[MADRAS HIGH COURT]

[ Hon'ble Judge(s): M. THANIKACHALAM ]

[ AIR 2007 (NOC) 48 (MAD.) ]

Sree Balaji Enterprises vs Greeta Exports & Ors.

C. S. No. 888 of 1984 - Decided On 28/04/2006

Indian Partnership Act, 1932 - S. 69(2) — Suit by partnership firm — Firm though registered, the
name of person signing plaint and claiming as partner in the Firm, not shown in the Register of Firms
— Suit is not maintainable in view of mandatory bar under S. 69(2). AIR 1990 Mad 198 and (1998) 8
SCC 559, Foll.

Civil Procedure Code (5 of 1908) - O. 6 - Suit for possession of immovable property situated outside
ordinary original jurisdiction of High Court - Court has no jurisdiction - Grant of leave will not cure
the defect and cannot confer jurisdiction.

Civil Procedure Code (5 of 1908) - O. 1, R. 17 and O. 1, R. 10 (5 of 1908), O. 6 - Application for

amendment of plaint seeking relief only against substituted defendant - On date of impleading such
defendant, period of limitation for the relief already barred against substituted defendant - No
provision made in the order allowing amendment to presume that substituted defendant having been
brought on record even on date of filing of suit - Suit, held, was liable to be dismissed as barred by
limitation.

JUDGMENT :-- This is a suit for possession of the suit property or in the alternative if the first defendant
failed to deliver possession, praying for a decree for a sum of Rs. 14,16,295/-, with interest thereon at
19.5% p.a. with quarterly rests, from the date of plaint till the date of repayment in full.

2. The plaint averments, pertaining to the case, in brief:

(a) The plaintiff who was manufacturing aluminium containers for pesticide industries, applied to the
Director of Industries and Commerce, for allotment of land, as per the letter D/- 7-12-1978, on which basis,
the plaintiff was allotted a vacant land measuring 0.25 acres in Vikram Sarabhai Instronic Estate,
Thiruvanmiyur, as per their letter D/- 9-1-1979. Thereafter, the plaintiff felt, the land allotted was
insufficient, thus prayed for larger extent, which was complied with, allotting 2 acres of land bearing plot
Nos. 96-99, 109 to 112, which is described in the plaint. The plaintiff, creating equitable mortgage over the
said property, in favour of their Banker, M/s. Indian Bank, also obtained loan.

(b) In view of the escalation of prices of aluminium and due to relaxation to the Rules, to manufacture
pesticide containers, in Tin metal, the plaintiff had to diversify their line of business. At that stage, the first
defendant approached the plaintiff for the sale of the land and superstructure i.e. the suit property, for
which, the plaintiff agreed. Pursuant to the negotiation, both the plaintiff and the first defendant entered into
an agreement of sale on 22-1-1981, for the sale of the suit property, for a total consideration of Rs.
11,70,000/- and part of the sale consideration, as advance, the defendant paid Rs. 3,70,000/- leaving a
balance of Rs. 8 lakhs. Immediately, the first defendant was put in possession of the suit property.

(c) Thereafter, despite repeated requests, oral as well as in writing, the first defendant has failed to pay the
balance sale consideration of Rs. 8 lakhs, thereby compelling the plaintiff even to issue a legal notice, for
which also, there was no proper reply and compliance. Under the abovesaid facts and circumstances of the
case, the plaintiff is constrained to file the suit for the abovesaid reliefs.

3. Originally, the suit was filed against Greeta Musical Instruments, Manufacturing and Exporters Private
Limited, in the year 1984. The then sole defendant filed a detailed written statement, questioning the
maintainability of the suit, as well as raising the question regarding non-joinder of necessary parties.
Thereafter, the present first defendant was substituted in the place of the then defendant, seeking permission
of this Court.

4. The first defendant, in its written statement contends, briefly, as follows:

(a) The suit, filed by the plaintiff, is not maintainable, for want of territorial jurisdiction, since the suit
property is situated outside the local limits of original ordinary civil jurisdiction of this Court, on the date of
institution of the suit, on 21-1-1984. This defendant alone has put up the superstructure, plant and
machinery embedded to the earth and therefore, the plaintiff is not entitled to recover possession of the suit
property, as such. The suit is not maintainable for non-joinder of Government of Tamil Nadu and the Indian
Bank as parties.

