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Concise Analytical Summary of the Opinion (J.N. Bhat, J.)

Factual and Procedural Background

The plaintiffs, Badrimal Ramcharan and Company, sued for sums said to be due (the plaint refers to various figures culminating in a net balance claimed in the plaint). The plaintiffs alleged that they were a registered firm carrying on business at Jammu with a branch styled Messrs Devicharan Omparkash, Devicharan being one of the partners. The defendants (including defendant No. 1, a joint Hindu family firm) had dealings with the plaintiffs' branch Messrs Devicharan Omparkash between the dates shown in the plaint; the plaintiffs claimed an outstanding balance plus interest.

At trial the defendants raised, among other pleas, that the suit was not maintainable because the plaintiffs' firm was not registered in accordance with law. The trial court framed twelve issues, ultimately deciding issues 1 and 4 against the plaintiffs and concluding on the evidence that dealings had been with Messrs Devicharan Omparkash and that Badrimal Ramcharan and Company had not supplied goods to the defendants; therefore the suit should have been instituted by Messrs Devicharan Omparkash and was misconceived and not maintainable. The trial court dismissed the suit. This appeal challenges that dismissal.

Legal Issues Presented

  1. Whether the suit had been instituted by a firm properly registered under the Partnership Act, such that a suit on behalf of the firm was maintainable.

Arguments of the Parties

Appellant's Arguments

  • The real firm was Badrimal Ramcharan and Company; Devicharan Omparkash and Sriram Silk & Cotton Mills were branches of that original firm, not separate firms.
  • Dealings of the defendants with Devicharan Omparkash should be treated as dealings with the parent firm Badrimal Ramcharan because Devicharan Omparkash was a branch.
  • The appellant relied on a sequence of partnership deeds: an initial firm commencement date was asserted, a partnership deed dated 1-3-1955 was relied on (the firm registered with the Registrar of Firms), and a fresh deed dated 1-3-1961 purportedly stated that the partnership would be carried on under the name Badrimal Ramcharan with branches styled Messrs Devicharan Omparkash.
  • On this basis the appellant contended the trial court was wrong to hold that the suit should have been brought by Messrs Devicharan Omparkash alone.

Respondents' Arguments

  • Messrs Devicharan Omparkash was a separate entity that maintained separate books of account, carried on a different business from Badrimal Ramcharan, and had different sign-boards.
  • The defendants' transactions were entered in Devicharan Omparkash's own books; notices and bills were sent and prepared in the name of Devicharan Omparkash; payments by the defendants were credited to Devicharan Omparkash's account.
  • The only reason the suit appeared in the name of Badrimal Ramcharan was that Messrs Devicharan Omparkash was not registered under the Partnership Act; because Devicharan Omparkash was not registered the plaintiffs sued in the name of Badrimal Ramcharan, which the respondents said rendered the suit not maintainable.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
AIR 1956 Punj 24 (Division Bench) Held that to institute a suit a partnership firm must not only be registered, but all persons who are partners in the firm at the time of institution of the suit must be or have been shown as such in the Register of Firms (interpretation of Section 69(2)). The court relied on and adopted this determination to interpret Section 69(2) and to support the conclusion that all partners must be shown in the register for a suit by the firm to be maintainable.
AIR 1964 Punj 270 (Division Bench) Re-affirmed the view that "the persons suing" in Section 69(2) means the partners in the firm and emphasized the plural implies all partners must be shown in the Register of Firms. The court adopted and endorsed the reasoning in this authority to reinforce the requirement that all partners be shown in the register when a firm institutes suit.
AIR 1922 Sind 13 Held that if a partner retires and a new partner joins, the newly constituted firm is different from the old firm and cannot institute a suit on a contract entered into by the original firm unless the new firm took over liabilities and outstandings by arrangement. The court cited this authority as relevant to the legal consequences of a change in firm constitution for the capacity to sue on pre-existing contractual rights.
AIR 1955 Trav Co. 155 Held that not only must the firm be registered but the person suing must be shown as a partner in the firm; non-compliance with this condition means Section 69(2) is not satisfied. The court applied this principle to conclude that absence of the requisite registration entries prevents maintenance of the suit by or on behalf of the firm.

Court's Reasoning and Analysis

The court proceeded by first noting that the facts were supported by evidence taken at trial. Relevant factual findings from witnesses included admissions that:

  • Badrimal Ramcharan & Company and Messrs Devicharan Omparkash operated as separate firms, carrying on different businesses (cloth versus ghee/sugar/flour) and maintaining separate books of account and sign-boards (P.W. Devidatta Mal and P.W. Kundan Lal).
  • The plaintiff Devicharan (as a witness) stated that profits of Devicharan Omparkash were added to the account of Badrimal Ramcharan and distributed, but also admitted that notices, bills and challans were sent and prepared in the name of Devicharan Omparkash and payments were credited to Devicharan Omparkash's accounts.

