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Case Number

Second Appeal No. 859 of 1945

Attorney(S)

Kedar Nath Sinha
A.P. Pandey

Judges

Hon'ble Mr. Prakash Narain Sapru
Hon'ble Mr. Vashistha Bhargava

Acts

provisions of section 69 of the Indian Partnership Act and this provision
provisions of section 69 of the Indian Partnership Act.4.
provisions of section 69 of the Indian Partnership Act.
provisions of sub-sections (1) and (2) of that section
sub-section (1) of section 69. Normally, section 69
section 74(b) of the Indian Partnership Act
section 69 of the Indian Partnership Act.
Act used in sub-section (b) of section 74
section 4 of the Encumbered Estates Act
sub-sections (1) and (2) of section 69
provisions of sections 1(3), 69
sub-section (3) of section 69
sub-section (3) of section 1;
section 1(3) of this Act
Indian Partnership Act
section 1(3), section 69
section 1(3)

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Smart Summary

Structured Summary of the Opinion — V. Bhargava, J.

Factual and Procedural Background

This is a second appeal arising from proceedings under the Encumbered Estates Act. Respondent No. 1 presented an application under section 4 of that Act and, in a written statement under section 8, disclosed certain debts including one to a firm styled "Sheikh Mohammad Hashim Haji Pir Mohammad." The firm, by its partners Abdul Sattar and Abdul Jabbar, filed a written statement under section 9 claiming the same amount.

The Special Judge confronted the question whether the partners' claim could be entertained in view of section 69 of the Indian Partnership Act. The claim arose from a "sarkhat" executed in 1933 but before 1 October 1933. The Encumbered Estates Act application was presented on 27 October 1936 and the partners' claim was presented on 12 August 1937. Up to the date the claim was presented, the firm was not registered (though registration was later claimed).

The trial court (25 May 1943) found no proof of registration and held the claim barred under section 69. The trial court also rejected the partners' reliance on section 74(b) of the Partnership Act, concluding that the right had not accrued before the commencement of the Partnership Act. The lower appellate court agreed, and the partners appealed to this Court in second appeal.

Legal Issues Presented

Whether proceedings under the Encumbered Estates Act to determine a creditor's claim are governed by section 69 of the Indian Partnership Act.
Whether the appellants' right (accruing between 1 October 1932 and 1 October 1933) is to be treated as having accrued "before the commencement of this Act" for the purposes of section 74(b) of the Partnership Act, given that section 69 came into force on 1 October 1933 while the rest of the Act came into force on 1 October 1932.
Whether the appellants' subsequent registration of the firm (if any) after filing the claim but before dismissal would validate the claim despite the bar in section 69.
Whether additional documentary evidence as to registration may be admitted in this Court on second appeal when the factual finding of non-registration was not challenged before the appellate court.

Arguments of the Parties

Appellants' Arguments

Their right to recover the claimed amount accrued before the "commencement of this Act" and, therefore, section 74(b) protects their right and prevents section 69 from operating against them.
The phrase "commencement of this Act" in section 74 should be read to mean the date when section 69 itself came into force (1 October 1933), or alternatively that the Act's commencement for purposes of section 69 should be treated as 1 October 1933, thereby excluding their claim from the operation of section 69.
They relied on prior decisions (including remarks by Sulaiman, C.J., in AIR 1936 All 3) to suggest that postponement of section 69's enforcement was meant to give unregistered firms a reasonable chance to register and that contracts entered during the deferred period should not necessarily be caught by section 69.
As an alternative, they contended the firm had been registered subsequent to filing the claim but prior to dismissal, and they sought to adduce documentary evidence of such registration.

