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Case Number

W.P No. 1893 of 1973

Attorney(S)

For the Appellant: C. Jayashree Sarathy, C.P. Sarathy, Advocates

Judges

Gopal Rao Ekbote, C.J
Chennakesav Reddy, J.

Acts

therein.11. Sub-Rule (2) of Rule 4 of Andhra Pradesh Partnership (Registration of Firms) Rules, 1957,
Section 8(4) read with section 13(4)(e) of the Central Sales Tax Act. Section 13(4)(e)
Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957.4.
Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957,
provision to rule 6(1) of the Central Sales Tax (Kerala) Rules 1957,
section 8(4) read with section 13(4) of the Central Sales Tax Act
sub rule (2) of Rule 4 of the Andhra Pradesh Partnership Rules.
rule 17 of the Madras Employees' insurance Court Rules, 1951,
benevolently.14. Clause (b) of sub-section (2) of section 71
Rule 4(7) of the Andhra Pradesh Partnership Rules, 1957,
section 96 of the Employee's State insurance Act, 1948.
Rule 4(2) of the Andhra Pradesh Partnership Rules
Sec. 63(1) of the Indian Partnership Act
Section 71(2)(j) of the Partnership Act.
Indian Partnership Act, 1932.
Section 59.10. Section 71
Sections 60, 61, 62 and 63
Section 60, 61, 62 and 63
Rule 4(2) of the Rules
Act. But rule 4(2)
rule 6(1)

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petition was initiated by Smt. C. Jayashree Sarathy challenging the validity of Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957 on the ground that it is made in excess of the Government's rule-making power under Section 71(2)(j) of the Indian Partnership Act.

The matter was directed for reference and the petition was heard on 24 and 28 January 1974 after perusal of an order of reference dated 3-12-1972. The judgment was delivered by Chennakevav Reddy, J.

Facts specific to the petitioner: the petitioner is the partnership firm "Rajasthan Trading Company Osmanganj, Hyderabad", registered under the Indian Partnership Act, 1932 on 8 October 1968. The firm underwent various changes in constitution which were notified to the Registrar of Firms as and when they occurred.

On 4 September 1972 the petitioner filed a notice of change under Section 63(1) of the Indian Partnership Act and paid the prescribed fee. The Registrar of Firms returned that notice by letter No. F2/8052/1972 dated 30-11-1972, stating that Form V notices could not be taken on the office record because the petitioner failed to inform the change within 15 days as required by sub‑rule (2) of Rule 4 of the Andhra Pradesh Partnership Rules.

The petitioner challenged the Registrar's action by filing the present writ petition under Article 226 of the Constitution seeking quashing of the Registrar's communication and a direction to record the change in the Register of Firms.

In the counter-affidavit the Registrar admitted that, in several prior cases, notices filed after the prescribed 15-day period had been accepted, but stated that following a Government memo dated 14-9-1972, notices and statements received after the 15-day period were to be rejected and were being so rejected.

Legal Issues Presented

Whether Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957 — which requires every statement, intimation or notice under Sections 60, 61, 62, 63(1) or 63(2) to be sent to the Registrar within 15 days of the event — is within the rule-making power conferred on the State Government by Section 71(2) of the Indian Partnership Act, 1932.
Whether, given that Section 63(1) does not prescribe any time limit, the State Government could, by rules made under Section 71(2), validly prescribe a rigid time-limit (15 days) for submission of notices under Section 63(1).
Whether the Registrar of Firms acted lawfully in returning the petitioner's notice on the ground that it was not filed within 15 days as required by Rule 4(2).

Arguments of the Parties

Petitioner's Arguments

Section 63(1) allows a partner (incoming, continuing or outgoing) to give notice to the Registrar when a change occurs in the constitution of a registered firm and mandates that the Registrar "shall make a record of the notice" and file it along with the statement relating to the firm.
Section 63(1) does not prescribe any time limit for giving such notice; therefore it is mandatory on the Registrar to record any notice once given, and the Registrar has no power to return a notice on the ground that it was not given within 15 days.
No rule can be framed beyond the scope of the parent Section; Section 71 does not empower the State Government to prescribe a time-limit for the notices, hence Rule 4(2) (referred to also as Rule 4(7) in the petitioner's submissions) is ultra vires Section 71 and the Act.