(b) The plaintiff has no right, title or interest over the suit property on the relevant date, when it purported
to have created the alleged equitable mortgage over the suit immovable property, in favour of the Indian
Bank.

(c) It is true, that this defendant had approached the plaintiff, for the sale of the land and then existing
unfinished and incomplete superstructure put-up by the plaintiff in its favour for Rs. 11,70,000/- free from
any encumbrance and pursuant to the agreement, he has also paid a sum of Rs. 3,70,000/- leaving the
balance of Rs. 8 lakhs to be paid. Possession was also handed over. This defendant was put in possession of
the land in question on 17-3-1982 by the Administrative Officer of Dr. Vikram Sarabhai Instronics Estate,
Department of Industries and Commerce, Government of Tamil Nadu, Thiruvanmiyur and therefore, the
plaintiff is not entitled to ask for re-delivery.

(d) This defendant was always ready and willing to perform its part of contract of the sale, according to
terms and conditions, set out in the agreement, paying the balance of sale consideration, provided, the
plaintiff cleared the encumbrance over the suit property, which was not done by the plaintiff. Therefore,
neither the plaintiff is entitled to possession nor recovery of money.

(e) The plaintiff has to prove that it is a registered firm, as contemplated by the provisions of the Indian
Partnership Act, 1932, as amended for which no document is produced. Therefore, the suit filed by the
plaintiff, represented by its partner, whose name is not shown to have been entered in the Register of
Partnership Firm, is not maintainable. The suit is barred by limitation. The other averments in the plaint are
specifically denied, praying for the dismissal of the suit.

5. The second defendant, in its written statement, denying the allegations in the plaint, would contend that
they have sanctioned medium term loan, open cash credit facility, key cash credit facility and Bills Purchase
facility to the plaintiff firm, for which it had created an equitable mortgage over the suit property, that for
the non-payment of the said amount, a suit is also filed, which is pending and that they are unnecessary
parties to this suit.

6. Based upon the above pleadings, on 6-11-1985, the following issues were framed for trial:

1. Whether the suit, as framed, is maintainable?

2. Whether the plaintiff is entitled to recovery possession?

3. Whether the plaintiff is entitled to claim Rs. 12,32,000/-?

4. To what relief is the plaintiff entitled?

7. Subsequent to the amendment of the plaint and substitution of the first defendant and impleadment of the
defendants 2 and 3, the following additional issues were framed, as per the order of this Court D/-
21-6-2002:

1. Whether the suit is barred by limitation?

2. Whether the State is a necessary party?

ISSUE No. 1, framed on 6-11-1985:

8. Originally, the suit was filed against one Greeta Musical Instruments Manufacturing and Exporters
Private Limited, Casa Greeta, 52-A, Chamiers Road, Madras-28 alone, which was contested. The original
defendant opposed the suit on the grounds that the said company is not answerable to the plaintiff's claim
whereas Greeta Exports alone is competent to answer the claim, if at all. Thereafter, deleting the original
defendant, existing first defendant was substituted as a party, which reached finality. It seems, the suit
property was mortgaged, equitably or otherwise, by the plaintiff in favour of the Indian Bank and Central
Bank of India. Therefore, in order to have adjudication in their presence, they have been impleaded as
defendants 2 and 3. In fact, no relief is sought for against the defendants 2 and 3 and to that effect, a
specific endorsement was also made by the plaintiff on 6-4-2006. In view of the stand taken by the plaintiff,
though defendants 2 and 3 have been impleded as parties, no relief is sought for, they have not let in any
evidence, in support of their defence and therefore, in this case, I refrain myself from considering the
validity of the equitable mortgage or the amount payable by the plaintiff to the defendants 2 and 3 that too,
in view of the admitted position, cases are pending before the Debts Recovery Tribunal. In this view alone,
the defence raised by the original defendant and the second defendant are not, in detail, extracted in this
judgment. Therefore, we have to see at present whether the suit, as such, is maintainable against the first
defendant (newly substituted), as such.

