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PETITIONER: SHREERAM FINANCE CORPORATION

       Vs.

RESPONDENT: YASIN KHAN AND OTHERS

DATE OF JUDGMENT21/07/1989

BENCH: KANIA, M.H. BENCH: KANIA, M.H. SINGH, K.N. (J)

CITATION:  1989 AIR 1769            1989 SCR  (3) 484  1989 SCC  (3) 476        JT 1989 (3)   146  1989 SCALE  (2)51

ACT:     Partnership  Act,  1932: Sections 59 and 69--Suit  filed by  registered firm--Person suing--Not shown as partners  in Register of Firms--Suit whether maintainable.

HEADNOTE:     Under  a Hire Purchase agreement entered into  with  the appellant,  a  firm registered under  the  Partnership  Act, 1932,  carrying on the business of hire-purchase of  automo- bile vehicles, Respondent No. 1 hired the truck owned by the appellant,  under the agreement Respondent No. 1  agreed  to pay  initial hire charge of Rs. I0,000 and  certain  monthly hire charges on due dates. On the failure of Respondent  No. 1 to pay the monthly hire charges, after paying the  initial hire charges and charges for one month, the appellant  filed a  suit against Respondent No. 1 and his guarantor  on  July 22,  1968,  for the recovery of a sum of Rs.  13,422.23  for breach of terms and conditions of the agreement.     There  was a change in the constitution of the  firm  on July  1, 1967 with the retirement of two of the  then  part- ners,  and addition of one new partner as also admission  of two  minors to the benefits of the Partnership. This  change was  notified to the Registrar of Firms on August  28,  1968 and  was duly taken note of in the Register of Firms  subse- quently. Thus, no notice of the change had been given to the Registrar  of firms. The Trial Judge dismissed the  suit  as not maintainable in view of Section 69(2) of the Partnership Act, 1932. Upholding this decision, the High Court dismissed the appeal of the firm. Hence, the appeal, by special leave, by the appellant firm. Dismissing the appeal, the Court.     HELD:  Sub-section (2) of Section 69 of the  Partnership Act lays down that 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 were or had been shown in the Register of Firms as partners in the firm. [487C] In the present case, the suit tided by the appellant firm is clearly 485 hit  by the provisions of sub-section (2) of Section  69  of

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the  said Partnership Act, as on the date when the suit  was filed,  two  of the partners shown as partners  as  per  the relevant entries in the Register of Firms were not, in fact, partners,  one  new partner had come in and two  minors  had been admitted to the benefit of the partnership firm regard- ing  which  change no notice was given to the  Registrar  of Firms. 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. Therefore, the suit was not  maintainable in  view of the provisions of sub-section (2) of section  69 of the Partnership Act, 1932. [487D-E]     Although  the plaint was amended on a later  date,  that cannot save the suit.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1548  of 1974.     From  the  Judgment and Order dated 12.12. 1972  of  the Bombay High Court in F.A. No. 152 of 1972.     V.A. Bobde, B.R. Agarwala and R.B. Hathikhanwala for the Appellants. M.S. Gupta for the Respondents. The Judgment of the Court was delivered by     KANIA,  J.  This is an appeal by special  leave  granted under  Article 136 of the Constitution of India against  the judgment  of  a  Division Bench of  the  Bombay  High  Court (Nagpur Bench) in First Appeal No. 152 of 1972, the judgment having been delivered on December 12, 1972.     The appellants are a firm registered under the  Partner- ship  Act,  1932  and inter alia carry on  the  business  of hire-purchase  of automobile vehicles. The  appellants  were the  owners of a diesel truck complete with tools and  other accessories. On January 24, 1962 respondent No. 1 hired  the said truck from the appellants under a Hire Purchase  Agree- ment in writing of the same date. Under the said  agreement, respondent  No. 1 agreed to pay to the appellants a  sum  of Rs. 10,000 as initial hire charges and certain monthly  hire charges.  It was provided under the said agreement  that  on the  payment  of  all the monthly  hire  charges  and  other amounts payable under the agreement 486 on  the  respective due dates and fulfilment  of  the  other terms  and  conditions of the agreement,  respondent  No.  1 would  have the option to purchase the said truck.  However, if  any of the monthly hire charges were not paid  or  there was  a  breach  of any of the terms and  conditions  of  the agreement,  the appellants were entitled to take  possession of  the truck. Until respondent No. 1 validly exercised  the option  to  purchase the said truck, the said truck  was  to remain  the property of the appellants. Respondent No. 2  is the  guarantor. Respondent No. 1 failed to pay  the  monthly hire charges to the appellants as provided under the  agree- ment.  In fact, he paid only the initial hire of Rs.  10,000 and  hire  charges  for one month only.  Giving  up  certain claims  for damages and other items the appellants  filed  a suit in the Court of Civil Judge (Senior Division) at Nagpur for  recovery  of a sum of Rs. 13,422.23 p against  the  re- spondents.  Several issues were framed by the learned  Trial Judge and they were all decided in favour of the appellants. However,  the learned Trial Judge dismissed the suit on  the ground  that it was not maintainable in view of  the  provi- sions  of  section 69(2) of the Partnership Act,  1932.  The appellants preferred an appeal against this decision to  the