Respondent / Government's Arguments

The learned Government Pleader supported the validity of Rule 4(2) on the ground that clauses of Section 71(2) — specifically referred to in the opinion as subsection (2)(e) and (i) in the Government Pleader's submissions — empower the Government to prescribe periods of limitation for statements, intimations or notices.
In practice the Government had issued a memo dated 14-9-1972 directing the Registrar to reject statements and notices received after the prescribed 15-day period, and the Registrar was acting pursuant to that Government instruction.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sales Tax Officer, Ponkunham v. ??? Abraham (AIR 1967 Supreme Court, 1823)	Held that a provision in rules prescribing a time-limit for filing declarations was ultra vires where the parent statute's phrase "in the prescribed manner" did not include a time element; rule-making power to prescribe form/manner does not authorise prescription of time-limits.	The Court treated this decision as directly analogous and persuasive: it supports the view that rule-making power to prescribe forms or mode of entries does not extend to prescribing time-limits; this authority reinforced the conclusion that Rule 4(2) was ultra vires.
Basta Colla Colliery Co. (P) Limited v. State of Bihar (AIR 1969 Patna, 42)	Ruled that provisions (section 8(4) read with section 13(4) of Central Sales Tax Act) did not authorise the State Government to frame rules imposing strict time-limits for submission of declarations and returns.	Referenced as persuasive authority for the proposition that where the statute does not provide for a time-limit and the delegated power does not expressly or implicitly relate to prescribing time, a rigid time-limit in rules is not permissible.
Messrs. Solar Works v. Employees' State Insurance Corporation, Madras (A.I.R. 1964 Madras, 376)	Held rule 17 of Madras Employees' Insurance Court Rules, 1951 to be ultra vires section 96 of the Employees' State Insurance Act, 1948 where the Act did not prescribe any time-limit but the rules did.	Used as further persuasive authority demonstrating the trend not to read into delegated powers an authority to prescribe limitations where the parent statute does not do so; this reinforced the conclusion that Rule 4(2) was beyond the State Government's power.

Court's Reasoning and Analysis

The Court began by identifying the single question: the validity of Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957.

The Court examined Section 63(1) of the Indian Partnership Act. It noted that Section 63(1) permits an incoming, continuing or outgoing partner (or an authorised person) to give notice to the Registrar when a change occurs and requires the Registrar to make a record of the notice and to file it with the statement relating to the firm. The Court observed that Section 63(1) does not itself prescribe any period or limitation within which such notice must be given; while notice should be given within a reasonable time, the statute uses permissive language and does not impose a mandatory fixed time-limit.

The Court then analysed Section 71(2) — the delegated power enabling the State Government to make rules. It identified clause (b) (and clause (c) in the text) as empowering the State Government to prescribe the form of statements, intimations and notices and the form of the Register of Firms and the mode for making entries therein.

Interpreting the phrase "form" and "mode" (and relying on the authority of Stroud's Judicial Dictionary as cited in the opinion), the Court concluded that those words relate to the manner or mode of doing something (i.e., the content and format), but do not naturally include the temporal element of prescribing a time-limit.

The Court then directly examined Rule 4(2), which prescribed a 15-day period within which every statement, intimation or notice under the specified sections must be sent to the Registrar. The Court held that Section 71(2) did not empower the State Government to prescribe any minimum period of limitation for such notices; accordingly Rule 4(2) attempted to prescribe a time-limit beyond the scope of the delegated rule-making power.

The Court reinforced its interpretation by reference to relevant authorities (the Sales Tax case, Basta Colla Colliery, and Solar Works) where higher courts had struck down rules that imposed time-limits not authorised by the parent statutes. These decisions were described as persuasive, establishing that where a statute does not provide for a limitation and the delegated power does not expressly or impliedly relate to prescribing time, the rule-making authority cannot create a rigid time-limit.

