K.K.A. Ponnuchami Goundar v. Muthusami Goundar

1. Section 69(2) of the Partnership Act states that no suit to enforce a right arising from a contract shall be instituted in a Court by or on behalf of a firm against a 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. The question which arises in this petition is whether the registration of a firm after it has filed a suit can cure the defect.

2. In this case an unregistered partnership instituted a Small Cause suit in the Court of the District Munsif of Palni. It had applied for registration before filing the plaint, but the application had not been granted. In fact it was not granted until over a month had elapsed after the filing of the plaint. In these circumstances the District Munsif dismissed the suit with costs. The reported cases disclose a difference of opinion, but the majority of the judgments are to the effect that subsequent registration of the firm does not entitle the Court to proceed with the suit and that the only course open to it is to dismiss it.

3. The question has been considered on different occasions by four Judges of this Court, namely, by Menon, J., in Subramania Mudaliar v. The East Asiatic Co., Ltd. (1936) 71 M.L.J. 663, Stodart, J., in Firm of Syed Ibrahim Sahib v. Gurulinga Aiyar (1937) 2 M.L.J. 717, Horwill, J., in Varadarajulu Naidu and Kuppuswami Naidu & Co. v. Rajamanicka Mudaliar (1937) 2 M.L.J. 273 and Venkataramana Rao, J., in Girdharilal Son & Co. v. Kappini Gowder (1938) 2 M.L.J. 44. Menon, Stodart and Venkataramana Rao, JJ., formed the opinion that subsequent registration did not remedy the defect. On the other hand Horwill, J., held that it did. Menon, Stodart and Venkataramana Rao, JJ., considered that the wording of the section compelled the Court to dismiss a suit filed by an unregistered firm. Venkataramana Rao, J., in addition to relying on the wording of the section drew attention to the fact that the Privy Council in Bhagchand Dagadusa v. Secretary of State for India in Council (1927) S3 M L.J. 81 : L.R. 54 I.A. 338 : I.L.R. 51 Bom. 725 (P.C), had pointed out that Section 80 of the Civil Procedure Code, is explicit and mandatory. Section 80, Civil Procedure Code, has very much in common with Section 69 of the Partnership Act. It says that no suit shall be instituted against the Secretary of State for India in Council, or against a public officer for an act purporting to be done by him in his official capacity, until the expiration of two months next after notice in writing has been given. The Privy Council also observed that Section 80 imposes a statutory and unqualified obligation upon the Court, and Section 69 (2) of the Partnership Act does the same. Venkataramana Rao, J., relied further on the decisions of this Court with regard to Section 28 (2) of the Provincial Insolvency Act. That section prevents a suit being filed against an insolvent without the leave of the Insolvency Court, and in Ghouse Khan v. Bala Subba Rowther (1927) 53 M.L.J. 412: I.L.R. 51 Mad. 833 and Davood Mohideen Rowther v. Sahabdeen Sahib (1937) 2 M.L.J. 223 : I.L.R. (1937) Mad. 841, this Court held that a subsequent leave would not cure the initial defect and validate the institution of a suit.

4. In expressing the contrary opinion Horwill, J., in Varadarajulu Naidu & Kuppuswami Naidu & Co. v. Rajamanicka Mudaliar (1937) 2 M.L.J. 273 observed:

It is a well-established principle that the Court can take notice of events that happen subsequent to the filing of the suit and that any irregularities or deficiencies in the cause of action that may exist on the date of the filing of the plaint can be overlooked if on some date subsequent to the filing of the plaint and before the suit comes up for trial those irregularities or deficiencies arc rectified by the plaintiff or by process of law.

Whatever may be the principle which applies to the rectification of irregularities and deficiencies in the cause of action we are of the opinion that it cannot be applied here.

5. The conclusion of Horwill, J., that subsequent registration will put the suit on a proper basis receives support, however, from the judgment of the Calcutta High Court in Radhacharan Saha v. Motilal Saha (1937) 41 C.W.N. 534 and that of the Nagpur High Court in Jakiruddin Badruddin v. Vithoba Jagannath Gadali A.I.R. 1939 Nag 301. These cases were decided by Judges sitting alone. In the Calcutta case it was said that when registration had been effected the suit might be treated as though the plaint had been received and the suit instituted on the day following the day of registration. The Patna High Court expressed dissent from this opinion in Firm Laduram Sagarmal v. Jamuna Prasad Chaudhuri (1938) I.L.R. 18 Pat. 114, where Harries, C.J., observed that he knew of no provision of law which permits a Court to treat the plaint as having been filed, on a date subsequent to the date upon which it was actually filed, and we know of no such provision. It has been pointed out to us that a Bench of this Court expressed the opinion in Ramakrishna Nadar v. Ponnayya Tirumalai Vandaya Thevar (1935) 69 M.L.J. 791, that a defect in a suit filed under the provisions of Order 33, Rule 15 of the Civil Procedure Code could be remedied after the suit had been instituted and that in such circumstances it should be treated as having been instituted on that date. Order 33, Rule 15 states that an order refusing to allow a person to sue as a pauper shall be a bar to a subsequent application of a like nature by him in respect of the same cause of action, but he shall be at liberty to institute a suit in the ordinary manner provided he first pays the costs incurred by Government and by the opposite party opposing his application for leave to sue as a pauper. The wording of Order 33, Rule 15 is not the same as the wording of Section 69 (2) of the Partnership Act. Order 33, Rule 15 gives liberty to institute a suit in certain circumstances. Section 69 (2) says that no suit shall be instituted in certain circumstances which is more emphatic, and the circumstances are very different. Therefore we do not regard Ramakrishna Nadar v. Ponnayya Tirumalai Vandaya Thevar (1935) 69 M.L.J. 791, as having application here.

6. The Allahabad High Court in Danmal Parshotamdas v. Baburam Chhotelal (1935) I.L.R. 58 All. 495, the Patna High Court in Firm Laduram Sagarmal v. Jamuna Prasad Chaudhuri (1938) I.L.R. 18 Pat. 114, the Lahore High Court in Krishanlal Ramlal v. Abdul Ghafur Khan (1935) I.L.R. 17 Lah. 275, and Chhaganlal v. Firm Mangal Sainraj Narain A.I.R 1938 Lah. 767, have all held that subsequent registration of the firm will not allow the suit to proceed. All these cases except the second Lahore case were decided by Division Benches.

7. The great weight of authority is in favour of the opinion that registration will not put the suit on a proper basis and that the Court's duty is to dismiss it. We consider that the majority opinion is correct. A suit is instituted when the plaint is filed in a Court of competent jurisdiction. Section 69 says that a suit by a firm shall not be instituted until the firm has been registered. The registration of the firm is a condition precedent to the right to institute the suit and the Court has no jurisdiction to proceed with the trial when the condition precedent has not been fulfilled.

8. For the reasons given we consider that the District Munsif acted lawfully in dismissing the suit. It follows that the petition must be dismissed with costs.