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Case Number

Civil Revn. Petn. No. 510, of 1935

Judges

Horwill, J.

Acts

ORDER 33 RULE 15 A CIVIL PROCEDURE CODE
Section 69(2) of the Partnership Act,
Order 33, Rule 15

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Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

The petitioners, partners in a firm, instituted S.C.S. No. 719 of 1933 in the Court of the Subordinate Judge of Chingleput on 30th October, 1933 seeking Rs. 509-12-4 due from the respondents. At the time of filing the plaint (30th October, 1933) the partnership was unregistered. This omission escaped notice initially of both the Court office and the defendants. The plaintiffs rectified the deficiency by registering the firm in July, 1934. The defendants had filed a written statement on 15th December, 1933 without raising the registration objection. The suit was posted for hearing on 20th December, 1934. On 19th December, 1934 the defendants sought leave to raise a preliminary objection that, under Section 69(2) of the Partnership Act, no suit could be instituted by an unregistered firm, and that the suit should therefore be dismissed. The Subordinate Judge upheld that objection and dismissed the suit. The petitioners challenge that dismissal, seeking a declaration that the suit should be deemed to have been properly instituted on the date of the partnership's registration.

Legal Issues Presented

Whether a plaint lodged by a partnership before registration (in breach of Section 69(2) of the Partnership Act) can be treated as valid from the date the partnership is subsequently registered (i.e., whether the Court can deem the suit to have been instituted on the date of registration).
Whether the mere fact of subsequent registration transforms an invalid plaint filed before registration into a valid plaint without further formal amendment or refiling.
Whether this Court should intervene in revision to set aside the dismissal by the Subordinate Judge, or whether the lower Court's discretion should be left undisturbed.

Arguments of the Parties

Petitioners' Arguments

The petitioners did not argue that the suit was originally properly instituted on 30th October, 1933. Instead they contended that once the firm was registered in July, 1934, the suit should be deemed to have been properly instituted as of the date of registration.

Respondents' / Defendant's Arguments

Argued by Mr. T.M. Krishnaswami Aiyar for the respondents: the plaint filed on 30th October, 1933 was not a plaint at all because Section 69(2) requires that a firm must be registered and the partners shown in the register before instituting a suit to enforce a contract. Registration in July, 1934 did not transform an invalid plaint into a valid one; consequently there was at no time any valid institution of the suit.
The defendants applied, on 19th December, 1934, to raise a preliminary objection to maintainability under Section 69(2), contending the suit should be dismissed because it had been instituted before registration.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Doraisami Pillai v. Chinnia Goundan (1917) 34 M.L.J. 258	That courts can recognise acts done subsequent to filing of pleadings which perfect or cure deficiencies in a plaintiff's title (plaintiff perfected title after seeing written statement).	The Court relied on this case to support the general proposition that events subsequent to filing which cure defects may be recognised so as to avoid dismissing a suit where substantial justice can be done.
Subbaraya Chetty v. Nachiar Ammal (1917) 7 L.W. 403	A cause of action that matures after the filing of a suit but before hearing may render a premature suit maintainable when the cause of action comes into existence.	Used to illustrate that where the cause of action materialises before trial, dismissal is unnecessary and the suit may be dealt with on the basis that the cause of action existed when tried.
Appalasuri v. Kannamma Nayuralu (1925) 49 M.L.J. 479	Where an event after filing strengthened the plaintiff's title, courts may allow amendment of the plaint to set forth the additional cause of action; principle to avoid multiplicity of proceedings.	Cited to show courts' inclination to avoid dismissals and multiplicity where a subsequent event cures a defect; supported the propriety of permitting continuation after registration.
C.R.P. No. 1489 of 1935	An example where an illegal transfer by an insolvent was recognised because the adjudication was subsequently annulled (an event after filing affecting the validity of earlier acts).	Referred to as further illustration of recognising subsequent events which alter the legal position and justify treating the matter differently than at the date of filing.
Ramakrishna Nadar v. Ponnayya Thirumalai Vandaya Thevar (1935) 69 M.L.J. 791	Analogy: where a condition precedent (payment of costs to sue as a pauper) was fulfilled after an initial order, the court held the suit could be treated as instituted on the date of fulfilment rather than dismissed and re-instituted.	The Court relied on this decision by analogy to hold that once the registration (the condition precedent under Section 69(2)) was fulfilled before trial, the suit could be treated as instituted on the date of registration.
Subramania Mudaliar v. The East Asiatic Co., Ltd. (1936) 71 M.L.J. 663	A similar factual situation where the plaintiff's amendment application was dismissed; Menon, J. did not interfere in revision in that case.	The Court distinguished that case on the ground that an amendment application there had been dismissed. The present Court did not read Menon, J.'s decision as deciding that allowing a suit to continue after cure of a defect would be wrong.

