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

Stodart, J.—The appeal is by the plaintiff. The plaintiff is a firm and the suit was against a debtor of the firm to recover money due on

dealings. The suit was filed on 12th October, 1933, that is, it was presented into Court on that day and it was admitted to the file on 20th

November, 1933. The Partnership Act IX of 1932 came into force on 1st October, 1932, except Section 69 which came into force according to

Section 1(3) of the Act on 1st October, 1933. And the question for decision in this suit is whether, having regard to the provisions of Section 69

the suit is maintainable. Section 69(2) is:

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.''

This suit was instituted after 1st October, 1933, and the trial Court and the Court of first appeal have both held that it is not maintainable,

because the plaintiff firm was not registered on 12th October, 1933.

Another point that arises in the suit is this. The plaintiff did actually get itself registered on 15th January, 1934; and it is contended that the lower

Courts were wrong in not holding that the suit could be treated as valid as from that date.

Two arguments have been put forward on appeal. The first is that the right to bring a suit without being registered as a firm to recover this debt

was a right which had vested before the passing of Act ''IX of 1932, and so is not affected by the provisions of that Act. That is the argument

founded on general principle, and it is also contended that Section 74 of the Act confirms this principle.

The second argument relates to the further point which I have just mentioned, namely, that the lower Courts should have treated the suit as valid

as from the date when the firm became registered.

The relevant words of Section 74 are as follows:

Nothing in this Act shall affect or be deemed to affect-Co) any right, title, interest, obligation or liability already acquired, accrued or incurred

before the commencement of this Act, or

(a) any legal proceeding or remedy in respect of any such right.

Before examining the principal argument in the appeal which is briefly that Section 74 merely enunciates the general principle that new

enactments cannot retrospectively affect vested rights unless by express provision in the enactments themselves, I would observe that the legal

proceedings indicated in Section 74(&) have been interpreted in some decisions to mean proceedings pending at the commencement of the Act,

and it is argued as a preliminary point that that interpretation is not correct. With all respect to the learned Judges who decided those cases,

namely, Surendranath De v. Manohar De I.L.R.(1934) 62 Cal. 312 and Firm Krishen Lal v. Abdul Ghafur AIR 1935 Lah. 893 I must say that I

find myself in agreement with the learned Government pleader who appears for the appellants on this point. There appears to be no reason why, if

the legislature intended to confine the operation of Section 74 only to suits and proceedings which were pending at the time of the commencement

of the Act, they should not have said so in express terms. One finds such provisions in other enactments. On the main point, however, namely, that

Section 69 either by the general law or by reason of the operation of Section 74 has no retrospective effect, I find myself unable to agree with the

learned Counsel for the appellant. The argument, as I have said is that the firm, prior to the passing of the Act had the right to sue for debt without

being registered, that right was a vested right which cannot be taken away by the Act, and therefore since the cause of action accrued before the

Act the plaintiff firm can bring exactly the same kind of suit as it could before the Act, that is, without first getting itself registered under Ch. VII of

the Act. In my opinion the only right which is affected by Section 69 is a processual right. , Before the Act the firm had acquired rights under its

contract with defendant. Those rights are not affected or impaired by the passing of the Act. Before the Act the firm could have brought a suit

against the defendant to enforce that contract. The right to bring a suit is not impaired by the passing of the Act. So far as I can see the only

difference is that prior to bringing the suit the plaintiff firm must now do a certain act, namely, get itself registered in the office of the Registrar of

firms, and I think that is a processual matter. Therefore though the general principle relied upon by the learned Government Pleader cannot be

gainsaid, and while it cannot be denied that it applies to protect all vested rights from the retrospective effect of new enactments, this, in my

opinion, is the exception, namely, when the right relates to procedure in which the litigant has not got a vested right. I cannot, however, omit to set

out the argument in its strongest form which has now been put forward on behalf of the appellant, namely, that the right indicated in Section 74(a) is

a right of action, and if Section 69 can be construed as affecting the right of action which the plaintiff firm had before the Act that section is nullified

by Section 74. I have given that argument my careful consideration and I feel that the right of action in this case is not affected, as such, by Section

The plaintiff firm has still got that right, the same right as it had before the Act was passed. What has been altered is the mode in which the firm

can enforce that right. Formerly, it had only to file a suit into Court. Now before filing a suit the firm has to get itself registered, and that, as I have

said is a matter of alteration in procedure which the law is perfectly competent to effect. This is the view of the section taken in the Allahabad High

Court in Danmal Parshotamdas v. Baburam Chhotelal I.L.R.(1935) 58 All. 495 .

