Holding

The suit is partly barred under Section 69(2) for the contractual claim but not barred for the statutory claim, and the decree for possession stands upheld.

Summary

The landlord, a partnership firm, sued its former tenant for possession of premises after a 21‑year lease expired. The partnership was unregistered when the suit was filed, raising a bar under Section 69(2) of the Partnership Act. The trial court and High Court held the suit maintainable and granted possession. On appeal, the Supreme Court examined whether the suit was barred by Section 69(2) and whether the subsequent registration of the firm cured any defect. It held that the suit was partially barred: the claim based on breach of the lease covenant fell within the bar, but the claim based on the statutory right to possession under Sections 108(q) and 111(a) of the Transfer of Property Act did not. Since the decree was granted on both grounds, it remained valid. The Court also noted that the bar under Section 69(2) is mandatory and a suit by an unregistered firm is incompetent from inception, but it did not need to decide the effect of later registration. The appeal was dismissed.

Issues considered

Whether the suit filed by an unregistered partnership firm is barred under Section 69(2) of the Partnership Act, wholly or in part.
Whether subsequent registration of the partnership firm can revive a suit that was barred at the time of filing.
Whether the decree for possession, based on both contractual and statutory causes of action, can be sustained.

Legislation cited

Code of Civil Procedures. Order 23 Rule 1(3), s. Order 7 Rule 11(d), s. Order 7 Rule 13
Indian Contract Act, 1872s. 1
Indian Partnership Act, 1932s. 69(2)
Limitation Act
Transfer of Property Act, 1882s. 108(q), s. 111(a)

Subjects

Partnership registrationSection 69(2)possession suitlease expirytenant at sufferanceTransfer of Property Actstatutory obligationcomposite cause of actionbar of suitdecree for possession

Judgment

MIS RAPTAKOS BRETT AND CO. LTD. A
v.
GANESH PROPERTY

SEPTEMBER 8, 1998

[S.B. MA.IMUDAR AND M. JAGANNADHA RAO, JJ.) B

Pwtnmhip Act, 1932-Section 69(2}-Suit by partnership Jinn-Effect
of 11011 registration-Suit mu.1·1 be held to be i11compete11t from the i11cep-
tio11-Co11ditio11s of section 69(2) held mandat01y.

Part11ership Act, 1932-Sectio11 69(2)---Suit for possessio1t-Te11a11t
c
continuing in possessio11 eve11 after expiry of leas~Wliether suit filed by
unregistered Jinn legally mai11tai11able-Held, Ye~~Transfer of Property Act,
188h·s 108, 111.

Transfer of Property Act, 1882-Section 108(q) iw/S 111 (a)-Lease of D
immovable property---Dete1111inatio11 by efflux of time-Rights a11d liabilities
of lessor a11d lessee.

The suit premises were rented to the appellant-defendant by a
registered lease for a period of_21 years, ending on 15-3-1985. On the expiry
of the lease period, the respondent- plaintiff, owner of suit premises, a
E
partnership firm, filed a suit for decree for possessio1,1 as well as damages
for illegal occupation of the premises by the appellant. The trial Court
passed a decree for possession, holding that the defendant- appellant was
not a tenant holdin.g over and was in unlawful possession of the premises
after the expiry of the lease period and that the suit was not barred by F
Section 69 (2~~f the P11rtnership Act, 1932. The High Court upholding the
findings recorded by the trial Court, dismissed the appeal. Hence this
appeal.

Appellant submitted that respondent being not a registered partner-
ship firm, and seeking to enforce a right arising out of the contract of lease G
between the parties, the suit was not maintainable, it being barred under
Sec. 69(2) of the Partnership Act. The respondent contested that the suit
was not filed for enforcing any right arising from a contract which was
already at an end by effiux of time and it was based on two causes of action;
(i) on the covenant contained in the erstwhile contract; and (ii) on the law H
485
486 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A of the land namely, common law as well as Sec. 111 (a) rw/S 108(q) of the
Transfer of Property Act. Pending this suit, before the decree could be
passed, respondent- plaintiff got the firm registered.

The issues raised for consideration were (i) Whether the suit filed
by the respondent-plaintiff was barred u/s 69(2) of the Partnership Act
B either wholly or in part; (ii) if the suit was so barred, whether subsequent
registration of the plaintiff firm could survive the suit.

