Kelson Constructions v. Versha Spinning Mills Ltd.

J.K Mehra, J.:— This is a petition under Section 20 of the Arbitration Act wherein the petitioner had alleged that the petitioner is a partnership firm and they were awarded the work of construction of factory building and ancillary building at Bawal (Haryana). According to the petitioner an agreement of M/s. Build India System Construction which had already been executed by the employer/respondent No. 1 was to be executed under the same terms and conditions and rates by the petitioner and the work was to be executed under the supervision of respondent No. 2. It is further alleged that the respondent No. 1 had invited and accepted the tender submitted by M/s. Build India Construction System Limited who had left the work after completing the work upto plinth level only and the balance work was thereafter given to the petitioner on the same terms and conditions contained in the said tender as a consequence of the letter of acceptance by respondent No. 2.

2. Differences having arisen between the parties the present petition was filed seeking filing of the arbitration agreement in the court and reference of the disputes to the arbitrator. The said petition had been opposed by the respondents.

3. The respondent No. 1 has raised, inter alia, a preliminary objection relating to the maintainability of the petition on account of the petitioner being not registered with the Registrar of Firms under Section 69 of the Partnership Act. Since this objection went to the root of the matter. I proceeded to hear the arguments on this question first.

4. In the course of arguments at the bar, my attention was drawn to the Form-B which had been filed with the petition, which clearly showed that the partnership was registered with the Registrar of Firm in the year 1992, whereas the present petition has been field in early April, 1991. The consequence of non-registration on the date of institution is provided in Section 69 of the said Act, sub-section (2) whereof reads as under:—

“Sec. 69(2).—No suit to enforce a right arisen from contract shall be instituted in any court by or on behalf of the 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.”

5. It is also not disputed that a petition under Section 20 of the Arbitration Act has to be tried like a suit. While it is correct that it is not a pre-condition that the firm should be registered for entering into any contract, but it is mandatory requirement that the firm should be registered with the Registrar of firm and the persons suing are or have been shown in the Registrar of Firms as partners in the firm before any suit to enforce a right is brought by the firm.

6. In Loonkaran Sethia etc. v. Mr. Ivan E. John and others etc. reported as AIR 1977 SC 336(1), the Hon'ble Supreme Court has held that the provisions of section 69 are 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 the entered into as a partner of an unregistered firm, whether existing or dissolved, void. What is material is that on the date of institution of the suit the partnership should have been registered failing that the suit would fail. In Shankar Housing Corporation v. Smt. Mohan Devi and others reported as AIR 1978 Delhi 255(2) a Division Bench of this Court had also taken the following view:—

“The point of time contemplated in Section 69(2) is at the time of the institution of the suit. That is to today, the firm must be a registered firm by the date of the institution of the suit and the persons suing (i.e, all the partners) must have been shown in the Register of Firms as partners of the firm by the date of the institution of the suit.

Sub-sections (1) and (2) of S. 69 are substantive provisions intended to discourage the non-registration of firms. The provision in S. 69(2) is mandatory and makes the registration of a firm a condition precedent, to the institution of a suit of the nature mentioned in it.”

7. Similarly another single Bench of this Court in the case of Kavita Trehan & Ors.…Plaintiffs; v. Balsara Hygiene Products Limited…Defendant., reported as AIR 1992 Del 92(3) had held that a suit filed by a partner of a firm which is not registered on the date of the filing of the suit would be hit by the provisions of Section 69(2) of the Indian Partnership Act and as such it is not maintainable and is liable to be dismissed. In the case of M/s. Shreeriam Finance Corporation v. Yasin Khan and others reported AIR 1989 SC 1769(4), the Hon'ble Supreme Court had gone to the extent of laying down that even if the suit is instituted by a registered firm, but change in the constitution of the firm had taken place whereby one new partner had been added and two had retired and a minor being admitted to he benefits of the firm, the suit as filed by the firm after such change in the constitution, but the change was not notified to the Registrar of Firms, the suit was not maintainable as the current partners were not shown in the Register of Firms.

8. As against this, counsel for the plaintiff placed reliance on the judgment in the case of Atmuri Mahalakshmi and others v. Jagadeesh Traders reported as AIR 1990 AP 288(5) wherein although the Judge accepted the position that the subsequent act of registration cannot validate the plaint from the date of its filing as no suit was maintainable before the date of registration but the court proceeded to take the view that instead of allowing withdrawal of the suit and refiling after registration the Court could deem that the suit had been filed as on the date of the registration of the partnership because the partnership was registered during the pendency of the suit and for the purposes of limitation, the date of registration of partnership would be taken to be the date of institution. I am unable to agree with this view for the reason that if a suit on the date of its institution is not maintainable there is nothing in the language of the statute which by any implications would have the effect of validating the same plaint w.e.f the date of registration of partnership. The Court in that case has proceeded on the principle that it is duty of the court to administer the justice according to the principles of equity and good conscience, and it cannot be said to do so when it dismisses a suit because the formality of withdrawing a plaint and filing a fresh one was not complied with. While it is certainly the duty of the court to administer justice according to the principles of equity and good conscience, the courts are not supposed to circumvent or overlook the mandatory provisions of a statute and when a statute does not permit any suit to be brought, contrary to its specific provisions the Court cannot by the device of interpretation overcome such legal bar.

9. In the light of the above discussions. I hold that although there is no bar on the petitioner instituting a petition after the date or registration of the partnership with the Registrar of Firms, the present petition must fail on account of aforesaid technical non-compliance with the mandatory requirement of law as the partnership on the date of institution was not registered. Accordingly, the petition is rejected with no order as to costs.

I.KPetition Dismissed.