My attention has been drawn to several decisions in India which the general principle has been affirmed. The first of these is G. Lee Morris,

Esquire v. Sambamurthi Rayar (1871) 6 M.H.C.R. 122. That Sahib was a case where the landlord sued to recover arrears of rent. The suit was

instituted in April, 1869, and included arrears which were due for 1865-66, before the passing of Act VIII of 1865. The new Act governed the

relations between landlord and tenant at the time of the suit, and according to Section 7 of that Act no suit to enforce the terms of a tenancy could

be maintained unless pattas and muchilikas had been exchanged. The defendant in the Madras High Court Reports suit contended that so far as

rent due for 1865-1866 was concerned the suit was unsustainable, since patta and muchilika had not been exchanged. The fact however was that

at the time when the arrears accrued, the Act had not come into force, and it was not necessary in order to enforce the recovery of those arrears

that patta and muchilika should have been exchanged; and it was held in that case that Section 7 of the Act had no retrospective effect.

The exchange of patta and muchilika of course had nothing to do with the procedure by which the law was put into motion. The procedure was,

as everybody knows, by instituting a suit in the Court of the Collector. The right to recover arrears even though no patta and muchilika had been

exchanged was a vested right prior to the passing of the Act. Another important case cited in this connection was Promatha Nath Pal Chowdhuri

v. Mohini Mohan Pal Chowdhuri I.L.R.(1920) 47 Cal. 1108. That case arose out of a difference between Section 66 of the present CPC and the

corresponding Section 317 of the Code of 1882. The latter barred a suit by the real owner against the benamidar purchaser at Court auction of

property sold under a decree, but not against the purchaser''s assignees. The new Section 66 barred suit by the real owner against any person

claiming title by virtue of the Court auction-purchase. The suit related to a court auction-purchase which was confirmed on 30th July, 1906, but in

which the sale certificate was not taken out till 24th April, 1909. The suit was filed after 1909 when the present CPC had come into force. It was

held that the rights of the parties were governed by Section 317 of the old Act, in other words, Section 66 of the new Act could not operate to

take away the right which had been vested Sahib before the commencement of that Act. In this case, therefore the vested right was a substantive

right. The new Code took it away absolutely. It was not a case where the new Code merely effected an alteration in the mode of enforcing that

right.

In the case of The Attorney-General v. Sillem and Ors. (1864) 10 H 704: 11 E.R. 1200 the principal point for decision was whether the

Barons of the Court of Exchequer had the delegated power u/s 26 of 22 and 23 Victoria, Ch. XXI, to extend certain provisions of the Common

Law Procedure Act, 1854, to the revenue side of the Court of Exchequer. One of the results of such extension was to create a right of appeal to

the Court of Exchequer Chamber from the verdict of the Court of Exchequer. The point was decided in the negative. It was held that the Barons

had no such power under the aforesaid section of 22 and 23 Victoria, Ch. XXI. But two of the learned Lords who decided that case held the

opposite view, and proceeded to consider the further point whether this alteration in the law could affect pending actions. That point was very

pertinent to the case, because, the respondents had obtained a verdict in the Court of Exchequer before the Barons of the Exchequer made the

rule aforesaid and claimed that the new rule could not operate retrospectively so as to give appellant the right of appeal. Concerning the question

whether the new rules affected pending actions Lord Wensleydale said (page 762 of the report):

A question has been presented to our attention, which must be now considered. Was it competent for the Judges of the Exchequer to alter the law

as to then pending proceedings, and to enact provisions at the time...so as to affect the verdict, which the claimant then had, which was subject

only to the then existing law, and make it subject to another mode of enquiry? I was much impressed with this objection at first, and was for a time

strongly inclined to think that it was well-founded, and that the new rules, though operative as to all future suits, were not operative in this. But

further argument, and a full consideration of this question, have satisfied me that this objection is not well-founded.