Applying those principles to the present facts, the Court concluded that Rule 4(2) was ultra vires the powers conferred by Section 71(2) of the Act. Consequently, the Registrar's action in returning the petitioner's notice under communication F2/8052/72 dated 30-11-1972 (on the ground of non-compliance with the 15-day requirement of Rule 4(2)) was quashed.

The Court found that the petitioner's intimation in the present case had been sent within a reasonable time and therefore directed the Registrar to make the record of the notice in the Register of Firms and to file the notice along with the statement under Section 59 of the Act.

Holding and Implications

Holding: The Court held that Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957 is ultra vires the powers of the State Government under Section 71(2) of the Indian Partnership Act and is struck down.

Direct consequences and orders made by the Court:

The proceedings of the Registrar of Firms in file F2/8052/72 dated 30-11-1972 were quashed.
The Registrar of Firms was directed to record the petitioner's notice in the entry relating to the firm in the Register of Firms and to file the notice along with the statement relating to the firm under Section 59.
The writ petition was allowed with costs; Advocate's fee awarded at Rs. 100/-.

Implications beyond the present parties: The opinion relies on and applies existing authorities to strike down a delegated rule that imposes a time-limit not authorized by the parent statute. The judgment's immediate effect is the relief granted to the petitioner and the invalidation of Rule 4(2) in respect of its purported power to impose the 15‑day limit; the opinion does not purport to announce novel statutory interpretation principles beyond those applied from the cited precedents.

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Rajasthan Trading Company, Osmanganj, Hyderabad Partnership Firm v. Registrar Of Firms, House No. 4-1-358, Hanuman Tekdi, Hyderabad

1. It is contended by Smt. C. Jayashree Sarathy that Rule 4(2) of the Rules framed under the Partnership Act is made in excess of the rule-making power conferred upon the Government under Section 71(2)(j) of the Partnership Act. This Petition may therefore be posted before a Bench of the judge.

2. Pursuant to the above order of Reference this petition coming on for heading on Thursday the 24th, Monday the 28th days of January, 1974 and upon perusing the order of Reference dated 3-12-1972 and made herein and the petition and the Memo. of grounds the material papers and counter affidavit in the case and upon hearing the arguments of C.P Sarathy and Smt. C. Jayashree Sarathy, Advocates for the Petitioner and of the Government Pleader for Revenue on behalf of respondents, and having stood over for consideration till this day. The Court delivered the following:—

JUDGMENT

(Judgment of the Court delivered by Chennakevav Reddy, J.)

3. The only question requiring determination in this writ petition presented under Act, 226 of the Constitution relates to the validity of Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957.

4. The aforesaid question arises in the following circumstance. The petitioner is a partnership firm name Rajasthan Trading Company Osmanganj, Hyderabad, registered under the Indian Partnership Act, 1932. The firm was registered on 8th October 1968. Subsequently, there were alterations in the constitution of the firm and they were carried cut as and when the changes were notified to the Registrar of Firms, Hyderabad. On 14-11-1969 the partners of the firm were: Sri Satyanarayan Bhangadia, Smt. Ratan Bal Bhattod, Sri Nandlal Sarada, Smt. Yashodabal, Sri Pannalal Hiralal Bhangadiaya, Religious and Charitable Trust, Bidar, represented by their trustees, Sri Srigopal Bhattad, and Sri Raj Kumar and Sri Kant, Minors. On 19-10-1971 the last mentioned two minor partners viz., Sri Raj Kumar and Sri Kant ceased to be the partners of the firm. On 20-10-1971 the firm was reconstituted with the other seven existing partners and the newly admitted partners, Smt. Kesavbal, Sri Venugopal Inani and Sri Srigopal Inani, Sri Kailashnarayan, Minor by guardian Satyanarayan Bhangadia and Sri Kachrulal minor by guardian Smt. Sarjoobai (the last two minors being admitted to the benefits of partnership).