9. The suit property was allotted to the plaintiff by the Department of Industries and Commerce,
Government of Tamil Nadu, at their request, at Vikram Sarabhai Instronic Estate, Thiruvanmiyur,
Madras-41, is not now seriously disputed, though there was an attempt in the written statement of the first
defendant, to say, possession was given to the first defendant by the Administrative Officer of Dr. Vikram
Sarabhai Instronics Estate, Thiruvanmiyur, Madras-41, representing the Government of Tamil Nadu. On
22-1-1981, as evidenced by Ex. P. 11, there was an agreement between the plaintiff and the first defendant
for the sale of the suit property, fixing the sale consideration at Rs. 11,70,000/-. Subsequently, on various
dates, the first defendant has paid advance of Rs. 3,70,000/- leaving the balance of Rs. 8 lakhs. The
pleadings to this effect, as seen from paragraph No. 4 of the plaint, are admitted by the contesting
defendant, as well as the original defendant also. No dispute has been raised before me, even at the time of
the argument, questioning the validity of the agreement, payments made pursuant to the agreement and
regarding the balance of sale consideration. It is also an admitted fact, that possession of the suit property
was given to the first defendant, whether it was by the plaintiff or by the person, who had allotted this
property to the plaintiff, as the case may be. Because of the allotment order in favour of the plaintiff, the
plaintiff is entitled to be in possession of the suit property. But, pursuant to the agreement, possession was
given to the first defendant. It appears, because of the dispute, viz. encumbrance over the suit property, the
agreement was not specifically enforced, causing problems. Under the said circumstances alone, the suit has
been filed, for possession or in the alternative for recovery of the balance of sale consideration viz. Rs. 8
lakhs with interest thereon at 18% p.a. totalling a sum of Rs. 14,16,295/-.

10. The plaintiff, in support of its claim, examined one of its partners, by name Mr. R. Manoharn as P.W. 1,
seeking aid from Exs. P. 1 to P. 11, which are sought to be eclipsed only by Exs. D.1 and D.2, not
examining any witness on behalf of the contesting defendant.

11. The main thrust of Mr. S. Raghavan, the learned counsel for the first defendant, is that the suit filed by
the plaintiff is not maintainable before this Court on the following grounds:

i) that this Court has no territorial jurisdiction, on the date of filing of the suit;

ii) that the suit filed by the plaintiff, is not maintainable, since the mandatory provision of Section 69 of the
Indian Partnership Act, 1932, is not complied with; and

iii) that the suit is barred by limitation, for which there is no convincing answer from the plaintiff.

12. The plaintiff claims that it is a registered partnership firm, registered under the provisions of the Indian
Partnership Act, 1932 and its partner Sri R. Ramachandran is entitled to represent the plaintiff. The first
defendant, in their written statement, has taken a specific stand, that the suit is not maintainable and called
upon the plaintiff to furnish the following particulars, viz.:

(1) the number and place of registration of the plaintiff firm.

(2) the names and addresses of the partners of the plaintiff, since its inception till date setting out in detail
the change in the constitution of the plaintiff firm and also its incoming and outgoing partners since its
inception till date;

and

(3) to give inspection to its counsel the certificate of registration of the plaintiff firm issued by the
concerned Registrar of Firms, within the period mentioned above.''

Pursuant to the particulars furnished or otherwise, Ex. D. 1 was obtained i.e. Form-A, submitted by the
partnership firm under Rule 5.

13. Section 69 of the Indian Partnership Act, 1932, mandates:

''(1) 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.

(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.''

(3) ..... (4) ....

Therefore, in view of the admitted position, the plaintiff is a registered partnership firm, it must be shown
that the person suing, is a partner in the firm and his name has been shown in the Register of Firms as a
partner of the firm.

14. Ex. D. 1 is the Certified Extract from the Register of Firms pertaining to the plaintiff firm, wherein the
names of the Partners of the plaintiff firm are shown as (1) Sivarani Ammal (2) S. Alamelu Ammal and (3)
S. Hariharan. The person, who has signed in the plaint, representing the plaintiff's firm viz. Mr. R.
Ramachandran, has not been shown as the partner in the Register of Firms. It is also admitted by PW-1, one
of the partners of the plaintiff's firm. It is admitted by PW-1, during the cross-examination, that there was a
change in the constitution of firm, but he would express his ignorance, when the changes were effected,
who are all the partners etc. Therefore, by the production of Ex. D. 1, it is demonstrated, unquestionably,
that the name of Mr. Ramachandran, who claimed as partner in the plaintiff's firm, has not been shown in
the Register of Firms as partner, and therefore, in view of the bar available under Section 69 of the Indian
Partnership Act, the suit filed by him is not at all maintainable, which is fully supported by the decisions
rendered not only by this Court, but also by the Apex Court.

