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  • P.K Palli
  • R.L Khurana, JJ.
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  • P.K Palli
  • R.L Khurana, JJ.
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Smart Summary

Structured Summary of the Legal Opinion (R.L. Khurana, J.)

Factual and Procedural Background

On 29.3.1984 at about 4:00 p.m., truck No. HPM 1411, belonging to respondent No. 1 and driven by respondent No. 2, turned turtle between Harabagh and Jarol while proceeding from Nerchowk to Kangu. In the accident one person named Indru died and Prabhu Ram, Nek Ram and Ram Dass sustained bodily injuries. The truck was carrying cement pipes and collars that belonged to the petitioner-appellant; those goods were damaged in the accident.

The petitioner-appellant filed a petition under section 110-A of the Motor Vehicles Act, 1939 (corresponding to section 166 of the Motor Vehicles Act, 1988) claiming compensation for damage to his goods. The respondents resisted the claim, denying rash and negligent driving by respondent No. 2 and asserting that the vehicle's brakes suddenly failed and the driver dashed the vehicle against a hillock to avoid a major accident. The respondents also denied damage to the goods and raised an objection that the petitioner-appellant was an unregistered partnership firm and thus the petition was not competent under section 69 of the Indian Partnership Act.

The Claims Tribunal found that damage of Rs. 3,100 was caused to the petitioner's goods and that the petitioner was entitled to that amount, but it non-suited the petitioner on the ground that, being an unregistered partnership firm, the petition was barred by section 69 of the Partnership Act. The petitioner appealed to this Court challenging the Tribunal's finding on maintainability and seeking a determination that section 69 did not apply.

Legal Issues Presented

  1. Whether a petition under section 110-A of the Motor Vehicles Act (claims before a Claims Tribunal) is a "suit" such that procedural or substantive bars applicable to suits (e.g., under the Indian Partnership Act, section 69) would apply.
  2. Whether proceedings under section 110-A (or proceedings before a Claims Tribunal) constitute an "other proceeding to enforce a right arising from a contract" within the meaning of sub-section (3) of section 69, Partnership Act, thereby attracting the bar in sub-section (2) of section 69 against unregistered firms enforcing contractual rights.
  3. Whether the petition filed by the petitioner-appellant seeking compensation for damage to goods arises out of any contract between the parties (for carriage of goods) or whether it is an independent statutory right under the Motor Vehicles Act.

Arguments of the Parties

Appellant's Arguments

  • The petition under section 110-A of the Motor Vehicles Act was maintainable despite the petitioner-appellant being an unregistered partnership firm.
  • The provisions of section 69 of the Indian Partnership Act were not applicable to the claim made under section 110-A because the right claimed was not a right arising out of a contract.

