T. R. Krishnan v. T. V. Ramaswami and Rajam Venkateswaran

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.BHAVADASAN** ## **FRIDAY, THE 11TH DAY OF JULY 2014/20TH ASHADHA, 1936** ## **RSA.No. 111 of 2013 ()** **----------------------AS 103/2010 of ADDITIONAL DISTRICT COURT (ADHOC)-I, THRISSUR IN OS 90/2004 of I ADDL.SUB COURT, THRISSUR** **---------** ## **APPELLANT/APPELLANT/1ST DEFENDANT :** **-------------------------------------------------------------** **T.R.KRISHNAN, AGED 74 YEARS, S/O.S.V.V.RAMASWAMI IYER, XXV/73, PUTHAN NADAKKAVU ROUND SOUTH, THRISSUR VILLAGE AND TALUK.** **BY ADVS.SRI.T.K.VIPINDAS SMT.P.K.PRIYA SRI.K.V.SREE VINAYAKAN SRI.K.M.MUHAMMED HUSSAIN** ## **RESPONDENTS/RESPONDENT/PLAINTIFF & 2ND DEFENDANTS :** **------------------------------------------------------------------------------------------** ## **1. T.V. RAMASWAMI** **S/O.LATE T.R.VENKITESWARAN, PUTHAN NADAKKAVU, ROUND SOUTH, THRISSUR VILLAGE AND TALUK** ## **2. RAJAM VENKETESWARAN** **W/O.LATE T.R.VENKETESWARAN, PUTHAN NADAKKAVU ROUND SOUTH, THRISSUR VILLAGE AND TALUK.** **R1 BY ADVS. SRI.SAJU.S.A(CAVEATOR) SMT.MEENA.A.** **THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 11-07-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **BP** ## **P. BHAVADASAN, J.** - - - - - - - - - - - - - - - - - - - - - - R.S.A. No. 111 of 2013 - - - - - - - - - - - - - - - - - - - - - - Dated this the 11[th] day of July, 2014. ## **JUDGMENT** A short question of law arises for consideration in this appeal. It relates to the applicability of Section 69 of the Partnership Act to the facts of this case. The contention raised is that there is no evidence to show that the partnership in relation to which the suit is laid is a registered one, in which case the suit is incompetent. 2. The facts absolutely necessary for the disposal of this appeal are as follows: This appeal arises from O.S. 90 of 2004 before the Additional Sub Court, Thrissur. The plaintiff is the son and second defendant is the wife of late T.R. Venkiteswaran. The first defendant is the younger brother of the said Venkiteswaran. Plaintiff's father and the first defendant formed a partnership in the name and style 'S.V.V. Ramaswami RSA.111/2013. 2 Iyyer & Sons, Thrissur' It was a partnership at Will. The firm was reconstituted in the year 1984. The firm was engaged in the business of hardwares, cement, paints etc. It is claimed that the business was being conducted in the plaint schedule property which belonged to the father of the first defendant Sri.T.R.Venkiteswaran. As per the partition deed, item No.1 in the schedule was set apart to the share of Sri.T.R.Venkiteswaran and item No.2 was set apart to the share of the first defendant. Even after partition, the business continued in the same premises. As per the terms and conditions, the plaintiff and his father had 25% shares each in the firm and the first defendant held 50% shares. The plaintiff's father died on 11.12.2001. After the death of the father, the firm has not been reconstituted. As per the Will executed by the plaintiff's father, his rights and interest in the firm have been devolved upon his wife who is the second defendant herein. The second defendant executed a power of RSA.111/2013. 3 attorney in favour of the plaintiff and authorised him to manage the affairs of the firm. It is alleged in the plaint that the first defendant being the Managing Partner of the firm has the duty to maintain proper accounts. After the death of the father of the plaintiff, the affairs of the firm were badly affected and the first defendant alienated the properties of the firm without the consent of other partners. The first defendant went to the extent of filing an injunction suit seeking to restrain the plaintiff from entering into the firm premises. On 24.6.2003 it is claimed that the plaintiff sent a notice to the first defendant seeking dissolution of the firm and rendition of accounts. A reply was caused to be sent containing false allegations. Therefore the suit was laid seeking a declaration that the firm stood dissolved and for settlement of accounts of the firm. 3. The first defendant resisted the suit. He denied that the firm was reconstituted on 7.1.1984. According to RSA.111/2013. 4 him, the firm stood dissolved even prior to the death of T.R.Venkiteswaran and accounts were settled during his lifetime as per the partition entered into between the parties. He disputed that the plaintiff had any manner of right over the property of the firm. There was no subsisting firm and the plaintiff had no subsisting interest in the firm. He also disputed the rights of the plaintiff for rendition the accounts and receive the shares. On the basis of these contentions, he prayed for a dismissal of the suit. 4. O.S. 90 of 2004 was tried along with O.S. 904 of 2004, facts of which are not very relevant for the present purpose. On the basis of the pleadings, issues were raised and parties went to trial. The evidence consists of the testimony of P.Ws.1 to 3 and documents marked as Exts.A1 to A13 from the side of the plaintiff. The defendants examined D.Ws.1 and 2 and Ext.X1 is the third party exhibit. RSA.111/2013. 5 5. Both the courts below found that the allegation in the plaint that the firm was a registered one was not disputed even though no evidence regarding the registration of the firm was produced by the plaintiff as it was found immaterial. It is also found that in view of Section 69(3) of the Indian Partnership Act since the suit is one for dissolution of the firm, the embargo contained in Section 69 regarding registration will not apply and that the suit is not bad on that count. Accordingly, the suit was decreed. The first defendant carried the matter in appeal and the lower appellate court confirmed the findings of the trial court and dismissed the appeal. Hence this second appeal. 6. At the time of admission, the following substantial questions of law were raised for consideration: “(i) Did not the courts below go wrong in ignoring the fact that the firm stood dissolved even prior to the death of the plaintiff's father? RSA.111/2013. 