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Bombay  High  Court  (Nagpur Bench). The  said  appeal  was, however,  dismissed by the High Court upholding the view  of the learned Trial Judge regarding the non-maintainability of the  suit.  It is against this decision,  that  the  present appeal is directed.     In order to appreciate the controversy before us, it  is necessary to take note of a few further facts none of  which is disputed. The appellant-firm was registered under the Partnership Act, 1932 on November 2, 1960. There was a change in the  consti- tution of the firm on July 1, 1962 but we are not  concerned with that change. What is material is that, on July 1, 1967, there  was  another change in the constitution of  the  firm whereby  two of the then partners retired and one new  part- ner, namely, Smt. Sarita Agrawal joined as a partner of  the said  firm; and two minors, namely, Ashish Kumar  and  Rohit Kumar were admitted to the benefits of the said  partnership firm. On the said date, namely, July 1, 1967 two of the then partners, namely, Smt. Sheela R. Agrawal and Shri  Ramkishan retired  as aforestated from the said partnership firm.  The suit  was instituted on July 22, 1968. The notice  regarding the change in the constitution of the said firm as aforesaid was given to the Registrar of Firms on August 28, 1968 and a note  was taken of the said change in the Register of  Firms subsequently.  Thus,  as pointed out by  the  learned  Trial Judge,  on  the date when the suit was filed,  two  partners shown  as  partners in the appellant-firm  in  the  relevant entries in the Register of Firms had 487 already  retired, one new partner had joined the  said  firm and two minors had been admitted to the benefit of the  said partnership firm and no notice had been given to the  Regis- trar  of Firms in respect of these changes. The  notice  re- garding  these changes was given to the Registrar  of  Firms subsequently and noted on November 19, 1968.     Section  69 of the said Partnership Act deals  with  the effect of non-registration of firms. Sub-section (2) of  the said  section,  which is material for the purposes  of  this appeal, runs as thus:               "(2). 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."     In the present case the suit filed by the appellants  is clearly hit by the provisions of sub-section (2) of  section 69 of the said Partnership Act, as on the date when the suit was filed, two of the partners shown as partners as per  the relevant entries in the Register of Firms were not, in fact, partners,  one  new partner had come in and two  minors  had been admitted to the benefit of the partnership firm regard- ing  which  no notice was given to the Registrar  of  Firms. 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. Although the plaint was amended on  a later  date  that cannot save the suit. Reference  has  been made  to some decisions in the judgment of the Trial  Court; however, we do not find it necessary to refer to any of them as the position in law, in our opinion, is clear on a  plain reading  of sub-section (2) of section 69 of the said  Part-

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nership Act. In the result, the appeal fails and is dismissed with costs. N.P.V.                                Appeal dismissed. 488