15. In T. Savariraj Pillai v. M/s. R.S.S. Vastrad and Company (AIR 1990 Madras 198), this Court has
considered the effect of Section 69 of the Indian Partnership Act, as well as Order 23 Rule 1(3) of CPC. In
the case involved in the above ruling, a suit was filed by a partnership firm, and no entry has been made in
the Register. But, subsequently, entry has been made in the Register only during the pendency of the suit.
Whether such subsequent entry, could cure the defect, which was available under Section 69(2) of the
Indian Partnership Act, was considered by this Court. This Court, considering various decisions, has taken
the view that the suit filed, originally, is hit by Section 69(2) of the Partnership Act and the subsequent
registration will not cure the defect. Thus, it is held, there is non compliance with regard to Section 69(2),
which should follow, the suit filed, as such, is void. Taking such view, even permission to withdraw the suit
was refused.

16. In Delhi Development Authority v. Kochhar Construction Work, (1998) 8 SCC 559), the Apex Court
has taken the view:

''By virtue of Section 69(2), a suit instituted in any court by or on behalf of a firm against any third party
shall not be valid unless the firm is registered and the persons suing are or have been shown in the Register
of Firms as partners of the firm. Plainly, the institution of the suit itself is barred both by sub-section (1) and
sub-section (2) of Section 69 of the Partnership Act. On a plain reading of Section 69 of the Partnership Act
and Section 20 of the Arbitration Act, it is clear that an application filed by an unregistered firm under
Section 20 of the Arbitration Act would also be treated as a suit and would be hit by Section 69(2), if the
firm filing the application is not registered with the Registrar of Firms. The fact that it is an application to be
registered and numbered as a suit would not make any difference for the obvious reason that though
sub-sections (1) and (2) of Section 69 of the Partnership Act refer to a suit, sub-section (3) thereof makes
those sub-sections applicable even to other proceedings which would include an application registered and
numbered as a suit under Section 20 of the Arbitration Act. Proceedings under Section 20 of the Arbitration
Act were ab initio defective since the firm was not registered, and subsequent registration of the firm done
even if before the period of limitation had run out, cannot cure the initial defect.''

17. From the above Rulings, it is seen, if the mandatory provisions of Section 69(2) of the Indian partnership
Act, are not complied with, then, the suit is not maintainable and the Court cannot take cognizance of the
case also. Admittedly, in this case, the name of the partner, who is suing on behalf of the plaintiff, by name
Mr. Ramachandran, name does not find place in Ex. D. 1 Register of Firms, though the firm is a registered
partnership one. In view of the above settled legal position and in view of the admitted position, that Mr.
Ramachandran's name is not shown as the partner in the Register of firms, it is to be held, unhesitatingly
that the suit is not maintainable and is liable to be dismissed.

18. The suit property is situated outside the ordinary original jurisdiction of this Court. Therefore, a
submission was made on behalf of the contesting defendant, that this Court has no jurisdiction, to entertain
the suit. In view of my previous findings, this question is more or less an academic one. As seen from the
records, as per the order passed in the Application No. 577 of 1984, D/- 8-2-1984, leave was obtained.
Despite the leave has been granted, if the Court has no jurisdiction, that leave, certainly, will not cure the
defect or will not confer the jurisdiction upon this Court, if it is shown that the suit relates to immovable
property or for a land. Admittedly, the first prayer of the plaint is in respect of an immovable property i.e.
for a land. Therefore, it is to be construed that the suit is for an immovable property. As held by the Apex
Court in Adcon Electronics Pvt. Ltd. v. Daulat, (AIR 2001 SC 3712), when the suit is for land, even under
clause 12 of the Letters Patent, the High Court cannot exercise its ordinary original jurisdiction, even
assuming the cause of action has arisen wholly within the local limits of the ordinary original jurisdiction of
the High Court. Clause 12 of the Letters Patent is very clear that the High Court can exercise its ordinary
original jurisdiction, to try and determine suits for land or other immovable property, if such property is
situated within the local limits of the ordinary original jurisdiction of the High Court and in all other cases,
the cause of action would play its role, on which basis, leave could be granted, considering whether the
cause of action has arisen in part, within the local limits of ordinary original jurisdicion of the High Court
etc. In this case, admittedly, the subject matter of the suit, viz. the immovable property, on the date of filing
of the suit, is situated outside the ordinary original jurisdiction of this Court and in this view it is to be held
that this Court has no jurisdiction to decide this suit, in respect of prayer (a) viz. delivery of possession.