Court's Reasoning and Analysis

The Court began with the text of Section 69(2) of the Partnership Act: "No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm 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 Court accepted the respondents' logical submission that, at the moment the plaint was filed (30th October, 1933), the plaint was invalid because the firm was unregistered and therefore no valid suit existed at that time.

Nevertheless, the Court considered established principles that courts may recognise events occurring subsequent to the filing of a suit which cure initial irregularities or deficiencies, provided those events occur before the matter comes on for trial. The Court reviewed authorities (Doraisami Pillai, Subbaraya Chetty, Appalasuri and the C.R.P. example) to demonstrate this established practice: plaintiffs in those cases perfected or acquired the necessary title or the cause of action matured after filing but before trial, and courts allowed the suits to proceed or permitted amendments to avoid multiplicity of proceedings and to do substantial justice.

The Court acknowledged a distinguishing feature of Section 69(2): it embodies a public policy penalty against unregistered partnerships. Nevertheless, once the partnership was registered (in July, 1934) the legislative condition was fulfilled. On analogy with Order 33, Rule 15 of the Civil Procedure Code and the decision in Ramakrishna Nadar v. Ponnayya Thirumalai Vandaya Thevar, where a condition precedent (payment of costs for a pauper suit) fulfilled after an initial refusal resulted in the suit being treated as instituted on the date of fulfilment, the Court found persuasive analogy for treating a plaint as valid from the date of registration.

The Court considered Subramania Mudaliar, where an amendment application was dismissed and Menon, J. did not intervene, but concluded that that decision did not establish that allowing the suit to continue after registration would be wrong. The present case differed in that the court office had failed to detect the omission at the outset, the defendants had not raised the defect in their written statement, and they waited more than a year after filing the written statement before raising the objection. The Court found it inequitable to force the plaintiffs to have the suit dismissed and to require refiling with fresh court-fee when the defect had been cured before trial.

Balancing the public policy embodied in Section 69(2) against equitable considerations and the objective of avoiding multiplicity of proceedings, the Court concluded that the interests of justice required permitting the suit to proceed and treating it as instituted on the date of registration.

Holding and Implications

Holding: The petition is allowed; the suit is remanded for fresh disposal and the suit will be deemed to have been instituted on the date of the registration.

Implications and direct consequences:

The dismissal by the Subordinate Judge for want of registration is set aside (the petition is allowed and the suit remanded for fresh disposal on the footing that the plaint is valid from the registration date).
There will be no order as to costs in this Court. The costs in the lower Court will abide the result of the suit (i.e., the lower Court's costs will be determined in the course of the remanded proceedings).
The Court's direction treats the suit as instituted on the date of registration; it does not purport to validate the plaint retroactively as of the original filing date (the Court expressly states that no suit was maintainable before registration and that the plaintiffs' request is only that the plaint be treated as valid from the date of registration).

The opinion does not discuss broader doctrinal changes or assert that a new binding precedent is being laid down; it resolves the matter on the facts of the case and by analogy with prior authorities and equitable considerations.

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T. Varadarajulu Naidu And Others v. R. Rajamanika Mudaliar And Others

1. The petitioners (partners in a firm) brought S.C.S. No. 719 of 1933 in the Court of the Subordinate Judge of Chingleput for the sum of Rs. 509-12-4, due to them by the respondents debtors. They brought their suit on 30th October, 1933, when the firm was unregistered. This apparently escaped the notice of the office of the Subordinate Judge and also of the defendants. This deficiency was however rectified by the plaintiffs in July, 1934. The defendants filed their written statement on 15th December, 1933, making no reference to the fact that the suit had been instituted without registration of the partnership. The suit was posted for hearing on 20th December, 1934, more than a year after the filing of the written statement; and on the previous day, that is, on the 19th December, 1934, the defendants applied to be allowed to raise a preliminary objection to the maintainability of the suit. They contended that the suit having been filed before the partnership was registered under Section 69(2) of the Partnership Act, no suit could be instituted and that the suit not having been properly instituted should be dismissed. The learned Subordinate Judge upheld this objection and dismissed the suit. The petitioners have brought this petition, contending not that the suit was properly instituted, but that it should be deemed to have been properly instituted on the date that the partnership was registered.