Respondents' Arguments

The proceedings under the Encumbered Estates Act to enforce a contractual right fall within the scope of section 69 (see subsection (3) of section 69 making subsections (1) and (2) applicable to claims of set-off or other proceedings to enforce contractual rights).
The words "commencement of this Act" in section 74 refer to the date specified in section 1(3) — 1 October 1932 — because the Act was expressed to come into force on that date subject to the single exception that section 69 would come into force on 1 October 1933; an exception does not change the Act's commencement date.
Accepting the appellants' interpretation would render the Act ineffective up to 1 October 1933 and frustrate the legislature's declared commencement date for the Act; this would be an untenable result.
The trial court found no proof of registration of the firm up to its decision; that factual finding was not challenged on the first appeal and therefore cannot be reopened in this second appeal.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ram Gopal Sriniwas v. Net Ram, AIR 1941 All 178	Illustrated the application of section 74: courts considered whether section 74 applied to suits instituted before or after commencement of the Act.	The Court noted that in this and similar cases the only question decided was the temporal application of section 74; none of those cases dealt with what date should be treated as the "commencement of this Act" for s.74.
Danmal Parshottam Dass v. Babu Ram Chhotelal, AIR 1936 All 3	Contained observations by Sulaiman, C.J., that section 69 was postponed for one year, suggesting the legislature intended to give unregistered firms a chance to register.	The Court quoted Sulaiman, C.J.'s view but rejected any broader inference that postponement meant contracts entered in the interim would escape section 69; the present Court declined to adopt that inference.
Jamal Usman v. Firm Umar Haji Karim Shop, AIR 1943 Nag 175	Cited as one of the authorities where courts held section 74 applied to suits instituted after commencement provided the underlying right had accrued before commencement.	Used by this Court to show consistency of prior decisions on the application of section 74, but noted that none addressed the specific question of which date is the "commencement of this Act" for s.74.
Soonoiram Ramniranjandas v. Junjilal, AIR 1938 Rang 273	Another decision addressing whether section 74 applied to suits instituted before or after commencement, holding that s.74 could apply to suits instituted after commencement if the right accrued before commencement.	Similarly relied on to show prior treatment of s.74, with the Court observing that these cases did not resolve the novel question in the present appeal about the date of commencement for s.74.

Court's Reasoning and Analysis

The Court proceeded in a stepwise fashion.

Applicability of section 69 to Encumbered Estates Act proceedings:
The Court analyzed subsections (1) and (2) of section 69 and relied on subsection (3), which extends subsections (1) and (2) to claims of set-off and other proceedings to enforce rights arising from contract. The partners' claim in the Encumbered Estates proceedings was a proceeding to enforce contractual rights; therefore section 69 applied unless section 74 intervened.
Interpretation of "before the commencement of this Act" in section 74:
The critical question was whether rights that accrued between 1 October 1932 and 1 October 1933 are to be treated as having accrued before the "commencement of this Act" for s.74.

The Court considered the language of section 1(3), which declared that the Act would come into force on 1 October 1932, except that section 69 would come into force on 1 October 1933. The Court held that where the legislature states the Act comes into force on a specified date with an exception for particular provisions, the Act nevertheless commenced on that specified date subject to the exception; the exception does not delay the Act's commencement as a whole. Therefore, for the purposes of section 74, the "commencement of this Act" is 1 October 1932.

The Court gave a second, policy-oriented reason: if the appellants' interpretation were accepted and "commencement" were treated as 1 October 1933 for s.74, then section 74 would effectively suspend the operation of the entire Partnership Act until that later date. That would render the declared legislative commencement date (1 October 1932) meaningless and would produce an absurd result contrary to legislative intent.

The Court also rejected the appellants' attempt to read different commencement dates into section 74 for different parts of the Act. Because section 74 refers to "the Act" (not parts of the Act), the Court reasoned there must be a single date of commencement for the Act as a whole when interpreting the language of section 74.
Effect of prior decisions and the Sulaiman, C.J. observation:
Although prior cases had held that section 74 could protect suits instituted after commencement where the right accrued before commencement, none of them addressed which date constitutes the "commencement" for s.74. The Court examined Sulaiman, C.J.'s remarks in AIR 1936 All 3 and accepted the limited inference that section 69's enforcement was postponed to permit registration; the Court rejected any broader inference that contracts entered during the postponement are immune from section 69.
Factual question of registration and admissibility of further evidence:
The trial court found that there was no proof the firm had been registered up to the date of its decision. That finding of fact was not challenged before the lower appellate court and therefore the lower appellate court had no occasion to revisit it. The appellants sought to raise registration as a ground in this Court and to adduce documentary evidence; the Court refused to permit this factual issue to be raised in second appeal and refused to admit the additional evidence because it concerned a question of fact not decided by the lower appellate court.

Holding and Implications

Holding: APPEAL DISMISSED.

Core legal rulings (emphasized):

The Court held that proceedings under the Encumbered Estates Act to enforce a contractual right fall within the scope of section 69 of the Indian Partnership Act (having regard to subsection (3) of section 69).
The Court interpreted "the commencement of this Act" in section 74 as referring to 1 October 1932 (the date fixed by section 1(3) for the Act coming into force, subject to the single exception of section 69), and not to 1 October 1933. Consequently, rights accruing after 1 October 1932 are not protected by section 74 against the operation of section 69.
The appellants' claim — arising between 1 October 1932 and 1 October 1933 — was therefore governed by section 69 and was barred because the firm was unregistered as found by the trial court.
The Court refused to entertain a new factual contention (registration) in second appeal and rejected the application to adduce additional documentary evidence on that point.