Respondents' Arguments

  • Denied rash and negligent driving; alleged sudden brake failure and that the driver dashed the vehicle against a hillock to avoid a worse accident.
  • Denied that the cement pipes and collars were broken or damaged in the accident.
  • Contended that, since the petitioner-appellant was an unregistered partnership firm, the claim petition was not competent under section 69 of the Partnership Act.
  • Argued that even if a petition under section 110-A is not technically a suit, sub-section (3) of section 69 brings "other proceedings to enforce a right arising from a contract" within the ambit of sub-section (2), thus rendering proceedings by an unregistered firm incompetent; relied on Oriental Fire & Genl. Ins. Co. Ltd. v. Union of India (AIR 1991 Patna 250) and Surinder Mahajan v. National Project Construction Corporation Ltd. (1990 (2) Sim LC 182).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
State of Assam v. Urmila Datta, 1974 ACJ 414 (Assam & Nagaland) Held that an application under section 110-A of the Motor Vehicles Act is not a "suit" within the meaning of section 80 of the Civil Procedure Code; Claims Tribunals are not courts in the civil suit sense and certain CPC provisions do not apply where special procedure exists. The Court relied on this decision to support the proposition that proceedings under section 110-A are not suits and therefore procedural provisions applicable to suits (such as those aimed at instituting a suit) are not attracted.
Khairunnissa A.K. Saddiki v. Municipal Corporation, Bombay, 1966 ACJ 37 (Bombay) Held that a Claims Tribunal is not a court and applications under section 110 (Motor Vehicles Act) are not suits governed by statutory provisions applicable to civil courts. The Court cited this authority (as relied upon in Urmila Datta) to reinforce that Claims Tribunal proceedings are not governed by the institutional formalities of suits under the CPC, supporting the view that s110-A proceedings are independent of suit-based procedural bars.
Oriental Fire & General Insurance Co. Ltd. v. Union of India, AIR 1991 Patna 250 Involved a suit by an unregistered partnership firm to enforce liability under an insurance contract; held such a suit would be barred by section 69(2) of the Partnership Act because it was enforcement of contractual liability by an unregistered firm. The Court distinguished this case: the litigation in Oriental Fire was enforcement of contractual liability under an insurance policy (a contract), so section 69(2) applied; by contrast, the present petition under s110-A did not enforce contractual rights and therefore Oriental Fire did not apply.
Surinder Mahajan v. National Project Construction Corporation Ltd., 1990 (2) Sim LC 182 Addressed whether applications under the Arbitration Act (section 8(2) and section 13(b)) made by an unregistered partnership firm fell within "other proceeding to enforce a right arising from a contract" in s69(3) of the Partnership Act; court held such arbitration-related applications were caught by s69. The Court considered and distinguished this authority: Surinder Mahajan held that arbitration proceedings to enforce contractual rights fell within s69(3) and hence were barred for unregistered firms. The Court found that the facts and nature of s110-A proceedings differ, and thus Surinder Mahajan was not determinative of the present case.

Court's Reasoning and Analysis

The Court began by analysing the text of section 69 of the Partnership Act and the nature of proceedings under the Motor Vehicles Act (particularly sections 110, 110-A, 110-B and 110-F as discussed in the opinion). The Tribunal had held that the petition was a suit enforcing a contractual right and therefore barred by section 69 because the petitioner was an unregistered firm. The Court examined whether that conclusion was legally correct.

First, the Court relied on prior authority (State of Assam v. Urmila Datta and Khairunnissa A.K. Saddiki) to establish that applications under section 110-A are not "suits" within the meaning of section 80 of the Civil Procedure Code and that Claims Tribunals operate under a special statutory scheme in which only certain provisions of the CPC apply. That reasoning supported the proposition that the procedural concept of a "suit" (as used in statutes like the Partnership Act) may not directly apply to Claims Tribunal proceedings.

The respondents' counsel urged that, even if a section 110-A petition is not a suit, sub-section (3) of section 69 brings "other proceedings to enforce a right arising from a contract" within the ambit of sub-section (2), and therefore the rule in section 69(2) would nonetheless bar the petition. The Court examined the authorities relied upon by respondents (Oriental Fire and Surinder Mahajan) and analysed their ratios.

The Court scrutinised the jurisdiction and object of the Motor Vehicles Act's Claims Tribunal provisions. It explained that the Claims Tribunal is empowered to adjudicate compensation claims arising out of accidents involving motor vehicles — for death, bodily injury, or damage to third-party property — and to award compensation against the insurer, owner and driver and others responsible for negligence. The Court observed that the statutory language (section 110(1)) is broad and that the statutory scheme is designed to provide a speedy and inexpensive remedy to victims of motor accidents.

Crucially, the Court posed and answered the question whether proceedings under section 110-A are "for the enforcement of a right arising from a contract." It concluded that a petition under section 110-A seeking compensation for damage to goods in an accident is a statutory remedy and not an enforcement of contractual rights arising from a contract for carriage. Thus, the petitioner-appellant was asserting a right under the Motor Vehicles Act — independent of any contract between the parties — and not enforcing contractual obligations.

