A.P.M. Syed Ibrahim Sahib and brother vs V.S. Gurulinga Aiyar

Alfred Henry Lionel Leach, C.J.—The question which arises in this appeal is whether Section 74 of the Indian Partnership Act, 1932, which

saves rights and remedies which existed before the Act came into force, should be read as being subordinate to Section 69(2), which requires a

firm to be registered before instituting a suit to enforce rights, or whether Section 74 should prevail. The facts are simple. The appellant firm filed a

suit in the Court of the District Munsif of Vellore claiming from the respondent a sum of Rs. 846-13-2 with interest. The respondent was in the

employ of the appellant firm and was given charge of a branch office. It was said that he had overdrawn his account to the extent of the amount

claimed. The defence was that the respondent was entitled to a share in the profits of the firm and that if the profits were taken into account there

was no indebtedness. The firm had not been registered under the provisions of Section 58 of the Partnership Act when the suit was filed, but

during its pendency registration was effected. When the respondent discovered that the appellant firm had not been registered before the institution

of the suit he applied for leave to amend his written statement and include a plea that the suit could not be maintained by reason of the non-

compliance with the Act. The amendment was allowed and an additional issue was framed. The District Munsif found that the respondent was

indebted to the appellant firm in the amount claimed, but refused to grant a decree on the ground that the firm had not been registered before the

plaint was filed. The suit was accordingly dismissed. The appellant firm appealed to the Subordinate Judge of Vellore, who concurred in the

decision of the District Munsif. The appellant firm then appealed to this Court. The appeal was heard by Stodart, J., who also accepted the

contention of the respondent that the suit was bad on account of the failure to register the firm before the suit was launched. The learned Judge,

however, granted a certificate under Clause 15 of the Letters Patent and the question now comes before this Court for decision.

Section 69(2) of the Partnership Act states that no suit to enforce a right arising from a contract shall be instituted in any 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. Section 74, however, states that nothing in the Act or any repeal effected thereby shall affect or be deemed to affect inter alia:

(a) any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or (b) any legal

proceeding or remedy in respect of any such right, title, interest, obligation or liability or anything done or suffered before the commencement of

this Act.

The question now under discussion arose in the case of S. Girdharilal Son and Co. Vs. B. Kappini Gowder and Others, , which came in the first

instance before Pandrang Row and Venkataramana Row, J J. Pandrang Row, J., having in mind the fundamental principle that existing rights are

not to be taken away except by an express enactment or by an enactment which clearly expresses this intention, held that Section 69(2) does not

prevail over Section 74 and that a suit filed by a firm to enforce rights which had accrued before the commencement of the Act could be

maintained in spite of the non-registration of the firm. On the other hand Venkataramana Rao, J., considered that Section 69(2) must prevail and

was apparently of the opinion that Section 74 was merely inserted in order to save a suit which was pending at the time the Act came into force.

As the result of the disagreement the case was re-argued before Varadachariar, J., who agreed with Pandrang Row, J.

The opinion of Pandrang Row, J. and Varadachariar, J., is supported by the decision of Sulaiman, C.J., in Danmal Parshotamdas v. Baburam

Chhotelal I.L.R.(1935) 58 All. 495 the decision of the Bombay High Court in Revappa Nandappa Hattarki Vs. Babu Sidappa Erandole, and the

decision of the Rangoon High Court in In re Sooniram Ramniranjandass v. Junjilal (1938) Rang. L.R. 371 In his judgment in Revappa Nandappa

Hattarki Vs. Babu Sidappa Erandole, , Beaumont, C.J., referred to S. Girdharilal Son and Co. Vs. B. Kappini Gowder and Others, and

concurred in the judgment of Sulaiman, C.J., in the Allahabad case. In the last mentioned case Bennet, J., was not in agreement with Sulaiman, C.

J. He preferred the decision of the Calcutta High Court in Surendranath De v. Manohar De I.L.R.(1934) 62 Cal. 213, where it was held that

Section 69(2) would apply to suits for enforcement of claims which accrued before the commencement of the Act, if such suits were started after

Section 69(2) had come into operation. The Calcutta High Court laid great stress on the provision in the Act that Section 69(2) should not come

into operation until twelve months after the rest of the Act had come'' into force. The Calcutta decision has been followed by the Patna High Court

in Shazad Khan v. Darbar Babu Kuchhi I.L.R.(1936)15 Pat. 810 and by the Lahore High Court in Krishan Lal Ram Lal v. Abdul Ghafur Khan

I.L.R.(1935) 17 lah. 275, but the judgments in those cases do not carry the matter any further. The majority decision of this Court in S. Girdharilal

Son and Co. Vs. B. Kappini Gowder and Others, is binding on us and the matter could be left there, but as it has been suggested that we should

refer the question to a Full Bench I will set out our reasons for agreeing with it.

There is no ambiguity in the wording of Section 74. It says definitely that nothing in the Act shall affect or be deemed to affect any right, title,

interest, obligation or liability acquired or accrued before the commencement of the Act and that the Act shall not affect any legal proceeding in

respect of any such right, title, interest, obligation or liability or any thing done or suffered before the commencement of the Act. Therefore the

rights and remedies which accrued before the commencement of the Act are left entirely untouched. Before the Act came into force there was no-

register and a firm therefore had the right to file a suit without any formalities other than those required by the Code of, Civil Procedure and the

Stamp Act. In the Calcutta case Surendranath De v. Manohar De I.L.R.(1934) 62 Cal. 213, it was suggested that the words ""before the

commencement of this Act"" should be read in conjunction with the words ""any legal proceeding or remedy"", but in our opinion to do this would be

doing violence to the wording of the section. The section is a saving section and if effect is to be given to the words used Section 69(2) cannot

apply in a case like the one before us.

After we had indicated our opinion on the question of law the learned Advocate for the respondent suggested that we should send the case

back to the Subordinate Judge for his finding on the issue as to the amount due to the appellant firm. This suggestion cannot be accepted. The

District Munsif''s findings of fact were not challenged before the Subordinate Judge. The appeal was confined to the question of law, and the

respondent must therefore be deemed to have accepted the findings of the District Munsif. The Subordinate Judge has stated in his judgment that

the respondent did not seem to have any real case on the merits and had not attacked the findings of the District Munsif. It is now too late to do so.

The District Munsif has found that the appellant firm was entitled to a sum of Rs. 846-13-2 with interest at 9 per cent, per annum from the 7th

March, 1934. Therefore there will be a decree in favour of the appellant firm for this amount with interest at the agreed rate from the date just

mentioned to the date of the judgment of the District Munsif, namely, 27th March, 1935, with further interest at the Court rate on the decretal

amount from that date until payment or realisation. The appellant firm will also be entitled to costs throughout on the principal amount.