2. Section 69(2) of the Partnership Act runs thus:

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. This means, as rightly contended by Mr. T.M. Krishnaswami Aiyar for the respondent, that on the 30th October, 1933, the plaint filed in Court was not a plaint at all and no valid suit was pending before the Subordinate Judge; and that even after the registration in July, 1934, nothing was done to the plaint by the plaintiffs to transform it from an invalid plaint into a valid one. His argument therefore is that the plaint continued as before to be an invalid one and that the mere fact of registration did not amount to an institution of the suit; so that at no time was there any valid institution of the suit. One cannot deny that this argument is logically correct; but the question is rather whether the Court, in order to do substantial justice to the parties without violating the principles of the Partnership Act, cannot deem the suit to have been instituted on the date of registration. It is 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 are rectified by the plaintiff or by process of law. In Doraisami Pillai v. Chinnia Goundan (1917) 34 M.L.J. 258 the plaintiff, when he saw the written statement, became aware of the deficiencies in his title and perfected it by obtaining a conveyance from the next reversioner; and this act of the plaintiff was recognised by the Court. In Subbaraya Chetty v. Nachiar Ammal (1917.) 7 L.W. 403 a mortgage suit was premature, because on a proper interpretation of the bond it was seen that the money was not due. The date of maturity was some date after the filing of the suit and that date was prior to the hearing of the suit. It was held that the suit should not have been dismissed because when the suit came on for trial the cause of action came into being. In C.R.P. No. 1489 of 1935, an illegal transfer by an insolvent was recognised by the Court, because of the fact that the adjudication was subsequently annulled. In Appalasuri v. Kannamma Nayuralu (1925) 49 M.L.J. 479 a certain event happened after the filing of the suit which strengthened the plaintiff's title. He was allowed to amend the plaint, setting forth the additional cause of action. There, the principle governing the action of Courts in these matters was said to be that multiplicity of proceedings should be avoided. In all these cases, as in the present case, if the Courts had applied the wording of the statutes literally they would have dealt with the plaints as they existed when the suits were filed and proceeded to dispose of the suits on the pleadings raised. The plaintiff would then have been entitled immediately to have brought a fresh suit on the new cause of action. Courts are naturally reluctant to dismiss a suit and cause loss to the plaintiff when the plaintiff has a cause of action for a similar suit which he could file at once.

4. I agree with Mr. Krishnaswami Aiyar that the case of the plaintiffs is not as strong as in the cases just quoted; for Section 69(2) of the Partnership Act embodies a principle of public policy intended to penalise partnerships which do not register. However, when the registration has been carried out the requirements of the legislature are fulfilled and there is no reason in equity why from the moment of registration a suit previously filed should not be allowed to go on. This suit is not of course one in which the subsequent act of registration validates the plaint from the date of its being filed; for no suit was maintainable before the date of registration. The most that, the plaintiff can ask for is that his plaint should be treated as a valid one from the date of registration. A very similar case was considered by a Bench of this Court in Ramakrishna Nadar v. Ponnayya Thirumalai Vandaya Thevar (1935) 69 M.L.J. 791. There a person applied for leave to sue in forma pauperis, and his petition was dismissed. Under Order 33, Rule 15, Civil Procedure Code, a pauper is allowed to file a suit if he has paid the costs of the Government and of the respondents awarded in his application to sue in forma pauperis. The actual wording of the section is:

An order refusing to allow the applicant to sue as a pauper shall be a bar to any subsequent application of the like nature by him in respect of the same right to sue; but the applicant shall be at liberty to institute a suit in the ordinary manner in respect of such right, provided that he first pays the costs (if any) incurred by the Government and by the opposite party in opposing his application for leave to sue as a pauper.