Because the right to compensation under section 110-A did not arise out of a contract, sub-section (2) of section 69 of the Partnership Act did not apply. Having so concluded, the Court held that the Tribunal's finding that the petition was barred by section 69(2) was erroneous and required reversal.

The Court therefore allowed the appeal, set aside the Tribunal's finding on maintainability, and confirmed that the petitioner-appellant was entitled to the previously found compensation amount of Rs. 3,100. The Court added interest at 6% per annum from the date of the petition (6.6.1984) until payment and directed the respondents to pay/deposit the amount within thirty days.

Holding and Implications

Holding: The Court ALLOWED the appeal and held that the petition filed under section 110-A of the Motor Vehicles Act by the petitioner-appellant (an unregistered partnership firm) was competent because the right to claim compensation under section 110-A does not arise out of a contract and therefore is not barred by section 69(2) of the Indian Partnership Act.

Direct consequences for the parties (as ordered by the Court):

  • The petitioner-appellant is entitled to compensation of Rs. 3,100/-.
  • Respondent Nos. 1 to 3 are jointly and severally liable to pay the amount.
  • The petitioner-appellant is entitled to interest at the rate of 6% per annum on the awarded amount from 6.6.1984 (the date of the petition) until payment or deposit.
  • The respondents are directed to pay or deposit the amount within thirty days from the date of the judgment.

Broader implications (as expressed or necessarily arising from the opinion): The decision clarifies (for the facts of this case) that claims for compensation under section 110-A of the Motor Vehicles Act are statutory claims independent of contractual rights, and therefore an unregistered partnership firm pursuing such a statutory claim is not barred by section 69(2) of the Partnership Act. The opinion distinguishes prior authorities where unregistered firms sought to enforce contractual rights (or to initiate arbitration to enforce contractual rights), making clear that those authorities do not control where the remedy is statutory and not contractual.

The opinion did not state that it was laying down a broader binding precedent beyond the legal conclusions applied to these facts; it primarily set aside the Tribunal's maintainability ruling and directed payment of the awarded compensation with interest.

Disposition: Appeal allowed; Tribunal's find­ing that petition was barred by section 69(2) Partnership Act set aside; compensation Rs. 3,100 plus interest awarded and payable within thirty days.

Show full summary ...

    Chamunda Spun Pipe Industry v. Ishwar Dass And Others

    R.L Khurana, J.:— The admitted facts of the present case are that on 29.3.1984 at about 4.00 p.m truck No. HPM 1411 belonging to respondent No. 1 and being driven by respondent No. 2 while proceeding from Nerchowk to Kangu, had turned turtle at a place in between Harabagh and Jarol. In the said accident, one Indru had died, while Prabhu Ram, Nek Ram and Ram Dass had sustained bodily injuries. The truck at the relevant time was loaded with cement pipes and collars belonging to the petitioner-appellant. Such pipes and collars were also damaged in the said accident.

    2. The appellant-petitioner filed a petition under section 110-A of the Motor Vehicles Act, 1939, corresponding to section 166, Motor Vehicles Act, 1988, (hereinafter referred to as ‘the Act’), claiming compensation for damage caused to his goods, namely, cement pipes and collars. The respondents while resisting the claim petition denied rash and negligent driving on the part of respondent No. 2. It was averred that the brakes of vehicle have suddenly failed. The respondent No. 2 in order to avoid any major accident had dashed the vehicle against a hillock. They further denied if the cement pipes or collars were broken in such accident or were damaged in any manner. An objection was further raised to the effect that since the appellant-petitioner was an unregistered partnership firm, the petition was not competent in view of the provisions contained in section 69 of the Indian Partnership Act.

    3. The learned Tribunal upon consideration of the material placed before it during the course of evidence by the parties, came to the conclusion that damage to the extent of Rs. 3,100/- was caused to the goods of the petitioner-appellant, namely, the cement pipes and the collars and that the petitioner-appellant was entitled to compensation/damages to that extent. The claim of the petitioner-appellant was, however, rejected and the petitioner-appellant was non-suited on the ground that being an unregistered partnership firm, the claim petition was had under section 69 of the Partnership Act.