Page 763--

...I think that if it were an alteration in the mode of proceeding only, to the prejudice of the claimants, the objection would not prevail. It is clear

that there is a material difference when an Act of Parliament is dealing with a right of action already vested not intended to be taken away; and

when it is dealing with mere procedure to recover those rights, which it may be quite reasonable to regulate and alter.�

Page 764--

I may add that in the case already cited Surendranath De v. Manohar De ILR (1934) 62 Cal. 213 it is held that Section 69 is operative not to

affect an existing right, but merely to make an alteration of procedure to enforce that right. Though as I have said I do not find myself in agreement

with the construction of Section 74 adopted by the learned Judges in that case, their interpretation of Section 69 is in my view, if I may say so with

respect, a correct one. The same conclusion has been reached in recent cases of this Court. The case at Parinchu v. Ravi Varma (1936) 45 L.W.

276 is one instance.

I now come to the second argument which has been raised in the appeal and that is, that although the suit may have been bad at the time of the

institution, the Courts below should have held that it was good from the date when the firm got itself registered. In support of this argument the case

reported as Ramakrishna Nadar and Another Vs. Ponnayya Thirumalai Vandaya Thevar and Others, is cited. That was a case where the plaintiff,

having applied to be allowed to sue as a pauper and his application having been refused subsequently instituted a suit in the ordinary manner. But

he did so without first paying the costs of the pauper petition to the defendant. The suit was accordingly dismissed, though prior to the dismissal of

the suit he had deposited the costs in question. It was held by this Court on the appeal of the plaintiff that the Court below need not have dismissed

the suit altogether, that it was unnecessary to go through the formality of a dismissal and re-institution the next moment after payment of the costs of

the pauper application. The words of Order 33, Rule 15 are:

The applicant shall be at liberty to institute, a suit in the ordinary Sahib manner provided that he first pays the costs, etc.

And these words in my opinion have the same effect as Aiyar. Section 69(2) of the Partnership Act, which is that no suit to enforce a right shall

be instituted unless the firm is registered. Order 33, Rule 15 might read ''no suit shall be instituted by the applicant unless the costs of the pauper

petition are first paid.'' On the analogy, therefore, of this decision in Ramakrishna Nadar and Another Vs. Ponnayya Thirumalai Vandaya Thevar

and Others, it is contended by the learned Government Pleader that the appellant''s suit should not have been dismissed but should have been

regarded as instituted on the date when the firm was registered which was 15th January, 1934; and in support of this argument it is pointed out that

the defendant in the suit was not aggrieved by the delay or default in getting the firm registered, because he raised no objection to the progress of

the suit while the trial was going on, but only at the stage of argument did he disclose the fact to the Court that the suit had been filed at a time when

the firm was not registered. In my opinion,, the circumstances of this case are different from those in Ramakrishna Nadar and Another Vs.

Ponnayya Thirumalai Vandaya Thevar and Others, . The circumstances of the two cases would be similar if in the present case the plaintiff firm had

come to Court on 15th January, 1934, and asked to be allowed to withdraw his suit on the ground that it was incompetent alid to file another

immediately. It was not until a year later that the Court in the present case was informed that the suit as filed was incompetent. The defendant in the

ordinary course must be taken to have assumed when the suit was filed that the plaintiff firm was a registered firm and that it was registered under

the style and title found in the plaint. But, when in March, 1935, after the trial was over, the defendant discovered that the suit firm had not been

registered at the time of the plaint, then only was he in a position to ascertain the real identity of the plaintiff by consulting the certificate of

Registration. I do not say that he was actually prejudiced in the present case; but certainly cases can be imagined in which the certificate of

registration might disclose some change in the nature of the firm which would support a possible defence against the claim. On the whole, therefore,

I am inclined to interpret Section 69 strictly and to hold that the suit instituted contrary to its provisions is bad and cannot be subsequently validated

by compliance with those provisions. In the result this second appeal is dismissed with costs.

Leave to appeal is requested and it is granted.