5. The wording of this section makes it quite clear that the paying of costs of the Government and the opposite party is a condition precedent to the institution of the suit, just as it is in Section 69(2) of the Partnership Act. Varadachariar and Pandrang Row, JJ., in Ramakrishna Nadar v. Ponnayya Thirumalai Vandaya Thevar (1935) 69 M.L.J. 791 distinguished certain Allahabad decisions as instances where the condition had never been fulfilled from the case before them where the condition was fulfilled after the institution of the suit. The learned Judges then say:

We do not think the Court below need have dismissed the suit altogether. It is unnecessary to go through the formality of a dismissal and a re-institution the next moment after payment of the costs ordered in O.P. No. 8 of 1931. We think it will be sufficient to say that the suit must be treated as one instituted on the 2nd of March, 1932 (the date of fulfilment of the condition) and dealt with on that basis.

6. The case that came before Menon, J., Subramania Mudaliar v. The East Asiatic Co., Ltd. (1936) 71 M.L.J. 663 was very similar to the present one except that in that case the plaintiff had applied to the Court for an amendment of the plaint, which application was dismissed; and it was because of that difference from the present case and from Ramakrishna Nadar v. Ponnayya Thirumalai Vandaya Thevar (1935) 69 M.L.J. 791 that the learned Judge refused to interfere in revision. It would therefore appear that Menon, J., was not inclined to interfere in a matter of this kind in revision. I do not think that he intended to go further and to hold that if the Court had allowed the suit to continue--if the cause of action was not barred by limitation on the date of registration--it would have been wrong. If he did, I would respectfully dissent. I see no difference in the effect of the words quoted above in Order 33, Rule 15 and the material words in Section 69(2) of the Partnership Act. The difference in the actual words used in the two sections was necessary because in Order 33, Rule 15, the legislature wished to point out that the dismissal of an application to sue in forma pauperis did not preclude the applicant from instituting a suit upon payment of court-fee. The section had therefore to be so framed as to bring out the fact that the applicant was at liberty to bring a suit provided that the condition of previously paying the costs of the Government and the other party was fulfilled. There was no need to frame Section 69(2) of the Partnership Act in that way. The right of a partnership to sue was assumed; but the legislature wished to deprive a partnership which had not been registered of that right. Hence the form of the words:

No suit to enforce a right shall be instituted.

7. I therefore hold, on the analogy of Ramakrishna Nadar v. Ponnayya Thirumalai Vandaya Thevar (1935) 69 M.L.J. 791 that the Court should have permitted the plaintiffs to go on with their suit.

8. The question still remains whether this Court should interfere in revision or, as Menon, J., did in Subramania Mudaliar v. The East Asiatic Co., Ltd. (1936) 71 M.L.J. 663 should refuse to interfere with the discretion of the Court. In deciding this point I have been influenced by the fact that if the office of the Subordinate Judge had done its duty properly this difficulty would never have arisen. When a suit is filed by a partnership, it is the duty of the office to see that the plaint is a proper one and that the suit is maintainable. It is for that reason that if the facts set out show that the suit is premature or that no suit lies, the plaintiff is called upon in the ordinary course to point out how the suit is maintainable. If the office had been alert, it certainly would have called upon the plaintiffs to state whether the partnership had been registered and if so when. If that had been done, the plaint would have been returned, the firm would have been registered, and a fresh plaint (which would have been the old plaint with the fact of registration and the date added) presented. The defendants did not raise any objection in their written statement or until a year had elapsed after the filing of the written statement. I therefore think it would be most inequitable for the plaintiffs to have their suit dismissed and be forced to file another after paying fresh court-fee. The duty of the Court is to administer, justice according to the principles of equity and good conscience and it cannot be said to do this when it dismisses a suit because the formality of withdrawing a plaint and filing a fresh one in the same terms was not complied with. I am satisfied therefore that the interests of justice require that this petition should be allowed and the suit remanded for fresh disposal. It is ordered accordingly. The suit will be deemed to have been instituted on the date of the registration. Under the circumstances of the case there will be no order as to costs in this Court. The costs in the lower Court will of course abide the result of the suit.

T. Varadarajulu Naidu And Others v. R. Rajamanika Mudaliar And Others

Structured Summary of the Provided Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments

Respondents' / Defendant's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

T. Varadarajulu Naidu And Others v. R. Rajamanika Mudaliar And Others

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