    4. Feeling aggrieved by and being dissatisfied with the award dated 20.9.1985 of the learned Tribunal, the petitioner-appellant has come up in appeal before this court assailing the findings of the learned Tribunal, inter alia, on the ground that the petition for compensation was maintainable and that the provisions of section 69, Indian Partnership Act were not applicable.

    5. Section 69 of the Partnership Act reads:

    “Effect of non-registration.—(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.

    (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.

    (3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect:

    (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm; or

    (b) the powers of an official assignee, receiver or court under the Presidency Towns Insolvency Act, 1909 (3 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner.

    (4) This section shall not apply:

    (a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which, by notification under section 56, this Chapter does not apply, or

    (b) to any suit or claim or set-off not exceeding one hundred rupees in value which, in the Presidency towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882 (15 of 1882), or, outside the Presidency towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or other proceeding incidental or arising from any such suit or claim.”

    6. The learned Tribunal has come to the conclusion that the petition filed by the petitioner-appellant seeking compensation for the damage caused to his goods being a suit for enforcement of a right arising from a contract could not have been filed, since, the petitioner-appellant is an unregistered partnership firm.

    7. It is the admitted case of the parties that the petitioner-appellant is an unregistered partnership firm.

    8. In State of Assam v. Urmila Datta, 1974 ACJ 414, (Assam & Nagaland), a question arose, whether a petition under section 110-A of the Act is a suit and the provisions of section 80, Code of Civil Procedure are applicable. It was held as under:

    “…The question, therefore, that falls for determination is whether the compensation application can be said to be a suit within the meaning of section 80 of the Civil Procedure Code. We may here look into section 4 of the Civil Procedure Code and examine whether the Civil Procedure Code is at all applicable to claims under sections 110 to 110-F of the Act. We find that under section 110-C, only certain provisions of the Civil Procedure Code have been made applicable to a proceeding before a Claims Tribunal. Where any special law or a particular procedure is provided, the provisions of the Civil Procedure Code are to that extent excluded and as we have already stated, section 80 of the Civil Procedure Code primarily deals with institution of a suit. We are fortified in taking this view by the decision of Khairunnissa A.K Saddiki v. Municipal Corporation, Bombay, 1966 ACJ 37 (Bombay), where their lordships have held that a Claims Tribunal is not a court and that applications under section 110 for compensation before such Claims Tribunal are not suits and that the proceedings before these Tribunals are not governed by the statutory provisions applicable to civil courts. We are of the opinion that section 80 of the Civil Procedure Code is not attracted to an application made under section 110-A of the Act, since such application is not a plaint on the presentation of which a suit can be held to have been instituted.”

    9. The learned counsel for the respondents has contended that even if it be assumed that a petition under section 110-A of the Act is not a suit, rigour of sub-section (2) of section 69, Partnership Act, would apply, in view of the provisions contained in sub-section (3) of the said section, which provides that the provisions of sub-section (1) and sub-section (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract. In support of his contention, the learned counsel has placed reliance on Oriental Fire & Genl. Ins. Co. Ltd. v. Union of India, AIR 1991 Patna 250 and Surinder Mahajan v. National Project Construction Corporation Ltd., 1990 (2) Sim LC 182.

    10. The ratio laid down in the cases relied upon by the learned counsel for the respondents, has no application to the facts of the present case. In the case of Oriental Fire & Genl. Ins. Co. Ltd. v. Union of India, AIR 1991 Patna 250, a suit was filed by an unregistered partnership firm against the insurance company for the enforcement of the liability of the insurance company arising out of an insurance policy in respect of a motor vehicle belonging to the firm. It was held that since the liability was being enforced under the contract by an unregistered partnership firm the suit would be barred by virtue of section 69(2) of the Partnership Act for want of registration of the partnership firm.

