Narendra Kumar Saxena vs Paper Traders

K.K. Lahoti, J.

Defendant aggrieved by the judgments and decrees passed by the Courts below by which suit of respondent was decreed, has filed this appeal.

This appeal was admitted on 13-8-1991 on following substantial questions of law :--

"(1) Whether filing of a photo-copy of acknowledgment about registration of a firm issued by the Registrar of Firms and exhibited as P-1 was sufficient compliance of Section 68(2) of the Indian Partnership Act, 1932 ?

(2) Whether in the absence of certified copy of an entry relating to a firm in the Register of Firms, the suit of the respondents was liable to be dismissed as not maintainable ?"

Learned Counsel for the appellant submits that the respondent has filed the present suit on behalf of the Partnership firm. In this regard averment has been made in para 1 of plaint but the appellant has denied this fact. In these circumstances, to prove the factum that the respondent is a registered firm certified copy of an entry relating to a firm in the Register of Firms ought to have produced but the respondent has filed photo-copy of acknowledgment about registration of firm issued by the Registrar of Firms which is not in compliance of Section 68(2) of the Indian Partnership Act, 1932 (hereinafter referred to as ''Partnership Act''). Learned Counsel for the respondent submits that plaintiff firm was a registered firm on the date of filing of suit. Certified copy of acknowledgment about registration of firm has been filed which is according to law and the plaintiff is a partner of the firm. Respondent has duly complied with Section 68(2) of the Partnership Act. In the circumstances, both the Courts below rightly decreed the suit,

Learned Counsel for the respondent also submits that the present suit was filed for recovery of the amount for which defendant issued cheques but the same were dishonoured. In the circumstances, this suit is not a suit to enforce a right arising from a contract. In the circumstances, the suit was maintainable and it was not necessary to file a certificate copy of the entry relating to firm in the Register of Firms. In this regard, she placed reliance to a Division Bench judgment of Kerala High Court in Kerala Arecanut Stores Vs. Ramkishore and Sons and Another, and Single Bench judgment of Delhi High Court in M/s. Virendra Dresses v. Mis. Varinder Garments (AIR 1982 Del 481).

To appreciate the rival contentions of the parties, it is necessary to state the facts of the case. Plaintiff filed present suit for recovery of Rs. 16,450/-and interest at the rate of 12% per annum on the ground that the plaintiff is a partnership firm dealing in paper trade in wholesale having its shop at Gulia Dai Marg, Bhopal. The name of partners has been shown in para 1 of the plaint. The suit was filed through Sawal Prasad Goyanka whose name is appearing in para 1 of the plaint. Defendant is a Proprietor of Rajeshwari Printers and for his paper printing work he was purchasing paper from plaintiff and used to purchase the goods on credit. There was a current account with the plaintiff and defendant has purchased paper of Rs. 75,395/- during 28-12-79 to 18-6-80. Against this defendant has paid Rs. 58,990/- through cheques. But Rs, 16,405/-remained unpaid for which plaintiff requested the defendant but this payment was avoided on one or the other pretext. Ultimately, defendant issued two cheques of Punjab National Bank, T.T. Nagar, Bhopal. Out of two cheques, some amount was paid by the defendant and another cheque was given and it was requested that these two cheques be presented after 3-9-80 and one cheque was presented on 3-9-80 by the plaintiff to its Banker for collecting the amount but it was informed that the defendant has instructed to stop the payment of the cheque. As the defendant had stopped payment of the cheque hence the plaintiff issued a notice on 8-9-80 through his Counsel and has called upon defendant to pay the amount for which the defendant has issued two cheques. But the amount was not paid and the suit was filed against the defendant.

The defendant contested the suit. In the evidence two cheques were filed as Ex. P-28 for Rs. 8,000/- (this was returned back by bank) and another cheque Ex. P-29 for Rs. 8,405/- which was not presented to the bank because the defendant had stopped the payment.

In the evidence, plaintiff has filed photo-copy of acknowledgment of the registration of firm as Ex. P-l. At the time of the evidence of Sawal Prasad (P.W. 1), he brought original certificate which was marked by the Court as Ex. P-1/A and on photo-copy (Ex. P-l). By this way Ex. P-l was proved by bringing original certificate by the plaintiff. In the circumstances, contention of the appellant that such photo-copy cannot be proved without the original has no force.

It is not in dispute that suit filed by unregistered firm to enforce a right arising from a contract is not maintainable. This question has been considered by the Apex Court in M/s. Haldiram Bhujiawala and Another Vs. M/s. Anand Kumar Deepak Kumar and Another, ] and in Shreeram Finance Corporation Vs. Yasin Khan and Others, ) wherein the Apex Court has held :--

"6...... Thus, the persons suing, namely, the current partners as on the date of the suit were not shown as partners in the Register of Firms. The result is that the suit was not maintainable in view of the provisions of Sub-section (2) of Section 69 of the said Partnership Act and the view taken by the Trial Court and confirmed by the High Court in this connection is correct...."

In view of above judgment by the Apex Court a suit filed by unregistered firm is not maintainable to enforce a right arising from the contract.

Now the question arises whether the acknowledgment of a registered firm certificate can be taken into consideration for the compliance of Section 69(2) of Partnership Act. This question was considered in Kapurchand Bhagaji Firm v. Laxman Trimbak (AIR 1952 Nag 57), wherein it is held:--

"(5)..... That fact could be proved only by producing a copy of the entry from the Register of Firms. The Lower Court thus fell into error in relying on the evidence of P.W. 1 and holding that the requirements of Section 69(2) of the Partnership Act were satisfied. The plaintiffs suit should have been dismissed on this ground."