6 (ii) Without the consent of the existing partners, can a new partner be inducted in the partnership in the absence of a specific provision in the partnership Deed? (iii) When the validity of the Will itself is in dispute in a pending suit regarding the same, are the courts below right in acting upon that Will allegedly executed by the plaintiff's father?” When the matter was taken up for hearing, the only ground addressed was regarding the absence of evidence of registration and the maintainability of the suit. Learned counsel appearing for the appellant pointed out that Ext.A8 notice dated 20.3.2003 which is prior in point of time did not contain the demand for dissolution and therefore that cannot be treated as a document evidencing prayer for dissolution even though the plaintiffs claimed that Ext.A2 notice dated 24.6.2003 was issued in which dissolution was sought for. There is nothing to show that the said notice has been delivered on the first defendant and no receipt or RSA.111/2013. 7 acknowledgment was produced by the plaintiffs in that regard. If that be so, unless it is shown that the partnership is a registered one, a suit for dissolution and other reliefs will not lie. 7. Learned counsel appearing for the respondents contended that apart from the fact that the specific averment in the plaint was that the firm is a registered one is not denied, the fact also remains that in view of Section 69 of the Indian Contract Act the mere fact that partnership is not a registered one will not make the suit incompetent. Both the courts below found that the specific averment in the plaint in O.S.90 of 2004 was that the firm is a registered one has not been denied specifically by the first defendant. Both the courts below were of the opinion that in view of the non-denial of the said averment, it was unnecessary to adduce evidence in that regard. Even assuming that the firm is an unregistered one, it cannot help the appellant. True, both the RSA.111/2013. 8 courts below have come to the conclusion that Ext.A2 registered notice having been properly addressed and posted in accordance with law is deemed to have been received by the first plaintiff. Even assuming that there is want of evidence in that regard, Section 69 of the Indian Contract Act saves the plaintiffs in this regard. Section 69 reads as follows: “69. 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 first is registered and the person suing is or has been shown in the Register of Firms as partners 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 first is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. RSA.111/2013. 9 (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 the 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, or the Provincial Insolvency Act, 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,- (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 RSA.111/2013. 10 notification under section 56, this Chapter does not apply, or (b) to any suit or claim of 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, or outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.” Attention may be focused on Section 69(3)(a). The said provision exempts a non-registered firm from the embargo under Section 69 when the suit is one for dissolution of the firm. Authority if any required is furnished by the decision reported in Prabhu S. Jaiswal v. Sheo N. Jaiswal ((1996) 11 SCC 225) wherein it was held as follows: “5. Under S.69(1), a suit, inter alia, to enforce a right arising from a contract cannot be filed by a person RSA.111/2013. 11 suing as a partner in a firm against the other partners of the firm unless the firm is registered. Under Sub-s.(3) any other proceeding to enforce a right arising from a contract by a person suing as a partner against the other partners of an unregistered firm is also barred. Since the right to resort to arbitration flows from the contract between the parties contained in the partnership deed, a suit or any other proceeding by a partner to enforce this term in the contract against the other partners would, therefore, normally be barred under the first part of Sub-s.(3) of S.69. ..... Sub-s (3, in its later part, however carves out certain exceptions to the bar contained in sub-s. (1), (2) and the first part of Sub-s.(3). 6. Under Sub-s.(3)(a) this bar will not affect 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. Therefore, although the partnership firm may be unregistered, one partner can sue other partners for dissolution of the firm and for accounts. The words “to sue” used in Sub-s.(3)(a) cannot be construed narrowly to refer only to suits for dissolution of partnership and accounts. The exception contained in Sub-s.(3)(a) applies not merely to proceedings other than suits. RSA.111/2013. 12 Therefore, in order that Sub-s.(3)(a) would apply to all these provisions, the words “to sue” in Sub-s.(3)(a) must be understood as applying to any proceedings for dissolution of partnership or for accounts of a dissolved firm or to realise the property of a dissolved firm. This proceeding may be either by way of a suit or it can even be a proceeding under the Arbitration Act to secure these rights through arbitration. .... Therefore, an arbitration clause in a partnership deed of an unregistered partnership can be enforced for the purpose of securing, inter alia, a dissolution and accounts of the partnership or for enforcing any right or power for obtaining the property of a dissolved firm.” Even assuming that Ext.A2 notice has not been received by the first defendant, even assuming that denial of an allegation in the plaint to the effect that firm is a registered one is not made by the defendant, assuming that is not sufficient to hold that the firm is a registered one, still in the light of Section 69 (3), the contention based on Section 69(1) regarding the non-maintainability of the suit because there is no evidence RSA.111/2013. 13 that the firm is a registered one, cannot stand and it has necessarily to be turned down. For the above reasons, it is held that this appeal is without merits and it is dismissed. There will be no order as to costs. P. BHAVADASAN, JUDGE sb.