5. The petitioner filed notice of the change in the constitution of the firm as required under Sec. 63(1) of the Indian Partnership Act (here in after referred to as the Act) in the Office of the Registrar of Firms on 4-9-1972. The required amount towards the notice fee was also paid. But the Registrar of Firms returned the said notice to the petitioner in his letter No. F2/8052/1972 dated 30-11-1972 informing that the form V notices cannot be taken on the office record since the petitioner failed to inform the change in the constitution of the firm within 15 days from the date of the said change as required under sub rule (2) of Rule 4 of the Andhra Pradesh Partnership Rules. The petitioner alleges that the petitioner-firm underwent number of changes in its constitution after the first registration, that he has been intimating the Registrar of Firms about the said changes and that at no time an objection was taken that the change should be intimated within 15 days from the date of any such change in the constitution although the petitioner had not filed the said notices within 15 days. The petitioner also alleges that the action of the Registrar in returning the notice dated 4-9-1972 is not warranted by the provisions of the Act. The petitioner, therefore, filed the present writ petition seeking to quaah the notice of the Registrar of Firms dated 20-11-1972 and to direct the Registrar of Firms to record the change in the constitution of the firm.

6. In the counter-affidavit filed on behalf of the Registrar of Firms, it is admitted that in several cases, statements, intimations of notices relating to a firm under Sections 60, 61, 62, 63(1) or 63(2) of the Act filed in the office after the expiry of the period of is days had been accepted. In this case when the matter was brought to the notice of the Government for clarification, the Government in their Memo, dated 14-9-1972 informed the Registrar, and in pursuance of the said orders of the Government, notices and statements received, after the prescribed period of 15 days under Rule 4(2) of the Andhra Pradesh Partnership Rules are to be rejected. It is stated that statements and notices received after the period of 15 days are being rejected in pursuance of the orders of the Government.

7. The learned counsel for the petitioner submits that under Section 63(1) of the Act, a notice to the Registrar may be given when a change occurs in the constitution of the registered firm specifying the date of change and the Registrar shall make a record of the notice in the entry relating to the firm in the Register of Firms and file the nonce along with the statement relating to the firm. He submits that it is mandatory on the part of the Register to make a record of the notice and file the notice along with the statement relating to the firm when once the firm gives a notice. He argues that the Registrar has no power to return the notice on any grounds and particularly on the ground that the notice should be given within 15 days since the Section itself does not impose any such limitation. He argues no rule can be framed beyond the scope of the section itself. It is also his submission that section 71 of the Act which empowers the State Government to make rules does not empower the Registrar to frame rules to prescribe time limit for the notice and hence Rule 4(7) of the Andhra Pradesh Partnership Rules, 1957, is beyond the scope of the rule making power under Section 71 of the Act and is ultra vires of the provisions of the Act.

8. On the other hand, the learned Government Pleader support the validity of the rule on the ground that section 71(2)(e) and (i) of the Act empower the Government to prescribe the period of limitation ??? the statements, intimations or notices.

9. To answer the question, it is necessary to read the relevant provisions of the Act and the rules made thereunder. Section 63(1) of the Act reads as follows:—

“When a change occurs in the constitution of a registered firm any incoming, continuing or outgoing partner, and when a registered firm is dissolved any person who was a partner immediately before the dissolution or the agent of any such partner or person specially authorised in this behalf, may give ??? to the Registrar of such change or dissolution, specifying the ??? there of and the Registrar shall make a record of the notice in entry relating to the firm in the Register of Firms. ??? the notice along with the statement relating to the ??? under Section 59”.

10. Section 71 empowers the State Government to make ??? to the condition of previous publication. Section 71(2)(b) ??? are relevant for our purpose read:—

“71(7). The State Government may also ???

(a) xxxxxxxxxx

(b) requiring statements, intimations and notices under Sections 60, 61, 62 and 63 to be in prescribed form, and prescribing the form thereof;—

(c) prescribing the form of the Register of Firms, and the mode in which entries relating to firms are to be made therein, and the mode in which such entries are to be amended or notes made therein”.