In view of above, fact regarding registration of the firm and the person suing is a partner of firm on the date of filing of suit, can be proved only by the certified copy of the entry relating to the firm in the Register of Firms and not by otherwise. In view of this, the Courts below have erred in accepting Ex. P-l the acknowledgment of registration of firm as proof relating to registration of the firm. Such course is contrary to provision of Section 68(2) of Partnership Act. And it is held that Courts below have erred in arriving at a finding that the plaintiff/respondent has proved that it is a registered firm on the basis of Ex. P-l.

Learned Counsel for the respondent submits that the plaintiff/respondent is a registered firm and if the respondent has not filed such a certified copy as required u/s 68 then plaintiff be permitted to file the same before the Appellate Court. In this regard the respondent relied on judgment of this Court in S.A. No. 297 of 1986 (Ashok Kumar Kanhaiyalal v. Laxmi Kirana Stores) decided on 31-8-95, and reported in 1996(11) M.P.W.N. 169, wherein this Court has held :--

"Under the provisions of Section 68 of Indian Partnership Act any statement, intimation or notice recorded or noted in the register for firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated. According to Sub-section (2) of Section 68 a certified copy of an entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein. Sub-section (1) applies to the partners inter se while Sub-section (2) provides that the certified copy of the entry would be conclusive proof of the fact of the registration of the firm and all the contents of the statement recorded in the said entry. The learned First Appellate Court was not justified in holding that as the appellant did not file the said entry before the Trial Court he was not entitled to file such entry subsequently in the First Appellate Court. An additional evidence unless sought to be produced to delay the trial and to get undue advantage over the rights of other party and would tantamount to abuse of process of law, would ordinarily be accepted to do justice between the parties. In the instant case the plaintiff filed the documents alongwith an application showing the reasons as to why the said documents could not be filed before the Trial Court, application under Order 41 Rule 27 states that as the copy was not available to the appellant/plaintiff the same could not be filed. The said application was filed on 5-9-83. A copy was issued on 15-3-83 while the judgment of the Trial Court was delivered on 1-2-83. Under these circumstances the document was not available with the appellant and the same could not be filed. In any case this was a fit case in which the additional evidence ought to have been taken on record."

In view of the aforesaid decision respondent can be permitted to file additional evidence before the Appellate Court by filing application under Order 41 Rule 27 but in the present case no such application has been filed. In the circumstances respondent cannot take any benefit of the said decision.

Now the other question arises in this case whether present suit is arising from the contract and was filed to enforce such a right. If the suit is filed not to enforce a right arising from a contract then bar u/s 69(2) will not apply. Learned Counsel for the respondent has relied on the Division Bench decision of Kerala High Court in Kerala Arecanut Stores (supra). Contention of the learned Counsel for the respondent is that in the present case the plaintiff has filed suit for recovery of the amount for which the appellant had issued two cheques but malafidely stopped the payment of cheques, consequently one cheque was returned and another could not be presented. Kerala High Court inKerala Arecanut Stores (supra) has considered this aspect. The facts of that case are as under :--

"2. The plaintiff/company claims to be a firm registered under the Indian Partnership Act. The plaintiff is said to be the managing partner. Admittedly the first defendant issued three cheques, one for Rs. 7,500/-, another for Rs. 5,000/- and yet another for Rs. 2,500/-al! of the date 21-4-1965 in favour of the second defendant and the second defendant firm receiving consideration endorsed these cheques to the plaintiff. These were sent for collection by the plaintiff to the Canara Bank Limited, but they were dishonoured and returned to the plaintiff. The plaintiff therefore claims the amount of the cheque together with the interest and also the amount collected by the Bank from the firm as discount."

Considering the aforesaid facts the Division Bench of the Kerala High Court held :--

"9.... It is sufficient to state here for the purpose of this case, that the right of action available to an indorsee of a cheque who comes to hold the cheque in due course is based upon conferment on him by the statutory provisions the right to sue the maker of the cheque and also the indorser. If that be the case the right that is sought to be enforced does not arise from a contract. It is not a suit by the indorsee to enforce a right arising out of a contract and therefore the bar u/s 69(2) of the Partnership Act will not operate in such a case."

Delhi High Court in M/s. Virendra Dresses (supra) has held in para 5 :--

"5. The suit was filed by a firm against a third party. Thus under Sub-section (2) of Section 69 of the Partnership Act a suit to enforce a right arising from a contract against a third party is barred unless the firm is registered. The application of Sub-section (2) does not extend to the enforcement of rights not arising from contract. The present suit of the plaintiffs against the defendant does not arise out of any contract between the parties and as such Section 69(2) of the Partnership Act is not applicable. The objection of the defendant therefore has no force."

In view of the ratio of the Kerala High Court as it is held that to recover amount of cheque which was issued by the defendant but was not honoured, is not a suit to enforce a right arising out of contract. Similar is the position herein. The defendant had issued two cheques but had stopped the payment of the cheques. In the circumstances, the plaintiff filed suit for the recovery of amount of two cheques which is not a suit arising from a contract. In view of the above, the plaintiff has not filed a suit to enforce a right arising from a contract but filed a suit to recover amount of cheques with interest from the defendant. Relying on the case of Kerala and Delhi High Courts, this suit was maintainable as bar u/s 69(2) of the Partnership Act will not apply. In view of the aforesaid, the suit of the plaintiff was rightly decreed by the Courts below though document Ex. P-l was wrongly considered a document 10 prove registration of the firm u/s 69(2) of Partnership Act.

Accordingly, the appeal is dismissed. No order as to costs.