Saifuddin and Co. vs Bhanu Loha Shilpa (P) Ltd.

Chidananda Ullal, J.—The petitioner had preferred the above C.R.P. for challenging the Judgment and Decree date 29.2.92 in S.C.No. 3681/90 passed by the Court of Small Causes (SCCH 11) Bangalore, whereby the suit for recovery of Rs. 9,000/- together with costs and interest was dismissed.

The matter has come up for final hearing. I have heard the Counsel for the petitioner as well as the Counsel for the respondent. I have also gone through the decisions cited before me in support of the rival contentions put forth.

The short question in this petition is whether it was just and proper for the Court of the Small Causes (SCCH No. 11), Bangalore (for short hereinafter referred to as Court below), to dismiss the suit of the petitioner holding that the same is not in consonance with Section 69(2) of Indian Partnership Act. It is on that point of law alone, the Court below had dismissed the suit of the petitioner.

The brief facts of the case are that the respondent - company purchased industrial products called Thread Plug Gage'' from the petitioner on 30.1.90 worth of Rs. 8,334.10 ps. on credit basis and issued a post dated cheque date 14.2.90 for the said sum. It Is stated that the cheque so issued came to be dishonoured on presentation by the petitioner before its bankers. It is further stated that the respondent had not made payment inspite of several demands and therefore the petitioner was forced to issue a legal notice at the first instance on 13.3.90. The respondent did reply to the said legal notice on 17.3.90. Petitioner had also issued a rejoinder to the said reply notice on 21.3.90. The petitioner claimed interest at 18% p.a. as per trade and usage and further as per stipulation in the bill and the provisions of the Sale of Goods Act amounting to Rs. 555.90 ps. Ultimately, the petitioner was forced to institute the suit before the Court below.

The respondent has admitted to have purchased Thread Plug Gage on 30.1.90 worth of Rs. 8,344.10 ps. and had taken the contention that the said purchase consisted of three different items out of which item No. 2 being ''2 1/2" UNF Thread Plug gage'' valued at Rs. 1,515.20 ps. The same was not delivered to the respondent and that the respondent had issued a post dated cheque dated 14.2.90 for the above sum of Rs. 8,344.10 ps. The respondent further contended that they issued the cheque in question on the promise by the petitioner that they would deliver within the next two or three days the above said ''2 1/2" UNF Thread Plug Gage. It is also contended by the respondent before the Court below that in spite of several requests on different dates, the petitioner did not deliver the above said ''2 1/2 UNF Thread Plug Gage'' and therefore the respondent was forced to instruct their bankers not to honour the above said cheque issued in favour of the petitioner and it is for that reason, the cheque came to be dishonoured at the instance of the respondent. According to the respondent, the other two items delivered by the petitioner at the time of purchase was of no use without the ''2 1/2" UNF Thread Plug Gage'' being delivered to them, for all the three items put together composed of one set. The respondent therefore contended that they were ready to return those items delivered to them by the petitioner, whereas the petitioners were not ready and prepared to receive the same. Ultimately, the respondent contended that they were not liable to pay the suit claim to the petitioner and further contended that the suit filed by the petitioner was barred u/s 60 (probably it meant Section 69) of Indian Partnership Act, 1932.

Based on the above contentions, the Court below was pleased to set out the following points for its consideration.

(1) Whether the plaintiff proved that the suit filed by them is valid u/s 69(2) of the Indian Partnership Act, 1932?

(2) Whether the plaintiff proved that the defendant''s Company having purchased the Industrial Products worth Rs. 8,344.10 ps. is liable to make payment of it?

(3) Whether the defendant proved that they did not receive item No. 2 worth Rs. 1,515.20 ps. without which the other two items cannot be made use and therefore, they are not liable to make payment of the suit claim?

