Introduction

• It is a landmark case of Indian Partnership Act, 1932 where court discussed the application of Section 69 of the act.

Facts

• The impugned order dated 9^th October 2017 was passed by the court in a civil suit titled as M/s. R.S. Wood International v. M/s. Bhayana Builders Hindustan Infrastructure JV Pvt. Ltd. & Ors., dismissing the application of the petitioners/defendants under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC).
• The petitioners/defendants Nos. 2 & 3 filed an application under Order VII Rule 11 CPC for rejection of the plaint, contending that the suit is barred under Section 69 (2) of the Indian Partnership Act, 1932.
• The learned judge dismissed the application of the petitioners
  • The judge held that the suit, based on a dishonored cheque and not a contract between the parties, cannot be said to be not maintainable by virtue of provision of Section 69 (2) of the Indian Partnership Act, 1932.

Issue Involved

• Whether the suit filed by the respondents/plaintiff against the petitioners/defendants is maintainable despite the petitioners' argument of being barred under Section 69 (2) of the Indian Partnership Act, 1932?

Observation

• The Delhi High Court said that Section 69 (1) and (2) of the Indian Partnership Act, 1932 deals with the effect of non-registration of a partnership firm and bars filing of a suit by or on behalf of such firm to enforce a right arising from a contract by or on behalf of such firm against any third party.
• The respondents/plaintiff filed a Civil Suit for recovery of Rs.24,41,967/- against the petitioners/defendant on account of dishonor of cheques.
• The suit was based on dishonored cheques and not on a contract between the parties.
  • Thus, the suit cannot be held to be barred under Section 69(2) of the Indian Partnership Act.

Conclusion

• Therefore, no illegality or infirmity was found in the impugned order, and the revision petition along with application was dismissed with no order as to costs.

Note

• Section 69 of Indian Partnership Act, 1932: Effect of non-registration.—
  • No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
  • 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.
  • The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect,—
    • the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
    • the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 or the Provincial Insolvency Act, 1920 to realise the property of an insolvent partner.
  • This section shall not apply,—
    • to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories, are situated in areas to which, by notification under section 56, this Chapter does not apply, or
    • to any suit or claim of set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882, or, outside the Presidency-towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.