19. In the light of the above discussion, this issue is answered against the plaintiff, holding that the suit, as
such, is not maintainable before this Court.

Additional Issue No. 1 framed on 21-6-2002:

20. The suit was filed originally against Greeta Musical Instruments, and at present, no relief is sought for
against that company, whereas now the relief sought for is against the present first defendant, by name
Greeta Exports, a registered partnership firm, who was impleaded only on 5-8-1991. On the date of
impleading the first defendant, by way of amendment, the period of limitation prescribed, viz. three years,
for the recovery of the amount, is barred by limitation, as far as the present first defendant is concerned.
While allowing the amendment application also, no provision is made, as if it should be presumed or deemed
that the first defendant came on record, even on the date of filing of the suit, on 21-1-1984. In the absence
of any such specific finding or observation, the limitation, as far as the present first defendant, would
commence only from the date of bringing the first defendant as first defendant to the suit i.e. on 5-8-1991.
Admittedly, more than seven years lapsed from the date of original date of plaint and therefore, as rightly
submitted by the learned counsel for the first defendant, it is to be held, the suit is barred by limitation. In
view of my findings on Issue No. 1, that the suit itself is not maintainable, the finding on this issue viz.
whether the suit is barred by limitation, also would not arise for consideration. But, however, in order to
answer this issue alone, this finding is given. Even assuming that the suit is not barred by limitation, in view
of the fact that mandatory provision of Section 69(2) of the Indian Partnership Act are not complied with,
the suit is liable to be dismissed. Hence, this issue is answered accordingly.

Additional Issue No. 2, framed on 21-6-2002:

21. Though the plea of non-joinder of State is raised, no argument was advanced on this issue and therefore,
no separate finding is called for.

Issue Nos. 2 and 3, framed on 16-11-1985:

22. Admittedly, as per the contract, the first defendant was put in possession of the property and to be in
possession of the property, he has to pay the balance of sale consideration viz. Rs. 8 lakhs, which is not
paid. Only for the said sum, the interest is claimed at 18% p.a., which comes to Rs. 6,16,295/-, thus totalling
to Rs. 14,16,295/-. The first defendant, having the benefits of possession, certainly, liable to pay interest,
since the first defendant was inducted into possession, on the assurance given by it, that it will pay the
amount. Therefore, in the ordinary course, the plaintiff may be entitled to recover the abovesaid amount, if
the property is to be retained by the first defendant. In this case, we are not concerned about the validity
and enforceability of the equitable mortgage, said to have been created by the plaintiff, with respect to the
suit property, in view of the further fact, cases are pending elsewhere. The first defendant is not claiming
any other legally traceable right to be in possession. In this view also, since the first defendant is in
possession of the property, without paying the agreed amount, even he may be directed to hand over the
possession of the property or in the alternative, he may be directed to pay the money. But, unfortunately,
since the suit is not properly filed, complying with the mandatory provisions of Section 69(2) of the Indian
Partnership Act, I am unable to decree the suit, either for possession or for money and in view of the further
fact, the suit is also barred by limitation. Hence, the plaintiff is neither entitled to recover possession nor
entitled to have the money decree. These two issues are answered accordingly.

ISSUE NO. 4, Framed on 6-11-1985:

In view of my findings in the previous issues, the suit is dismissed, but under the facts and circumstances of
the case, ordering no costs, directing the parties to bear their respective costs.

Suit dismissed.