http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: VASANT RAO AND ANOTHER

       Vs.

RESPONDENT: SHYAMRAO AND ORS.

DATE OF JUDGMENT28/07/1977

BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. SHINGAL, P.N.

CITATION:  1977 AIR 2021            1978 SCR  (1) 218  1977 SCC  (4)   9

ACT: Companies  Act,  1956,  Part  X,  S.  590  vis-a-vis  Indian Partnership  Act,  1932.  for  winding  up  of  unregistered companies.

HEADNOTE: In  a civil suit for the dissolution of partnership  between the  appellants and respondents, the  defendants-respondents raised  an objection that the court had no  jurisdiction  to entertain  the suit in view of Part X of the Companies  Act, 1956         application was rejected by the Trial Court and thereafter by the  High Court in revision. it  was  argued  before this Court that as  Part  X  of  the Companies Act contains special provisions for the winding up of unregistered companies including partnerships  containing more. than seven members, such partnerships can be wound  up only  in  accordance with the procedure  prescribed  in  the Companies  Act,  and that the suit before the  Senior  Civil Judge was not maintainable. Dismissing the appeal by special leave, the Court, HELD  :  The provisions for winding up of the affairs  of  a firm which Chapter VI of the Indian Partnership Act contains besides  provisions for the dissolution of partnership,  are left  untouched by Section 590 of the Companies  Act,  1956. Section  590 makes it clear that Part X of the Act does  not affect  the operation of other enactments providing for  any partnership,  association or company being wound up.  [220H, 221A] Pattada Authayya v. Pattada Somayya & Ors.  AIR 1955  Mysore 149, partly over-ruled.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 393 of 1977. Apopeal  by Special Leave from the Judgment and Order  dated 8-10-1976  of  the Bombay High Court in Civil  Revision  No. 137/76. K.   S.  Ramamoorthy, S. Balakrishnan and N. N. Ghatate  for the Appellants. Naunit   Lal,  Miss  Latita  Kohli  and  S.  G.  Ghate   for Respondents Nos.  1 and 3 to 6.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

The Judgment of the Court was delivered by GUPTA,  J.-The two appellants and the six  respondents  were partners  of a firm called "Shivraj Fine Art Litho  ’Works." The appellants as plaintiffs instituted civil suit No. 9  of 1974  in the Court of the Senior Civil Judge,,  Nagpur,  for dissolution  of  the partnership  and  accounts.The  reliefs asked   for   included   a   declaration   that   the   firm stood  dissolved  on and from January 9, 1974.   It  appears that   thereafter  the  original  defendants  who  are   the respondents before us were transposed as plaintiffs and  the appellants   who   were  originally  the   plaintiffs   were transferred  to  the category of  defendants.The  transposed defendants raised an         objection that the court hadno jurisdiction to entertain the suit in view of the provisions of Part X 219 of  the Companies Act, 1956.  The trial court  rejected  the application.   The  defendants then moved the,  Bombay  High Court,  Nagpur Bench, in ’revision.  The High  Court  having dismissed the revision petition the present appeal has  been filed with special leave granted by this Court. it  is argued on behalf of the appellants that as Part X  of the Companies, Act, 1956 contains special provisions for the winding  up of unregistered companies, which  expression  as defined  in  that Act includes a partnership  consisting  of more than seven members, any action for the winding up  such a  partnership  must  be in accordance  with  the  procedure prescribed  for that purpose in the Companies Act,  and  the suit  instituted in the court of the Senior Civil Judge  was not  maintainable.   Part X of the  Companies  Act  includes sections  582  to 590.  Section 582 defines  the  expression "unregistered company" as follows :               Meaning of "unregistered Company".               "unregistered company               (a)   shall not include-               (i)   a  railway company incorporated  by  any               Act  of Parliament or other Indian law or  any               Act of Parliament of the United Kingdom;               (ii)a company registered under this Act; or               (iii)a company registered under any  previous               companies  law  and not being  a  company  the               registered office whereof was in Burma ,  Aden               or Pakistan immediately before the  separation               of that country from India; and                (b)  save  as  aforesaid, shall  include  any               partnership. association or company consisting               of more than seven members at the time  when               the  petition for winding up the  partnership,               association or company as the case may be,  is               presented before the Court." It is not disputed that the partnership in question had more than seven members at the time when the suit was instituted. This  was therefore an "unregistered company" as defined  in section  582(b).  Section 583(1) states that subject to  the provisions  of this Part, any unregistered company  may,  be wound up under this Act, and all the provisions of this  Act ’with  respect to winding up shall apply to an  unregistered company,  with  the exceptions and  additions  mentioned  in subsections  (2) to (5)".  It is not necessary to  refer  in any  great detail to these sub-sections except to point  out that sub-section (4) mentions the circumstances in which  an unregistered  company  may  be  wound up,  and  one  of  the circumstances  is that the company has been  dissolved.   It may also be stated that under subsection 220