    11. In Surinder Mahajan's case, 1990 (2) Sim LC 182, the court was dealing with the question whether the application made under section 8(2) and 13(b) of the Arbitration Act for reference of the dispute to the Arbitrator made by an unregistered partnership firm would be hit by the provisions of section 69(2) and (3) of the Partnership Act. It was held that the application under section 8(2) of the Arbitration Act falls within the ambit of the words “other proceeding to enforce a right arising from a contract” appearing in sub-section (3) of section 69, Partnership Act, and, therefore, the provisions of sub-section (2) of the said Act would be attracted and an application by an unregistered partnership firm for appointment of an Arbitrator under section 8 of the Arbitration Act would not be maintainable.

    12. Assuming that the proceedings under section 110-A of the Act are ‘other proceeding’ within the meaning of sub-section (3) of section 69 of Partnership Act, the question which would thus arise is whether such proceedings are for the enforcement of a right arising from a contract, so as to attract the rigour of sub-section (2) of the said section.

    13. The Claims Tribunal constituted under the Act is empowered to adjudicate upon all claims for compensation in respect of accident involving the death of or bodily injury to any person or involving damages to the property of a third party, where the accident arises out of the use of a motor vehicle. In awarding compensation in respect of such an accident, the Claims Tribunal is empowered to award compensation not only against the insurer and the owner and driver of the motor vehicle, but also against those on account of whose negligence the accident may have been caused. The words “in respect of accident…arising out of the use of the motor vehicle…” occurring in section 110(1) of the Act are words of the widest possible amplitude. It cannot be disputed that where the death of or bodily injury is caused to the claimant or damages caused to his property in an accident arising out of the use of the motor vehicle, and, as a result of the negligence of the owner or the driver of the motor vehicle as well as of a third party, the claim so far as the owner or insurer or driver of the motor vehicle are concerned would lie before the Claims Tribunal under the Act in terms of section 110. The jurisdiction in respect of such cases has been expressly barred by virtue of section 110-F of the Act.

    14. A bare reading of section 110-B of the Act would make it clear that the claim referred to in section 110 can have reference only to the claim against the owner or the driver of the motor vehicle concerned or insurer, as the case may be. The object of the Act is to provide for a speedy and cheap remedy to the person suffering injuries/damages in accidents arising out of the use of motor vehicles.

    15. By virtue of the petition made by the petitioner-appellant, under section 110-A of the Act, petitioner-appellant was not enforcing any right arising out of a contract. The petitioner-appellant was enforcing his right to claim compensation for the damages caused to his goods in the accident arising out of the use of the motor vehicle as a result of the rash and negligent driving on the part of respondent No. 2. Such a right was independent of any contract for carriage of goods between the petitioner-appellant and respondent No. I, owner of the truck.

    16. Since the right to claim compensation under section 110-A of the Act did not arise out of a contract between the parties, the provisions of sub-section (2) of section 69 of the Partnership Act would have no application to the facts of the present case. The petition filed by the petitioner-appellant was, therefore, competent. The findings of the learned Tribunal holding such a petition not to be competent and barred by section 69(2) of the Partnership Act, are, therefore, wrong and liable to be set aside. As a result, the present appeal is allowed. The findings of the learned Tribunal holding the petition to be had by virtue of section 69(2) of the Partnership Act are set aside, and, it is held that the petitioner-appellant is entitled to compensation of Rs. 3,100/- which the respondent Nos. 1 to 3 are liable to pay jointly and severally. The petitioner-appellant is also entitled to interest at the rate of 6 per cent per annum on the amount so awarded with effect from the date of the petition, that is 6.6.1984 till the date of payment/deposit of the amount. The respondents to pay/deposit the amount within thirty days from today.

    17. Appeal allowed.

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    Comments

    Chamunda Spun Pipe Industry v. Ishwar Dass And Others
    (Apr 25, 1996)