Implications:

Direct effect on the parties: The appellants' claim was disallowed because their firm was unregistered and section 69 applied to their claim; the second appeal failed and was dismissed with costs.
Scope of precedent: The Court's interpretation clarifies that, for the purposes of section 74, the "commencement" of the Partnership Act is the date the Act is declared to come into force in section 1(3) (here 1 October 1932) even if a specific provision (section 69) is made to come into force later. The opinion rejected the argument that the postponement of section 69's enforcement should protect contracts made in the interim from the later application of section 69.
No new factual findings were permitted at this stage of appeal; the Court reaffirmed that issues of fact not raised and decided in the lower appellate court cannot be reopened in second appeal and additional documentary evidence on such issues may be refused.

Outcome: Appeal dismissed.

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Abdul Jabbar And Others v. Audhesh Singh Ram Agyan Singh And Others

V. Bhargava, J.:— This second appeal arises out of proceedings under the Encumbered Estates Act. Respondent No. 1 presented an application under section 4 of the Encumbered Estates Act and, in the written statement filed by him under section 8 of the Act, he showed certain debts as payable by him, including a debt to a firm, Sheikh Mohammad Hashim Haji Pir Mohammad. A written statement was filed under section 9 on behalf of the firm by the two partners, Abdul Sattar and Abdul Jabbar, and they also claimed the same amount as had been shown by the landlord applicant in his written statement. When the learned Special Judge came to consider the amount due from the landlord applicant to these creditors, Abdul Sattar and Abdul Jabbar, the question arose whether the claim of Abdul Sattar and Abdul., Jabbar could be entertained in view of section 69 of the Indian Partnership Act. The claim of Abdul Sattar and Abdul Jabbar was in respect of a ‘sarkhat’ executed in the year 1933, but before the 1st October 1933, by the landlord in favour of the firm, Sheikh Mohammad Hashim Haji Pir Mohammad. The application under section 4 of the Encumbered Estates Act was presented on the 27th October 1936 and the claim of Abdul Sattar and Abdul Jabbar was made before the learned Special Judge on the 12th August, 1937. Up to that date the firm, Sheikh Mohammad Hashim Haji Pir Mohammad, was not registered, though it was claimed that it had been registered subsequently. The trial court on the 25th May 1943 held that there was no proof that the firm had ever been registered and that consequently the claim was barred under section 69 of the Indian Partnership Act. The contention on behalf of the partners of the firm that they were protected under section 74(b) of the Indian Partnership Act was rejected by the trial court on the ground that the right in respect of which the claim had been filed had not accrued to Abdul Sattar and Abdul Jabbar before the commencement, of the Partnership Act. On appeal, the learned Judge of the lower appellate Court agreed with the trial court and confirmed the order disallowing the claim of these persons. They have, therefore, come up in second appeal to this Court.

2. The first point that we had to consider in connection with this appeal was whether the proceedings under the Encumbered Estates Act for determination of a claim of a creditor were at all governed by the provisions of section 69 of the Indian Partnership Act. This argument had to be considered in view of the language of sub-sections (1) and (2) of section 69 wherein a bar was placed against the institution of a suit only. Our attention has, however, been drawn to sub-section (3) of section 69 which makes the provisions of sub-sections (1) and (2) of that section applicable even to a claim of set-off or other proceedings to enforce a right arising from a contract. It is obvious that the claim by the appellants in these Encumbered Estates Act proceedings for determination of the liability of the landlord to them and for passing a decree in respect of the amount found due is a proceeding to enforce a right arising from the contract and is fully covered by the language used in sub-section (1) of section 69. Normally, section 69 would bar such a claim unless the person putting forward the claim can rely on the benefit of section 74 so that the provisions of section 69 may not be applied to his case. The relevant portions of section 74 are as follows:

“Nothing in this Act or any repeal effected thereby shall affect or be deemed to affect

(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or

(b) any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability, or anything done or suffered before the commencement of this Act or…………….”

3. The contention on behalf of the appellants is that the right to recover the amount in respect of which they have filed the claim before the learned Special Judge accrued to the appellants before the commencement of the Indian Partnership Act and consequently the legal proceeding or remedy in respect of their claim in the Encumbered Estates Act case is not to be governed by the provisions of section 69 of the Indian Partnership Act.