The Court below while answering point No. 2 in the affirmative, answered points No. 1 and 3 in the negative. Ultimately, the suit of the petitioner came to be dismissed mainly on the ground that the suit filed by it was not in accordance with Section 69(2) of the Indian Partnership Act. The Court had mainly relied on the decision of this Court reported in M.A. HUSSAIN AND ANR. v. PANCHAMAL VASUDEV GANAPATH KAMATH AND BROTHERS AND ANR. 1970 (2) Mys. LJ 27 and had also relied upon the ruling reported in Sri Baba Commercial Syndicate and Another Vs. Channamasetti Dasu and Another, and AIR 1964 P&H 270, FIRM BUTAL MAL v. CHANAN MAL.

The learned Counsel for the petitioner Sri H.N. Prakash had vehemently argued that the Court below had misread the provisions of Section 69(2) of the Indian Partnership Act and thereby committed grave error in dismissing the suit of the petitioner, particularly when it is not the stand of the respondent before the Court below that P.W.1 Saifuddin, the partner who had signed and verified the plaint averments and further adduced evidence for and on behalf of the petitioner firm had no authority to do so and that it is not the case of the respondent either that P.W.1 ceased to be the partner. He further argued that Ex.P.1 the partnership deed, Ex.P.2 the acknowledgment of registration of firms and Ex.P.3 the extract of Register of Firms were conclusive proofs to show that P.W.1 Saifuddin was the partner and that the partnership firm was a registered firm. He had also argued that under Illustration (d) of Section 114 of the Evidence Act, the Court below had to presume existence of certain facts i.e., continuance of P.W.1 as the partner of petitioner firm. This, he pointed out with reference to Exs. P1 to P.3. He had also relied upon a ruling of the Bombay High Court reported in Jaiprakash Mangilal Agarwal Vs. Lilabai and Another, on that point of presumption and therefore, according to him, the dismissal of the suit of the petitioners by the Court below holding that the suit filed by them was not in accordance with Section 69(2) of the Indian Partnership Act is illegal and be set aside by this Court.

The other limb of the argument of Sri Prakash is in support of an I.A. filed by him u/s 41 Rule 27 read with Section 151 C.P.C. to permit the petitioner to adduce further evidence. Along with the said I.A. he had also produced the extract of Register of Firms issued by the Registrar of Firms during the month of May, 1992 showing that P.W.1 was in fact a partner as on that relevant point of time. Alternatively, the learned Counsel for the petitioner had argued that this Court may as well remand the matter to the Court below for that purpose. He had also cited a decision in support of the said contention.

The Counsel for the respondent Sri Chaithanya Hegde in reply had argued mainly supporting the judgment of the Court below. He had reiterated his argument before the Court below that P.W.1 Saifuddin was not a partner of petitioner firm as on the date of suit and hence, had no authority either to sign or verify the suit and further to adduce evidence on behalf of the petitioner firm and hence, according to Sri Hegde, the Court below had rightly dismissed the suit of the petitioner. He had further argued that this Court cannot entertain an I.A. for additional evidence while exercising revisional jurisdiction. In support of that argument he had also relied upon the ruling of this Court reported in HARILAL v. ISMAILSAB ILR 1979 Kar.1201

Now let me advert to the question before me whether the suit filed by the petitioner before the Court below is in accordance with Section 69(2) of the Indian Partnership Act or not as stated earlier, for the suit of the petitioner had failed before the Court below only on that sole point of law.

The provision of Sub-section (2) of Section 69 of the Indian Partnership Act reads as follows :

"69(2). No suits 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."

The above provision of law says that no suit to enforce a right arising from a contractual agreement be instituted in any Court by or on behalf of the firm against third party, firstly, unless the firm is registered and secondly, that the person suing is or has been shown in the Register of Firms as a partner in the firm.

