The defendant in O.S No. 111 of 1982 on the file of the Principal Subordinate Judge, Pondicherry, is the appellant in the Second Appeal.
2. The suit was filed by the respondent herein represented by its partner for recovery of Rs. 6,419.96 being the balance amount due by the defendant/appellant towards credit purchase of cloth, subsequent interest and costs. The case of the plaintiff was that the defendant purchased textile goods between 7.5.1981 and 21.8.1981 for a total value of Rs. 18,208.96 on credit, that they were credit sales and it was agreed between the parties that the defendant had to pay interest at 18% per annum if the credit bill was not discharged within 30 days from the date of purchase, that the defendant had paid Rs. 11,789/- on various dates towards the purchases, but, failed to pay the balance amount of Rs. 6,419.96 after 8.12.1981, that a lawyer's notice was issued and the suit came to be filed.
3. The defendant filed a written statement contending inter alia that his father was the sole proprietor of the defendant/firm, that his father died in April 1981 leaving him at a very young age, his mother and six other members in the family, that the defendant used to purchase textile goods on cash as well as on credit, that the business dealings with the plaintiff commenced from 16.5.1981 after payment of cheque for Rs. 500/- and the first consignment was not taken delivery because the plaintiff refused to handover the goods unless the defendant paid half of the sale consideration in advance, that after reaching an understanding, the defendant purchased goods from 17.5.1981, that the plaintiff had not given credit for Rs. 500/- on 30.5.1981, that the plaintiff had fabricated the suit claim, that the defendant owed only Rs. 740.95 as per the statement of accounts, that the suit was bad for non-joinder of necessary parties, as the defendant was not a proprietor, and that the suit was liable to be dismissed.
4. On the above pleadings, the following issues were framed:
1. To what amount the plaintiff is entitled?
2. Is the suit bad for non-joinder of other necessary parties?
3. To what relief are the parties entitled to?
5. The plaintiffs representative was examined and Exs.A-1 to A-7 were marked on the plaintiffs side. The defendant's representative was examined and Exs.B-1 to B-3 were marked. On the oral and the documentary evidence, the trial Court found that the plaintiff was entitled to recovery Rs. 5,919.96 with interest at 6% per annum from the date of filing of the suit till realization. The defendant was granted three months time to pay the amount.
6. In the course of the trial, a contention was raised on behalf of the defendant that the plaintiff's firm was not competent to file the suit because it was not a registered one. This contention was discountenanced by the trial Court observing that since the party representing the trading firm had filed the suit only for the purpose of collecting outstanding and for settling partner's account inter se, that the partner, who actually dealt with the defendant-firm, was competent to file the suit in full capacity and the question of registration of firm need not be considered in the suit, as the defendant had not raised any specific plea in the written statement about the non-registration of the firm.
7. The defendant filed appeal in A.S No. 104/84 before the 1 Additional District Court, Pondicherry. The learned District Judge confirmed the decision of the trial Court and dismissed the appeal. Even before the lower appellate Court, the non-registration of the plaintiff's firm was put forward as an objection to the maintainability of the suit by the defendant. The learned Additional District Judge held that this plea not having been raised in the written statement, it did not arise for consideration in the appeal.
8. At the time of admission the following substantial question of law was framed for decision in the Second Appeal.
Whether the suit filed by the plaintiff-firm is maintainable in view of the non-registration, which is specific bar under Section 69 of the Indian Partnership Act?
9. Mr. S. Krishnasamy, learned Counsel for the appellant, referred to Sec. 69 of the Indian Partnership Act (hereinafter referred to as ‘the Act’) and contended that the suit was not at all maintainable as the requirement under Sec. 69(2) of the Act was mandatory. He also relied on the following judgments:
(1) Balasore Textile Distributors Association v. Indian Union, A.I.R 1960 Ori. 119 and
(2) KRM Money Lenders, rep. by its Power Agent, Karuppiah v. A. Manoharan @ Doss, (1999) 3 M.L.J 51.
10. Though the plaintiff/respondent had been served, it had not chosen to engage Counsel and contest the second appeal. I therefore appointed Ms. Mala as amicus curiae to assist the Court as the question involved is of some consequence.