11. Sub-Rule (2) of Rule 4 of Andhra Pradesh Partnership (Registration of Firms) Rules, 1957, framed under Section 71 of the Act reads;—

“Every statement intimation or notice relating to a firm, under Sections 60, 61, 62, 63(1) or 63(2) of the Act, shall be sent or given to the Registrar together with the prescribed fee within 15 days from the date of occurrence of the event referred to in such statement, intimation or notice”.

12. Section 63 appears in Chapter VII of the Act and headed ‘Registration of Firms’, Registration itself of Firm is not made compulsory under the Act nor does it impose any penalties for non-registration. Only a right to registration of the firm by furnishing the required particulars is given under the Statute. The Act (Section 69) however imposes certain disabilities for non-registration on the partners of the firm and the firm itself to sue in a Civil Court.

13. Registration is indubitably in the interest of the trading public as well as the partners. It would render easy to prove the existence of the partnership in case of disputes between the partner themselves or between the trading public and the firm. A partner who is newly introduced into the firm will be unable to claim his dues from the partners if his name is not registered in the Register of Firms. The third party who deals how ever with a firm without knowing the addition of a new partner or knows that a new partner has been introduced can either content himself with the security of the other partners or insist upon the registration of a new partner as a condition for further dealings. However, in the case of expelled or retired partner, it is necessary to have the changes noticed in the Register since he continues to be liable for the acts of the firm until notices were given of the retirement or expulsion. Therefore, it will be in his own interest to give immediate notice to the Registrar. Therefore, Section 63(1) does not make it imperative but merely permissive to the partner incoming, continuing or out going when a change occurs in the constitution of registered firm to give notice to the Registrar of such change specifying the date thereof. But when once the change is notified, the Registrar shall make a record of the notice in the entry relating to the firm in the Register of Firms and shall file the notice along with the statement relating to the firm filed under Section 59. The section itself does not prescribe any limitation as to the period within which notice should be filed. Notice should, however be given within a reasonable time. The Section which is designed to give relief to the partners of the firm as well as the public should be construed more benevolently.

14. Clause (b) of sub-section (2) of section 71 only empowers the State Government to make rules prescribing the from in which the various statements, intimations and notices required under Section 60, 61, 62 and 63 should be sent under Sub-clause (c), rules prescribing the form of the Register of Firms and the mode in which entires relating to the Firms are to be made therein can be made by the State Government. The form in which such notices or intimations should be sent, or the ‘mode’ in which entries are to be made in the register, cannot take in the time-factor for doing the thing. According to Stroud's judicial Dictionary the words ‘manner and form’ refer only to the mode in which the thing is to be done, and do not introduce anything from the Act referred to as to the thing which is to be dorm or the time for doing it.” In our opinion. Section 71(2) of the Act does not empower the State Government to prescribe the minimum period of limitation for the submission of the intimations or notices under the Act. But rule 4(2) framed in exercise of the powers under Section 71(2) specifically states that every statement, intimation or notice relating to a firm under Sections 60, 61, 62, 63(1) or 63(2) of the Act shall be sent or given to the Registrar together with the prescribed fee within 15 days from the date of such occurrence referred to in such statement, intimation or notice ??? already noticed, section 63(1) of the Act prescribes no such period of ??? nor does it authorise the rule-making authority to prescribe ??? in section 63(1) itself permissive words are employed by the ??? that a person may send intimation to the Registrar about the ??? the constitution of the firm. The consequence of non-compliant ??? provisions of the section are not found in the section itself ??? rules. Further, if the notice sent after the prescribed period of ??? about the change is rejected, that would result in defeating the ??? fest purpose of the legislation, namely, to have the names of the persons entered in the Register of Firms. We are, therefore, of the ??? that Rule 4(2) of the Andhra Pradesh Partnership Rules is beyond ??? rule making power of the State Government.

