S.A. Abdul Subhan Sahib vs M. Abdul Ravoof Sahib

Kuppuswami Ayyar, J.—The only point for consideration in this second appeal is whether the contract sought to be enforced in the suit is

one to which the provisions of Section 69 of the Partnership Act apply and the suit is hence not maintainable. Both the lower Courts have held that,

though the partnership had not been registered, the contract did not come within the purview of Section 69 of the Partnership Act and that the suit

is maintainable.

The suit was for the recovery of money agreed to be paid by one partner to another under an agreement entered after the partnership was

dissolved and accounts were looked into. It is an agreement entered into after the dissolution and in the course of the settlement of accounts as

between the partners. It is true that the dissolution and the taking of accounts were contemporaneous but it cannot be said that the taking of

accounts was not subsequent to the dissolution because there could have been no taking of accounts unless there was a dissolution.

The two decisions relied on for the appellant and referred to by the learned District Munsiff in his judgment, viz., Patel v. Husseinbhai Mahomed

ILR (1937) Bom. 628 and Appaya Nijingappa v. Subraa Babaji ILR (1938) Bom. 102 have no application to the facts of the present case. The

first was a suit for recovery of money paid by one of the partners as Income Tax payable by the firm subsequent to the dissolution. The assessment

itself was subsequent to the dissolution. The liability to pay that amount was not a liability arising under the contract entered into at the time of the

dissolution but the enforcement of a right conferred under the Act. The second was a suit for the recovery of money due to a dissolved partnership

filed by the original partners suing for and on behalf of the firm. But this is altogether a different case. This is a suit for the enforcement of an

agreement entered into after the dissolution or at the time of the dissolution between the partners under which some definite amount was payable

by one partner to another. Section 69 (2) has no application because it relates to a suit on behalf of a partnership and this is not such a suit. With

regard to Sub-section (1) it may be said that it applies to a suit by a partner and that the partner may be one of a dissolved partnership. There are

observations in Patel v. Husseinbhai Mahomed ILR (1937) Bom. 628 to indicate that the suit contemplated by Section 69 may be a suit by a

partner of a dissolved firm. But then, as pointed out already, that was a case not of a partner enforcing a contract entered into after dissolution as

between the partners but a suit by a partner of a dissolved firm claiming rights conferred upon him under the Act or enforceable by him under the

terms of the partnership contract.

The section has to be strictly construed and I do not think on reading the section as it stands I will be justified in holding that the bar extends to

suits for recovery of money due on a contract entered into between the partners of an unregistered firm in pursuance of an agreement entered into

after dissolution and the taking of accounts. As a matter of fact Section 69(3)(a) states that sub-sections (1) and (2) shall not affect the

enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm. This is a case in which the firm was dissolved, the

accounts were taken and in pursuance of the taking of the accounts certain amounts found due to the respondent plaintiff were agreed to be paid

by the appellant defendant. I do not think it can be said that it was contemplated by the legislature that the prohibition u/s 69 should apply to

enforcement of contracts of this kind.

In the result the appeal fails and is dismissed with costs, Leave refused.