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

(3)  no unregistered company can be wound up under this  Act voluntarily  or subject to the supervision of the court  and can only be wound up by the court.  Admittedly this is not a case  of voluntary winding up or winding up subject  to  the supervision  of  the  court.  Chapter  VI  of,,  the  Indian Partnership  Act,  1932  also contains  provisions  for  the dissolution  of a firm and its winding up  on  ’dissolution. The  argument  for  the  appellants  is  that  the   special provisions  of  Part  X of the  Companies  Act  exclude  the operation  of the general law contained in  the  Partnership Act  in the matter of winding up of a firm having more  than seven persons, and as the Civil Judge trying the suit  shall have to apply the Partnership Act, the suit is not maintain- able. It  is  difficult to appreciate why the suit should  not  be maintainable  at  any  rate in. so far as  it  is  one,  for dissolution  of  the firm.  As already stated,  one  of  the reliefs  prayed  for is a declaration that  the  firm  stood dissolved  from January 9, 1974.  This is not a relief  that can be claimed in a proceeding under Part X of the Companies Act  which  provides  for the  winding  up  of  unregistered companies.  However it is not necessary to consider  whether the  Civil Judge had jurisdiction to entertain some  of  the claims  made  in  the  suit,  because  section  590  of  the Companies Act makes it clear that Part X of the Act does not affect the operation of the Indian Partnership Act.  Section 590 states Saving  and construction of enactments conferring  power  to wind  up  partnership,  association or  company  in  certain cases.               "Nothing   in  this  Part  shall  affect   the               operation of any enactment which provides  for               any partnership, association or company  being               wound up, or being wound up as a company or as               an unregistered company, under the Indian Com-               panies ’Act, 1913 or any Act repealed by  that               Act :               Provided that references in any such enactment               to’  any  provision contained  in  the  Indian               Companies Act, 1913 or in any Act repealed  by               that  Act shall be read as references  to  the               corresponding  provision, if any contained  in               this Act." As  the marginal note to this section indicates, this  is  a saving provision.  It leaves unaffected the operation of any enactment   (a)   which   provides  for   any   partnership, association or company being wound up, or (b) which provides for any partnership,association or company being wound up as a  company or as an unregistered company under  the   Indian Companies  Act,  1913 or any Act repealed by that  Act.   An enactment  means the whole Act or a part of  it.The  proviso which  contains a  rule    of construction of references  in any such enactment  to any provision in the Indian Companies Act, 1913 or any Actress pealed by that Act is not relevant for the  present  purpose.It is. clear that the  provisions  for winding up of the affairs of a firm which Chapter VI of  the Indian  Partnership Act contains besides provisions for  the dissolution of partnership are left untouched by section 590 of the 221 Companies  Act,  1956.  The cases cited in  support  of  the respective contentions of the parties are not really on  the point under consideration except the decision of the  Mysore High,  Court  in  Pattada Authayya v.  Pattada  Somayya  and others(1),  to  which counsel for the  appellants  referred.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

The  Mysore case contains an observation on section  271  of the Indian Companies Act, 1913 which corresponds to  section 590  of the, Companies Act, 1956.  The learned single  Judge who decided the case held that there was nothing in  section 271  or in the words "any unregistered company may be  wound up" appearing in that section to indicate that the aggrieved party had an option to institute a suit for winding up of an unregistered  company.  This decision does not take note  of sub-section  (2) of section 271 which is similar to  section 590  of  the  Companies Act,  1956  leaving  unaffected  the operation of other enactments providing for any partnership, association or company being wound up. The appeal is dismissed with costs. M.R. Appeal dismissed. (1)A.I.R. 1955 Mysore 149. 222