11. Ms. Mala, amicus curiae, put forward the following contentions:
The bar under Section 69(2) of the Act had not been raised in the written statement of the defendant, that the question is a mixed question of fact and law and unless specific plea had been raised, it was not open to the defendant to take advantage of the provisions of Sec. 69(2) of the Act. She also relied on the following judgments in support of her submissions:
(1) Goverdhandoss v. Abdul Rahman, 55 L.W 440 = A.I.R (29) 1942 Madras 634 (D.B),
(2) Jalal Mohammed Ibrahim v. Kakka Mohammed Ghouse Sahib, 84 L.W 654 = A.I.R 1972 Mad. 86 (D.B) and
(3) N.A Munavar Hussain Sahib v. E.R Narayanan, A.I.R 1984 Mad. 47 (D.B) (1983) 96 L.W 137 S.N
12. Section 69(2) of the Indian Partnership Act runs as follows:
“EFFECT OF NON-REGISTRATION:
1……………….
2. No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm”.
From a reading of the Section, it is clear that the provisions are mandatory and the prohibition is imperative. It is to be further seen, whether in the absence of specific pleading invoking Sec. 69(2) of the Act, it would be open to the Court to entertain the objection. Incidentally, it may also have to be further seen whether such a plea could be waived.
13. In Goverdhandoss Takersey v. Abdul Rahiman, 55 L.W 440 = A.I.R (29) 1942 Mad. 634 (D.B), it has been held as follows:
“A stringent provision like S. 69(2) must be strictly construed. The provisions of S. 69(2) can only be attracted to a suit if it was instituted either by or on behalf of the firm, that is to say ex facie it purports to be filed either by or on behalf of the firm or even in the interest of the firm. But this must be clear from the plaint itself and must not in any case depend on the liability of a plaintiff to restore the benefit that he has received out of that suit to the firm of which he is a partner eventually. It is immaterial whether the benefit of the suit is to go to any person other than the plaintiff ultimately. A contract entered into by a partner personally constitutes a personal agreement and therefore the partner is entitled to bring a suit on the contract in his own name without joining the other partners as plaintiffs in the action. Such a suit does not fall within the mischief of S. 69(2).”
It has also been held in that decision that the point under Section 69(2) as to non-registration of a firm being one of law it can be raised for the first time in appeal if all the facts necessary for its determination are on the record. It is, however, pointed out in that decision that while there is a distinct provision in the Limitation Act that a Court is bound to dismiss a suit on the ground of limitation if it finds the suit to be barred whether a plea of this kind had been raised on behalf of the defendants or not. No such provision, however, exists in the Partnership Act and therefore the Court is not bound to dismiss a suit on the ground of non-registration of the firm suo motu if no plea had been raised by any of the defendants to the suit.
14. In Jalal Mohammed Ibrahim v. Kakka Mohammed Ghose Sahib, 84 L.W 654 = A.I.R 1972 Mad. 86, it has been held that a decree passed in a suit filed by an unregistered firm is not a nullity and where the plea of non-registration was not raised in the suit itself it cannot be raised in a separate suit. The Bench further held that the registration of a firm is a condition precedent to its right to institute a suit. The object of the section appears to be to protect public against a firm carrying on business under a name which does not disclose to the public the names of the actual partners. But still the objection as regards the maintainability of the suit on the ground that it is an unregistered firm is one that is primarily available to the defendants in the suit. Therefore, the defendants could waive that objection. The Bench drew analogy from Sec. 80 of the Code of Civil Procedure and referred to the decision of the privy Council in Vellayan Chettiar v. Govt. of the Province of Madras, 60 L.W 630 = A.I.R 1947 P.C 197, wherein it was held that though the provisions of Sec. 80, C.P.C were mandatory and must be enforced by the Court, it could be waived by the authority for whose benefit it was provided.
15. In Loonkaran Sethiya v. Ivan E. John, (1977) 1 S.C.C 379 = A.I.R 1977 S.C 336, it has been held that a suit by a partner of an unregistered firm for enforcement of agreement entered by him as a partner was not maintainable. The Supreme Court has observed as follows:
“Section 69 is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into a partner of an unregistered 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 Section 69 of the Partnership Act.”
In the case before the Supreme Court there was a specific plea raised with regard to the maintainability of the suit for not complying with the requirements of Sec. 69(2) of the Partnership Act.
16. In N.A Munavar Hussain Sahib v. E.R Narayanan, A.I.R 1984 Mad. 47 = (1983) 94 L.W 137 S.N, another Division Bench of this Court held that the plea based on Sec. 69 of the Act must be squarely raised in the written statement. If it is not done, the defendant cannot be allowed to raise it at a later stage. The Bench referred to Order VIII, Rule 2 C.P.C requiring the defendant to raise in his written statement all matters which could show how the suit was not maintainable. In the case before the Bench it was not raised in the written statement and it was sought to be raised in the appeal for the first time.
17. In Krishna Motor Service By Its Partners v. H.B Vittala Kamath., (1996 (10) S.C.C 88, it has been held that Section 69 is mandatory in character and its effect is to render a suit by the 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.