4. The decision of this question depends on the interpretation of the words “before the commencement of this Act” used in clause (b) of section 74. The right to claim the debts, which are the subject-matter of this appeal, accrued to the appellants sometime before the 1st October 1933 and after the 1st October 1932. This fact is not contested by either party. The question is whether a right which accrued during the period between the 1st October 1932 and the 1st October 1933 must be deemed to have accrued before the commencement of the Indian Partnership Act or subsequent to its commencement. The argument arises because, under sub-section (3) of section. 1 of the Act, it is laid down that the Act shall: come into force on the 1st day of October, 1932, except section 69, which shall come into force on the 1st day of October, 1933. It was contended that the words “commencement of this Act” used in clause (b) of section 74 must mean the commencement of the whole Act, including every single provision of it, and not merely a part of it and since section 69 did not come into force up to 1st October, 1933, it ought to be held that the commencement of this Act for purpose of section 74 was on the 1st day of October, 1933, There are two reasons why this argument cannot be accepted. Firstly the language of section 1(3) itself indicates that the legislature laid down that the Act was to come into force on the 1st day of October, 1932, with one exception, viz., that section 69 was to come into force on the 1st day of October, 1933. Even if the Act was to come into force with the exception of one provision of the Act, it must be held that the Act did come into force on that date, though subject to that exception.

5. When the legislature lays down that the whole Act is not to come into force on the same date, this intention can be expressed in various ways. Firstly, the legislature may lay down that the Act would come into force on a certain date with the exception of one or more provisions specified in the exception secondly, it may lay down that certain provisions of the Act are to come into force on one specified date and the remainder of the Act on some other date and thirdly, it may lay down that certain provisions or parts of the Act are to come into force on one date and other provisions or parts of the Act on another date. In the latter two cases, it may be possible to urge that the Act cannot be held to commence on the earlier date on which certain provisions or parts of the Act are to come into force, but, in this case, it is unnecessary for us to express any opinion on this argument. In the first case, however, the language itself indicates that the Act as such is to commence on the date specified and the mere fact that an exception is made in the case of some provisions of the Act would not change the date of commencement of the Act. The language used in section 1(3) of this Act clearly indicates that the Act itself was to come into force on the 1st day of October, 1932, and that must be held to be the date of the commencement of the Act even though there was an exception in respect of one provision of the Act. We, therefore, uphold the contention of the learned counsel for the respondents that the words “commencement of this Act” used in sub-section (b) of section 74 refer to the coming into force of the Act on the 1st day of October, 1932, as laid down in sub-section (3) of section 1; even though this was to be subject to an exception in respect of one section.

6. The second ground, which appeals to us, is that, if the interpretation sought to be put on behalf of the appellants is accepted, the effect would be that the whole Act would become ineffective & inoperative up to 1-10-1933. Under Section 74 nothing in the Act would affect anything done or suffered or any right, title, interest, obligation or liability acquired, accrued or incurred or any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability if it happened before the 1st of October, 1933. On the interpretation sought to be put on behalf of the appellants, the result would be that S. 74 would, in effect, suspend the operation of all provisions of the Act up to the 1st of October, 1933, and the provision made by the legislature that the Act was to come into force on the 1st day of October, 1932, would become meaningless and ineffective.

7. Learned counsel for the appellants further contended that, if it could not be held by us that the words “commencement of this Act” in section 74 are to be read as meaning commencement of the Act as a whole including section 69, we may, at least, hold that the commencement of the Act, for purposes of section. 69, took place on the 1st of October, 1933, though it may have taken place, for purposes of other provisions of the Act, on the 1st of October, 1932. We do not see how this contention can be accepted because the words “commencement of the Act” occur in section 74 and not in section 69 and, in that section these words can signify only one single date. The commencement of the Act mentioned in section 74 could take place either on the 1st day of October, 1932, or, on the 1st day of October, 1933, but not on both dates. There can be only one date for the commencement of one Act. There can be different dates for the commencement of different parts of the Act. If the words, that have to be interpreted, mention “the Act” and not “parts of the Act”, only one date can be determined for the commencement of the Act. In this case, as we have said earlier, on a correct reading of the language of sub-section (3) of section 1 as well as on other considerations, the only correct interpretation is that, for purposes of section 74, the Act commenced on the 1st day of October, 1932. Consequently, the appellants, whose claim is in respect of rights acquired after the 1st of October, 1932, are governed by the provisions of section 69 of the Indian Partnership Act and this provision is clearly applicable to this case.