15. It would be apposite at this stage to refer to some of the decided cases cases on the point. In Sales Tax Officer, Ponkunham v. ??? Abraham (1) (AIR 1967 Supreme Court, 1823) the question that arose was whether the third provision to rule 6(1) of the Central Sales Tax (Kerala) Rules 1957, prescribing the time limit within which a declaration must be filed by a registered dealer was ultra verse of Section 8(4) read with section 13(4)(e) of the Central Sales Tax Act. Section 13(4)(e) did not authorise the rule-making authority to make rules prescribing the time-limit within which declarations should be made by a dealer. The Supreme Court observed at page 1825.

“The decision of the question at issue therefore depends on the construction of the phrases “in the prescribed manner” in Sec. 8(4) read with S. 13(4)(c) of the Act, in our opinion, the phrase in the prescribed manner occurring in section 8(4) of the Act only confers power on the rule making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished. But the phrase “in the prescribed manner” in S. 8(4) does not take in the time element. In other words, the section does not authorise the rule-making authority to prescribe a time-limit within which the declaration is to be filed by the registered dealer”.

16. in that case the Supreme court held that the third proviso to rule 6(1) is ultra vires of the rule-making power and that the assessee was not bound to furnish the declaration in form ‘C’ within the prescribed time. It was observed further that in the absence of any such time-limit it was the duty of the assessee to furnish the declarations in the form ‘C’ within a reasonable time.

17. In Basta Colla Colliery Co. (P) Limited v. State of Bihar (2) AIR 1969 Patna, 42), the Bihar High court ruled that section 8(4) read with section 13(4) of the Central Sales Tax Act did not authorise the state Government to frame a rule to bring home the rigour of time-limit for the submission of the declarations and the returns.

18. In Messrs. Solar Works v. Employees' State Insurance Corporation, Madras (3 A.I.R 1964 Madras, 376), the Madras High Court held that rule 17 of the Madras Employees' insurance Court Rules, 1951, is ultra vires the rule making powers of the State under section 96 of the Employee's State insurance Act, 1948. In that case also no time-limit was prescribed under the Act to file an application to recover employer's contribution under Section 75(2). A time-limit is prescribed under the rules, while no specific power was expressly given to prescribe any time-limit. The learned judges observed:

“……Section 96(b) which we have just reproduced does not refer, in any sense, to a power to prescribe time, or to lay down any rule of limitation. In the light of the tendency shown in recent times, not to consider the power to prescribe limitation as merely a part of procedural provisions, at least so far as legislative competence is concerned. We agree with the argument of the learned Advocate General that sec. 96(b) will not authorise the State Government to make a rule for limitation, as for instance R. 17 which is now in controversy”.

19. The learned Judges in that case held that rule 17 was ultravires of the rule making power and that the application of the employees was not time barred in any sense and the statute itself prescribes no such limitation. The above decisions are persuasive authorities for the proposition in the present case that when the statute itself does not provide for any limitation with reference to a particular matter and the delegation of power to make rules is conferred by a section of the Act which does not expressly or impliedly relate to the power to prescribe time, the authority to which the power is delegated, namely, the State in the case, cannot make a rule proscribing a rigid time-limit with reference to that matter. It is manifest that in this case neither section 63(1) nor Section 71(2) of the Act empower the State Government to make rules prescribing any time limit for the submission of notice or intimation under Section 63(1). In the circumstances, Rule 4(2) of the Andhra Pradesh Partnership (Registration of Firms) Rules, 1957, is ultra Hires of the powers of the State Government under Section 71(2) of the Act. The said Rule is, therefore struck down, and the proceedings of the Registrar, of Firms in F2/8052/72, dated 30-11-1972 are quashed. It cannot be said that the intimation in this case about the change in the constitution of the firm has not been sent to the Registrar of firms within a reasonable time. Therefore, the Registrar of Firms is directed to make a record of the notice in the entry relating to the firm in the Register of Firms and file the notice along with the statement relating to the firm filed under Section 59 of the Act.

20. The Writ petition is accordingly allowed with costs. Advocate's fee Rs. 100/-.

Rajasthan Trading Co... v. Registrar Of Firms, ...