18. In Balasore Textile Distributors Association v. Indian Union, I.R 1960 Ori. 119, it has been held that even in the case of defective pleadings and issue if the plaintiff had sufficient notice of fact to be proved, the Court could admit evidence and refuse to entertain suit as being barred under Section 69(2) of the Act. The Bench of the Orissa High Court observed as follows:
“Here, however, S. 69(2) of the Partnership Act expressly forbids any Court from entertaining any suit by or on behalf of the unregistered partnership firm. When the necessary facts for the application of that section have been brought to the notice of the Court, it cannot be a party to the perpetration of an illegality.”
The Orissa Bench referred to the decision of the Privy Council in Suraj Mull v. Triton Insurance Co., A.I.R 1925 P.C 83, wherein it has been held that —
“No Court can enforce as valid that which competent enactments have declared shall not be valid nor is obedience to such an enactment, a thing from which a Court can be dispensed by consent of parties or by failure to plead or to argue a point at the outset……The enactment is prohibitory. It is not confined to affording a party protection to which he may avail himself or not as he pleases.”
The Privy Council in its turn quoted with approval the following observation of Lindley, L.J in Scott v. Brown, Doering Mc Nab and Co., (1892) 2 Q.B 724:
“It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality, the Court ought not to assist him.”
The Orissa High Court rejected the technical objection raised on behalf of the appellant before it to the effect as no specific issue was raised on this question the trial Court was not justified in either allowing evidence to be adduced on this point or in permitting counsel for the plaintiff to make any concession of facts, relying on the provisions of Order VI, Rule 6 and Order VIII, Rule 2, C.P.C
19. In Shreeram Finance Corporation v. Yasin Khan, A.I.R 1989 S.C 1769 = (1989) 2 L.W 542, M.H Kania, J. of the Supreme Court, speaking for the Bench, while considering the scope of Sec. 69 of the Partnership Act held thus:
“In the present case the suit filed by the appellants is clearly hit by the provision of Sub-sec. (2) of Sec. 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per the relevant entries in the Register of Firms were not in fact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regarding which no notice was given to the Registrar of Firms, thus, the persons suing, namely, the current partners as on the date of the suit were not shown as partners in the Registrar of Firms. The result is that the suit was not maintainable in view of provisions of Sub-sec. (2) of Sec. 69 of the said Partnership Act and the view taken by the trial Court and confirmed by the High Court in this connection is correct although the plaint was amended on a later date that cannot save the suit.”
20. In T. Savariraj Pillai v. R.S.S. Vastred & Co. (M/S) and Co., (1989) 2 L.W 418 = (1989) 2 M.L.J 349, it has been held by a Bench of this Court that the requirements of Sec. 69 of the Partnership Act are mandatory and the suit filed by a party without complying with the requirements under Sec. 69 of the Parntership Act is not maintainable.
21. In A.P.S Baharudeen v. Antony, 1991 T.L.N.J 27, Srinivasan, J. (as the learned Judge then was) has held as follows:
“…….. the views held by practically all the High Courts in India is that the registration of the firm is a condition precedent to its right to institute a suit of the nature mentioned in Sec. 69(2) the Partnership Act and that the registration after the institution of the suit cannot cure the defect of non-registration before the date of the suit. It follows from this, that the plaintiff is not entitled to withdraw the present suit and file a fresh suit on the same cause of action. Since in my opinion, the defect pointed out by the defendants is not a formal defect but goes to the root of the matter. Hence, I have no jurisdiction to proceed with the trial when the condition precedent to the right to institute a suit has not been fulfilled.”
22. In Selvam Estates v. Thangapandia Maharajan, (1991) 1 M.L.J 421, Lakshmanan, J. (as the learned Judge then was) has held that the registration of a firm is a condition precedent to its right to institute a suit of the nature mentioned in Sec. 69(2) of the Partnership Act and that the registration after the institution of the suit cannot cure the defect of non-registration before the date of the suit.
23. In KRM Money Lenders, rep. by its Power Agent Karuppiah v. Manoharan @ Doss, (1999) 3 M.L.J 51, E. Padmanabhan, J. has referred to a number of decisions and held that it is obligatory on the part of the plaintiff to prove that it is a registered firm. Its failure to establish the above is fatal and hit by Sec. 69(2) and merely because the defendants have not raised the plea in detail, the plaintiff is not exonerated, nor could it be stated that the defendants have waived such an objection. The learned Judge relied on Order VII, Rule 11, C.P.C, wherein it is provided that a plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law, and in the case before the learned Judge Sec. 69(2) being a bar and the plaint and the institution of the suit were non-est, the Court had no jurisdiction to proceed with the trial of such suit and any amount of waiver will not cure such inherent defects.