Now let me examine Ex.P.1 - the Partnership deed, Ex.P.2 -the Acknowledgement of the Registration of Firms and Ex.P.3 - the extract of Register of Firms produced by the petitioners before the Court below on the touchstone of the above provisions of law. It is not in dispute that the firm is a registered firm. It is also not in dispute that P.W.1 - Saifuddin who had signed and verified the plaint averments and further adduced evidence on behalf of the petitioner- firm has not been a partner of the petitioner - firm at all. If Ex.P.3- extract of Register of Firms does show the name of P.W.1 -Saifuddin as one of the partners of the petitioner - firm, I am at a loss to understand how the Court below could say that the suit of the petitioner - firm was not in consonance with the said Section 69(2) of the Indian Partnership Act, for, the said provision of law demands the petitioner - firm to show that it is a registered firm and the person so suing is or has been shown in the Register of Firms, as partners in the firm. Ex.P.1 to Ex.P.3 produced by the petitioner - firm do show that Saifuddin, P.W.1 has been shown as the partner in the petitioner - firm. It appears to me that the Court below misapplied the ruling reported in 1970(2) KarL.J. 27 to dismiss the suit of the petitioner. As a matter of fact, the facts of that case are different from the facts of the case in the instant case in hand. In the reported case, the oral evidence was led in to show that the petitioner in that case was a partner, whereas in the instant case of the petitioner firm, evidence had been lead in both oral and documentary by marking Exs. P.1 to P.3 and P.W.1 did speak thereto. The Court below probably thought that the petitioner firm had to demonstrate before it that P.W.1 - Saifuddin is a partner as on the date of the suit having authority in law to institute the suit. According to me, this is not the purport of the provisions of Section 69(2) of the Indian Partnership Act at all. As per the said provision of law, one has to show before the Court firstly that it is a registered firm and secondly that the same is represented by the partner whose name is or has been shown as partner in the Register of Firms. That apart, even the reported decision in 1970(2) KarLJ 27 is no longer a good law in view of the Division Bench ruling of this Court in MILAP CUT PIECE CENTRE v. SARVADA CUT PIECE CLOTH SOTRES 1989(1) KarLJ 6

It is relevant to observe here that in the written statement filed by the respondent before the Court below, the respondent had not taken a stand that P.W.1 - Saifuddin who had signed and verified the plaint and adduced evidence on behalf of the petitioner - firm had ceased to be a partner before the institution of the suit. Such a case had not even been suggested to P.W.1 by the respondent in his cross examination. Further more, even in the evidence of the respondent - P.W.1 it was not so asserted.

As pointed out by the Counsel for the petitioner, illustration (d) u/s 114 of the Evidence Act is dear that, a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or state of things usually cease to exist, is still in existence, has to be presumed. If such a presumption under law is attached to Exs. P.1 to P.3, the Court below would have presumed that P.W.1 - Saifuddin had continued to be the partner even on the date of suit having authority to institute the suit by representing petitioner firm. If so, it cannot be said that P.W.1 - Saifuddin was not a partner as on the date of the suit and that the suit of the petitioner firm before the Court below is not in consonance with Section 69(2) of the Indian Partnership Act, as held by the Court below, more so, when no such case is ever made out by the respondent before the Court below and further more, no rebuttal evidence is produced by the respondent to that effect. Such a view is supported by the ruling of the Bombay High Court reported in Jaiprakash Mangilal Agarwal Vs. Lilabai and Another, cited before me by the Counsel for the petitioner.

Under the aforementioned circumstances, I am not inclined to accept the reasoning of the Court below to dismiss the suit of the petitioner firm holding that the suit in question is not in accordance with Section 69(2) of the Indian Partnership Act; in the result, I hold that it is not just and proper for the Court below to dismiss the suit of the petitioner firm.

Under the circumstances, it is unnecessary for me to consider the I.A, filed by the petitioner u/s 41 Rule 27 read with Section 151 C.P.C. for adducing further evidence before this Court.

For the aforesaid reasons, I allow the C.R.P. The Judgment and Decree dt. 29.2.92 passed by the Court of Small Causes (SCCH No. 11), Bangalore in S.C. No. 3681/1990 is hereby set aside. The suit of the petitioner - firm is decreed with cost as prayed for.

The respondent - defendant shall pay the suit claim with interest at 6% p.a. from the date of suit till the date of payment of the suit claim together with costs and interest. Needless to say, the petitioner is entitled to for the cost all through. Ordered accordingly.