The court then turned to the statutory framework under the Partnership Act. It set out the information required to be furnished to the Registrar under Section 58 (including firm name, principal place of business, other places of business, the date when each partner joined, names and addresses of partners, and duration). The court noted the Registrar's duties under Sections 59, 61, 62 and 63 to record statements, branches, alterations and changes in constitution. Most centrally, the court recited Section 69(1) and Section 69(2), which bar suits to enforce contractual rights by or on behalf of a firm or by a firm against third parties unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.

Factually, the court observed that a partner, Suraj Parkash (spelled Sural / Suraj in the record), was inducted in the partnership as of 1-3-1961 but that no intimation of his addition was given to the Registrar. It was also conceded that the firm registered with the Registrar was the one created by the partnership deed dated 1-3-1955; the 1961 change was not communicated.

Applying Section 69(2) and the authorities cited, the court reasoned that when a suit is instituted in the name of a firm it is a suit on behalf of all partners and therefore "the persons suing" contemplated by Section 69(2) must be all the partners; they must be shown in the Register of Firms. The court accepted the line of authority from the Punjab High Court and other decisions which interpret Section 69(2) to require that all partners at the time of institution be shown as such in the register, and that a defect in this respect is a bar to the institution of the suit that cannot be cured pendente lite.

Given the undisputed failure to notify the Registrar of the addition of the partner in 1961 and the factual findings that the transactions and notices were in the name of Devicharan Omparkash (which was not registered as a firm with the Registrar), the court concluded that the suit had not been instituted by a legally registered firm in the sense required by Section 69(2) and related provisions.

Holding and Implications

APPEAL DISMISSED.

Direct effect on the parties:

  • The trial court's dismissal of the plaintiffs' suit was affirmed; the suit was held not maintainable because it was not instituted by a firm properly registered in accordance with the Partnership Act and with the partners shown in the Register of Firms as required by Section 69.
  • The appeal fails and is dismissed without any order as to costs (as recorded in the judgment).

Broader implications: The opinion applies and adopts existing authority interpreting Section 69 of the Partnership Act; it does not purport to create a new precedent but reaffirms the principle that all partners at the time of institution must be shown in the Register of Firms for a firm to maintain a suit.

    M/S. Badrimal Ramcharan And Co. v. M/S. Gana Kaul And Sons And Others

    J.N Bhat, J.:— This is an appeal against the decree of the learned Additional District Judge, Jammu, by means of which he has dismissed the suit of the plaintiffs for Rs. 7467.50 against the respondents. The plaintiffs Badrlmall Ramcharan and Co. claimed that Page: 110they were a registered firm and carried on business at Jammu and had a branch styled as Messrs Devicharan Omparkash. Devicharan being one of the partners in the said firm. The defendant No. 1 a joint Hindu family firm had dealings with the plaintiffs branch Devicharan Omparkash from 27-5-2015 to 25-8-2016. The net balance outstanding against the defendants was Rs. 6,159/9/- and adding interest at the rate of Rs. -/8/- per cent per annum, to this amount, the net balance against the defendants was Rs. 7,167/8/- which they claimed against the defendants by means of this suit.

    2. Many pleas were raised by the defendants in their written statement and among other pleas the plea that the suit was not maintainable in the present form because the firm of the plaintiffs was not registered in accordance with law, was taken. The trial Court framed as many as 12 issues in this case but ultimately decided issues 1 and 4 against the plaintiffs and came to the conclusion from the oral and documentary evidence adduced in the suit that.

    “the defendants firm had dealing with Devicharan Omparkash and the latter had supplied ATTA to the former vide bills Ex. P. 2 to Ex. P. 5. The plaintiffs firm Badrimal Ramcharan had not supplied any goods to the defendants nor has the defendant's firm purchased goods from the plaintiffs firm. The present suit has been instituted by Badrimal Ramcharan and Company. The suit should have been instituted by the firm Devicharan Omparkash and Company, the present suit of the plaintiffs is misconceived and consequently is not maintainable in the present form.”