24. I have already referred to two Division Bench Judgments of this Court, namely, Jalal Mohammed Ibrahim v. Kakka Mohammed Ghouse Sahib, 84 L.W 654 = A.I.R 1972 Mad. 86 and N.A Munavar Hussain Sahib v. E.R Narayanan, A.I.R 1984 Mad. 47 (1983) 94 L.W 137 S.N. These two Bench Judgments have observed that the plea of non-registration based on Sec. 69 of the Act must be squarely raised in the written statement and if it is not done, the defendant cannot be allowed to raise it at a later stage. The 1984 Bench referred to Order VIII, Rule 2, C.P.C
25. It has been pointed by the 1942 Bench Goverdhandoss Takersey v. Abdul Rahiman, (supra) that while there is a distinct provision in the Limitation Act that the Court is bound to dismiss a suit on the ground of limitation if it finds the suit to be barred whether a plea of this kind had been raised on behalf of the defendants or not, no such provision, however, exits in the Partnership Act and therefore the Court is not bound to dismiss a suit on the ground of non-registration of the firm suo motu if no plea had been raised by any of the defendants to the suit.
26. It would appear that the trial Court had either missed in the plaint any statement to the effect that the plaint is barred by any law or that it did not think that the non-observance of the provisions of Sec. 69(2) would make the plaint void or non-est. As pointed out by the decision of the Bench in Goverdhandoss Takkersey's case while in the Limitation Act the Court is bound to dismiss a suit on the ground of limitation if it finds the suit to be barred whether a plea of this kind had been raised on behalf of the defendants or not, no such provision, however, exists in the Partnership Act and therefore the Court is not bound to dismiss a suit on the ground of non-registration of the firm. The Bench further observed that the non-registration of a firm being one of law it could be raised for the first time in appeal if all the facts necessary for its determination are on the record.
(Emphasis supplied).
27. However, the later Benches held that the objection regarding maintainability of the suit under Section 69(2) of the Act is a mixed question of fact and law and necessary foundation should be laid in the pleadings and it is further pointed out in those decisions that Order VIII, Rule 2, C.P.C requires the defendant to raise in his written statement all matters which would show how the suit was not maintainable.
28. The next question is as to whether the parties can waive the objection under Sec. 69(2) of the Act.
What is waiver? How it is to be deduced? And whether there can be waiver of a statutory right?
It has been held by the Supreme Court in Woman Shriniwas Kini v. Ratilal Bhagwandas & Co., A.I.R 1959 S.C 689 = 1959 Supp. 2 S.C.R 217 = 1959 S.C.J 655 thus:
“Waiver is the abandonment of a right which normally everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It may be deduced from acquiescence or may be implied.”
29. Its basic requirement is that it must be an intentional act with knowledge. (Motilal Padampat & Co. v. S., A.I.R 1979 S.C 621).
30. It has been held in Municipal Corporation of Greater Bombay v. Dr. Hakimwadi Tenants' Association, A.I.R 1988 S.C 233 = 1988 Supp. S.C.C 55, that estoppel and waiver are questions of conduct and must necessarily be determined on the facts of each case.
31. In Sashi Bhushan v. Dalip, A.I.R 1936 Pat. 75, it has been held that there is however nothing to prevent any litigant waiving any right he may have under the Code of the Civil Procedure or under any other statute for the matter, unless the waiver of the right or the absence of the right makes any particular matter illegal, or where the benefit is conferred by a statute which has public policy for its object.
(emphasis supplied).
32. It has been held in Dhirendra Nath v. Sudhir Chandra, A.I.R 1964 S.C 1300, Indian Electric Work v. James Mantosh, A.I.R 1971 S.C 2213, The Superintendent of Taxes v. Onkarmal, A.I.R 1975 S.C 2065 and Chotalal v. Ram, A.I.R 1975 Cal. 436, thus:
“……if certain requirements or conditions are provided by a statute, in the interest of a particular person, then the requirements or conditions, even if mandatory, may be waived by that person, if no public interest is involved, in such a case, the act done will be valid even if the requirement or condition has not been performed.”
“Party can waive even a mandatory provision in his favour.”
33. In Vellayan v. Madras Province, A.I.R 1947 P.C 197 = 60 L.W 630 = (1947) 2 M.L.J 208, which is referred to and relied on in Jalql Mohammed's case (supra) it has been observed as follows:
“There is no inconsistency between the proposition that the provisions of the section are mandatory and must be enforced by the Court and that they may be waived by the authority for whose benefit they are provided.”