8. Learned counsel for the appellants referred us to several decisions of this Court as well as of other High Courts, but in none of those cases was the point, which has arisen in this appeal, raised or decided. Reference was made by learned counsel to the cases of — ‘Ram Gopal Sriniwas v. Net Ram’, AIR 1941 All 178 (A), — ‘Danmal Parshottam Dass v. Babu Ram Chhotelal’, AIR 1936 All 3 (B), — ‘Jamal Usman v. Firm Umar Haji Karim Shop’, AIR 1943 Nag 175 (C) and — ‘Soonoiram Ramniranjandas v. Junjilal’, AIR 1938 Rang 273 (FB) (D). In all these cases, the only question, that came up for decision, was whether section 74 applied to suits instituted before the commencement of the Act or to suits instituted after the commencement of the Act and almost every Court held that section 74 was applicable even to suits instituted after the commencement of the Act, provided the right in respect of which the suit was filed had accrued before the commencement of the Act. In none of the cases did any occasion arise to consider the question as to what was the date of the commencement of the Act for purposes of applying section 74. Learned counsel quoted before us the views of Sulaiman, C.J, in — ‘AIR 1936 All 3 (B)’, which were as follows:

“Undoubtedly it is a significant fact that as provided in section 1(3), section 69 came into force one year after the coming into force of the Partnership Act. The reasonable inference as that the enforcement of this section was deliberately postponed in order to give unregistered firms a reasonable chance to get themselves registered before the section began to operate against them. Accordingly if there were nothing else in the Act, it would be a legitimate conclusion that section 69 would apply to all suits filed after the expiry of the period of one year. But there is also a possibility that the intention was to allow time to people, trading, under the name of an unregistered firm, to come to know of the drastic change in the law, which, should affect all contracts entered into after the expiry of that period.”

9. From these words learned counsel infers that Sulaiman, C.J, intended to lay down that the Partnership Act only affected contracts entered into by unregistered firms after the expiry of the period of one year during which section 69 was not in force, whereas the rest of the Act was in force. So that the contract on which the appellants have based their claim in these Encumbered Estates Act proceedings would not be governed by section 69 as having been entered into during that period of one year in which section 3 was not in force. We do not think that the learned Chief Justice ever intended to lay down, this principle and, if he did, we must say with respect that we find ourselves unable to agree with it. The first inference drawn by the learned-Chief Justice that the enforcement of section 69 was deliberately postponed in order to give Unregistered firms a reasonable chance to get themselves registered before the section began to operate clearly follows from the provisions of sections 1(3), 69 and 74; but this inference does not lead to the further position that there was any intention, in postponing the enforcement of section 69 to grant any concession to the unregistered firm? to continue to enter into fresh contracts during the period while section 69 had not come into force and to enforce those contracts even subsequently without any registration. A reading of all the provisions of the Act and the scheme of the Act can, in our opinion, leave no doubt that section 74 was not intended to make. S. 69 inapplicable to cases relating to rights arising out of contracts entered into after 1st October, 1932 and consequently in this case the claim of the appellants had to be disallowed on the ground that their firm was an unregistered one and the contract was entered into in the name of the firm.

10. Learned counsel for the appellants put forward an alternative argument, viz., that the firm of the appellants had been registered subsequent to the filing of their claim before the learned Special Judge & prior to the dismissal of it by him. But this argument cannot be accepted in view of the finding of fact given by the trial court, which was not challenged in the lower appellate court. In the trial court, though an opportunity was afforded to the appellants, they failed to produce satisfactory evidence to show that their firm had been registered and the learned Special Judge ultimately held that there was no proof that the firm of the appellants hart ever been registered up to the date of his decision. This finding of fact was not challenged by the appellants in their memorandum of appeal before the lower appellate court and consequently the learned Judge of the lower appellate court had no occasion to reconsider that finding. In this Court the appellants have sought to raise’ this ground in their grounds of appeal. Since this ground relates to a question of fact which was not raised before and decided by the lower appellate court, we cannot permit it to be raised in this Court.

11. The appellants also sought to adduce documentary evidence in support of the contention that the firm had been registered. The application for admitting this additional evidence has to be rejected as evidence is sought to be given in respect of an issue which the appellants are not entitled to raise in second appeal and which we have refused to entertain. On these findings, the appeal fails and is dismissed with costs.

B/V.B.B

12. Appeal dismissed.

Abdul Jabbar And Others v. Audhesh Singh Ram Agyan Singh And Others

Structured Summary of the Opinion — V. Bhargava, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Abdul Jabbar And Others v. Audhesh Singh Ram Agyan Singh And Others

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