    3. Hence the suit was dismissed. In this appeal against this decree of the trial Court, the only point that has to be decided is whether the suit has been instituted by a firm properly registered under the Partnership Act. The learned counsel for the appellants has argued that the firm Badrimal Ramcharan is the real firm. It had its branches called Devicharan Omparkash and Sriram Silk & Cotton Mills. According to the learned counsel Devicharan Omparkash with whom the defendants had dealings is only a branch of the original firm. The suit has been brought in the name of the real firm and therefore the trial Court was wrong in dismissing the suit, holding that the suit should have been by Devicharan Omparkash. In this appeal he has argued that the original firm Badrimall Ramcharan was started on 4th Poh 1992 (Bikarmi) then a fresh partnership deed was executed on 1-3-1955. He has further argued that on 1-3-1961 another partnership deed was written and therein it was stated that the partnership will be carried on under the name and style of Badrimall Ramcharan with its branches styled as Messrs Devicharan Omparkash. The real firm being Badrlk mall Ramcharan the dealings of the defendants with the firm Devicharan Om Parkash should be construed on behalf of the parent firm Badrimall Ram charan. This firm is registered according to the learned counsel for the appellants and therefore the trial Court was wrong in dismissing the suit.

    4. The matter is purely legal and has to be decided in terms of the provisions of the Partnership Act; but before we take up that discussion we shall briefly mention that the findings of the learned trial Judge are based on evidence produced in this case.

    5. One of the witness P.W Devidatta Mal has admitted that Badrimal Ramcharan and Company; and Messrs Devi Charan Om Parkash are two separate firms dealing in separate goods and maintaining different sets of account books. Badrimal Ramcharan tod Company carries on the business of sale of cloth and Devicharan Om Parkash sell Ghee and Sugar. The accounts of these two shops are different and the sign-boards also are different P.W Kundan Lal admits that Devicharan Omparkash is a different shop (firm) from Badrimal Ramcharan, the former carries on the business of flour. The plaintiff Devicharan as his own witness states that the profits of the business of Devi Charan Om Parkash are being added to the account of the firm Messrs Badrimal Ramcharan and the profits are distributed accordingly. In cross-examination this witness says that a notice was sent to the defendants on behalf of Devicharan Om Parkash and not from Badrimall Ramcharan and the bills and challans prepared and supplied to the defendants were also from Devicharan Om Parkash Whatever payments were made by the defendants they were credited in the account of Devi Charan Om Parkash.

    6. The learned counsel for the respondents has argued that Messrs Devi Charan Om Parkash is a separate entity, they have separate account books, they carry on different business from the one carried on by Badrimal Ramcharan the defendants had dealings with Messrs Devicharan Om Prakash, the transactions of the defendants are entered in their books of account, which are separately maintained. The notice for the payment of the sum claimed also was sent to the defendants on behalf Page: 111of Messrs Bevicharan Om Parkash. It is of no consequence so far as this suit is concerned that ultimately Messrs Devi charan Om Parkash submitted their accounts to Messrs Badrimal Ram Charan. It is only that the firm Messrs Devicharan Om Parkash and Company was not registered under the Partnership Act that the suit has been brought in the name of Messrs Badrimall Ramcharan and Company and it has been rightly dismissed.

    7. There is much force in this argument of the learned counsel for the respondents but we refrain from expressing our final opinion on this point of the case but the matter may be examined purely from the legal point of view.

    8. The transactions between the parties were somewhere in fifties. On the argument of the learned Counsel for the appellant himself the partnership deed then in force was that of 1955 entered into between the partners of that firm on 1-3-1955, This partnership deed was renewed on 1-3-1961 by means of a new partnership deed and one more partner Sural Parkash son of Lala Harichand was added to the original five partners constituting the firm Badrimal Ramcharan and Company. The suit was instituted on 30-1-1961 when the new partnership of 1-3-1961 had come into force. Assuming that Badrimal Ramcharan and Company was the real firm, it had changed its constituents in 1961 by introducing a new partner viz., Suraj Parkash. It has been conceded before us by the learned counsel for the appellant that the firm, which was registered with the Registrar of Firms was that which was created by means of Partnership deed dated 1-3-1955. He has further admitted that no intimation of the addition of one more partner i.e Suraj Parkash in 1981 has been given to the Registrar of Firms. Under Section 58 of the Partnership Act the Registrar of Firms has to be supplied with the following information in a prescribed form and accompanied by the prescribed fee. What is to be required to be conveyed to the Registrar is:—

    a/- the firm name.

    b/- the place or principal place of business of the firm,

    c/- the names of any other places where the firm carries on business.

    d/- the date when each partner joined the firm.

    e/- the names in full and permanent addresses of the partners; and

    f/- the duration of the firm.

    9. The statement has to be signed by all the partners of the firm or in their especially authorised agents and it has to be verified which allows that the necessary information to be conveyed to the Registrar is the date when each one of the partners joined the partnership and his full and permanent address. Under Section 59 of the Act on getting the information as required u/s. 58 of the Act the Registrar has to record all entries of the statement in a Register called the Register of firms. Under Section 61 of the Act Intimation of closing or opening of branches has to be given to the Registrar of firms. Under Section 62 when any partner. In any registered firm alters his name or permanent address an intimation of the alteration has to be given to the Registrar. Under Section 63 when any change occurs in the constitution of any firm, any incoming or out going partner has to inform the Registrar by notice of such change. The Registrar has to make a record of the notice in the Register of firms.