34. In Coimbatore Dt. C. Co-oper. S & M. SOC. v. Union of India, (1969) 2 M.L.J 602 = 82 L.W 451, it has been held:
“Where in the written statement filed by the defendant no objection was taken with respect to the validity of the notice there is justification for the inference that the defendant had waived the objection even if there was any defect in the notice. A plea of want of notice should be taken at the earliest opportunity for the simple reason it goes to the root of the case.”
35. Courts are agreed that non-registration is fatal to the maintainability of the suit. However, Jalal Mohammed Ibrahim v. Kakka Mohammed Ghouse Sahib, A.I.R 1972 Mad. 86 and N.A Munavar Hussain Sahib v. E.R Narayanan, A.I.R 1984 Mad. 47 (D.B), have held that the plea regarding non-registration must be squarely and specifically raised in the pleadings, while Balasore Textile Distributors Association v. Indian Union, A.I.R 1960 Ori. 119, has held that even in the case of defective pleadings and issue, if the plaintiff had sufficient notice of fact to be proved, the Court could admit evidence and refuse to entertain suit as being barred under Sc.69(2) of the Act.
36. It is a mixed question of fact and law according to Jalal Mohammed Ibrahim v. Kakka Mohammed Ghouse Sahib, A.I.R 1972 Mad. 86 (D.B) and N.A Munavar Hussain Sahib v. E.R Narayanan, A.I.R 1984 Mad. 47 (DB), but, Balasor Textile Distributors Association v. Indian Union, A.I.R 1960 Ori. 119, placing reliance on Suraj Mull v. Triton Insurance Co., A.I.R 1925 P.C 83 has held that since it goes to the root of the matter, it need not be specifically pleaded. To the same effect is the decision of E. Padmanabhan, J. in KRM Money Lenders, rep. by its Power Agent, Karuppiah v. A. Manoharan @ Doss, (1999) 3 M.L.J 51.
37. In Goverdhandoss v. Abdul Rahman, 55 L.W 440 = A.I.R (29) 1942 Mad. 634 (DB), Balasore Textile Distributors Association v. Indian Union, A.I.R 1960 Ori. 119, and K.R.M. Money Lenders v. A. Manoharan, (1999) 3 M.L.J 51, it has been held to be a question of law and can be raised for the first time in the appeal if all the facts necessary for its determination are on the record, while Vellayan v. Madras Province, A.I.R 1947 P.C 197 = 60 L.W 630 = (1947) 2 M.L.J 208, Wasant Shripat Deshpande, A.I.R 1949 Nag. 25, Woman Shriniwas Kini v. Ratilal Bhagwandas & Co., A.I.R 1959 S.C 689, Coimbatore Dt. C. Co-oper. S & M. Soc. v. Union of India, (1969) 2 M.L.J 602 = 82 L.W 451, hold that the plea can be waived expressly or can be implied. Balasore Textile Ditributors Association v. Indian Union, A.I.R 1960 Ori. 119, Suraj Mull v. Triton Insurance Co. A.I.R 1925 P.C 83 and K.R.M. Money Lenders v. A. Manoharan, (1999) 3 M.L.J 51, hold that such a plea cannot be waived.
38. Having regard to the Bench decisions of this Court by which I am bound, it has to be held that the defendant in the instant case had waived his right. So far as the case decided by Padmanabhan, J. is concerned, there was a specific plea raised in the written statement by some of the defendants and it was incumbent on the Court to find out whether the provisions of Sec. 69(2) of the Act had been complied with.
39. Thus,
(1) The Registration of a firm is a condition precedent for the launching of a suit by the firm as per Sec. 69(2) of the Partnership Act. Subsequent registration cannot care the defect.
(2) The objection regarding non-registration has to be specifically pleaded. Once pleaded it is incumbent on the plaintiff to prove the same and failure is fatal.
(3) If non-registration is not specifically pleaded no evidence can be let in for the plea not raised. The objection regarding non-registration can be waived. Unless the waiver of the right or the absence of the right makes any particular matter illegal, or where the benefit is conferred by a statute which has public policy for its object, and
(4) Such waiver can be expressed or be inferred from the facts and circumstances of the case.
40. In the present case, only in the course of evidence the defendant attempted to invoke the mandatory nature of the provisions of Sec. 69(2) of the Act by deposing that the plaintiff was not a registered partnership firm. Rightly did the Courts below not permit it.
41. Consequently, the substantial question of law is answered against the appellant. The Second Appeal fails and the same is dismissed.
42. I place on record the very able assistance given by Ms. Mala, as amicus curiae.
GS/VCS