    10. In this case Sural Parkash was inducted as a partner in 1961 but it is admitted that he did not send any intimation to the Registrar of his being inducted in the firm as a partner Under Section 69(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.”

    11. Under sub-section (2) of the said section.

    “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.”

    12. Then there are some other clauses which are not relevant for the disposal of this suit.

    13. What is required is that any change in the constitution of the firm has to be intimated to the Registrar of the Firms who has to make consequent changes in his register and secondly under Section 69(2) no suit can be brought on behalf of a firm unless the persons suing have been shown in the Register of Firms as partners in the firm. The present suit is on behalf of the firm under Order 30 of the CPC. It will be deemed to he on behalf of all the partners of the firm may be signed by any one or more of them. But what is obligatory the body of persons as a whole i.e, all the partners of the firm must be shown Page: 112partners in the records of the Registrar, Unless that is so, the suit is not maintainable. This matter has been the subject-matter of discussion in various authorities and only a few of them may be mentioned.

    14. In AIR 1956 Punj 24 a Division Bench of that Court consisting of Chief Justice, Bhandari and Falshaw, J. held that: —

    “In order to institute a suit a partnership firm must not only be a registered firm but also all the persons who are partners in the firm at the time of the institution of the suit must be or have been shown as such in the Register.”

    15. In Paragraph 9 of the Judgment their Lordships have held that:—

    “The question which arises in the present case is whether in order to institute a suit a partnership firm must not only be a registered firm but also all the persons who are partners in the firm at the time of the institution of the suit must be or have been shown as such in the Register. This certainly appears to be the plain meaning of the words in Section 69(2) ‘unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm’. It is difficult to imagine what other meaning the words ‘persons suing’ are capable of bearing in this context.”

    16. Their Lordships further say that:—

    “There is no doubt that in a sense the firm itself is a person but to my mind there can be no doubt that the words ‘persons suing’ here mean persons in the sense of individuals and that the only individuals referred to must in my opinion be the partners in the firm……”

    17. In the end it was observed in Paragraph 10 of the judgment that:—

    “In the circumstances although I hesitate to throw out the two apparently well-founded claims of the plaintiff firm on such a technical ground as this, I feel constrained to hold that the suit at the time of its institution suffered from the defect that one of the partners of the firm who had been a partner for several years, had not at the time of the institution of the suit been shown in the Register of Firms as a partner and in my opinion the same principle which applies to the registration of firm itself must also be held to apply to the individual partners and a defect of this kind, which is a bar to the institution of the suit, cannot be removed ‘Pendente lite’.”

    18. In another authority of the same High Court reported as AIR 1964 Punj 270 a Division Bench of that Court re-affirmed this view, and further in Paragraph 6 of the judgment added that:—

    “The question turns on what Interpretation is to be placed on the words “and the persons suing are or have been shown in the Register of Firms as partners in the firm.” It was, and still is, my view that “the persons suing” must mean the partners in the firm. The use of the plural “persons” is obviously deliberate, since while a singular may also mean the plural, the plural can never mean the singular………………”.

    19. And in the end it was observed that:—

    “……………. Obviously when a suit is instituted in the name of a firm the suit is on behalf of all the partners and not only such of them as are shown in the Register as such, and all the partners must be “the persons suing” contemplated in Section 69(2) of the Act…………………….”

    20. In another authority reported as AIR 1922 Sind 13, it has been held that:—

    “If a partner of a firm retires after the firm has entered into a contract and a new partner joins the firm, the newly constituted firm is different from the old firm and cannot institute a suit on the contract entered into by the latter except when the new firm took over by arrangement all the liabilities and outstandings of the old firm.”

    21. In AIR 1955 Trav Co. 155 it was held that;—

    “It is necessary not only that the firm should be registered, but the person suing must be shown as a partner in the firm, and when it is found that on the date when the plaint is filed the second part of this condition has not been carried out then Section 69(2) is not complied.”

    22. We are in perfect agreement with the view taken by the Punjab High Court which is directly in point here and we adopt the reasoning given in both those judgments.

    23. As the suit has not been instituted by a firm which is legally registered, the suit is not maintainable and has been rightly dismissed.

    24. The appeal therefore fails and is hereby dismissed but without any order as to costs.

    25. S.M.F Ali, C.J:— I agree.

    26. Appeal dismissed.

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    M/S. Badrimal Ramcharan And Co. v. M/S. Gana Kaul And Sons And Others
    (Jan 12, 1971)