Dismissing the appeal, this Court

C HELD: 1.1. Section 69 (2) of the Partnership Act is a penal provision
which deprives the plaintiff of its right to get its case examined on merits
by the court and simultaneously deprives the court of its jurisdiction to
adjudicate on the merits of the controversy between the parties. It will,
therefore, have to be strictly construed. Once the bar under Section 69(2)
of the Act gets attracted, then the said provision being mandatory in
D nature would make the suit incompetent on the very threshold. For sus-
taining a suit which falls within the sweep of section 69(2), the condition
precedent is that the firm must be registered at the time of filing of the
suit. If it is not registered the suit must be held to be incompetent from
the inception. [512-C; D; E]
E
1.2. In the present case, the lease has come to an end and the
erstwhile tenant has remained in occupation as a tenant at sufferance.
Under law the erstwhile landlord is entitled to restoration of possession
by enforcement of statutory obligation of the erstwhile tenant as statutorily
F imposed on him u/S 108(q) rw/S lll(a) of the Transfer of Property Act.
The non-compliance of the statutory obligation by the defendant when
made subject matter of corresponding legal right of the erstwhile landlord
cannot be said to be giving rise to enforcement of any contractual right of
the plaintiff arising from the expired contract of tenancy. [513-C; D; E]

G M.C. Clwckalingam & Ors. v. V. Manickayasagam & Ors., [1974) 1
SCC 48; R. V. Blmpal Prasad v. State of A.P., [1995) 5 SCC 698; Smt Shami
Devi v. Amal Kumar Bane1jee, [1981) 2 SCC 199; Mur/idhar la/an (since
deceased) through his Lrs. v. State of Meghalaya & Ors., [1997] 5 SCC 480
andD.H. Maniar& Ors. v. Waman Laxman Kudav, [1977) 1 SCR403, relied
H on.
RAPTAKOS BRETT AND CO. LTD. v. GANESH PROPERTY] 487

1.3. The plaint as framed by the plaintiff-respondent is based on a A
composite cause of action consisting of two parts. One part refers to the
breach of the covenant on the part of the appellant when it failed to deliver
vacant possession to the respondent lessor on the expiry of the lease and
thereafter all throughout. The second part of the cause of action, however,
was based on the statutory obligation of the appellant lessee when it failed
to comply with its statutory obligation under Section 108(q) read with
B
Section lll(a) of the Transfer of Property Act. So far as the second part
of the cause of action is conce,rned it cannot certainly be said tha~ it is
arising out of the erstwhile contract. (513-G-H; 514-A-B]

1.4. There is a statutory obligation of the lessee on determination of c
lease to put the lessor in possession of the property. There can still be a
contract between the parties at the time of entering into lease or even
thereafter that on the determination of lease the lessee will be given time
to remove his fixtures and to vacate the premises. On a conjoint reading
of the statutory scheme of Section 108 and Section 4 of the Transfer of D
Property Act and Section 1 of the Contract Act, it must be held that in
absence of such contrary legally permissible contracts, the statutory rights
and liabilities of lessors and lessees as laid down under Section 108 of the
Property Act, especially Section 108(q) in the present case would remain
fully operative by force of the statute itself. In the present case, there was
no contract to the contrary which permitted the lessee to continue in E
possession after the determination of lease by effiux of time even for a day
more. Consequently, it is the legal obligation flowing from Section 108(q)
of the Act which would get squarely attracted on the facts of the present
case and once the suit is also for enforcement of such a legal right under
the law of the land available to the landlord it cannot be said that F
enforcement of such right arises out of any of the express terms of the
contract which would in turn get visited by the bar of Section 69 sub-sec-
tion (2) of the Partnership Act. Consequently, it has to be held that when
paragraph 2 of the plaint in addition made a reference to right of the lessor
to get possession under the Jaw of the land, the respondent was seeking
enforcement of its legal right to possession against the erstwhile lessee G
flowing from the provisions of Section 108(q) rw/S lll(a) of the Property
Act which in turn also sought to enforce the corresponding statutory
obligation of the defendant under the very same statutory provisions. So
far as this part of the cause of action is concerned it stands completely
outside the sweep of Section 69 sub-section (2) so far as it sought to enforce H
488 SUPREME COURT REPORTS (1998] SUPP. 1 S.C.R.

A the obligation of the defendant under the contract of lease. The present
suit can be said to be partly barred by section 69(2) so far as it sought to
enforce the obligation of defendant under the contract of lease. But it was
partly not barred by Section 69(2) in so ar as the plaintiff-respondent
based a part of its cause of action also on the law of land, namely, Transfer
B of Property Act whereunder the plaintiff had sought to enforce its statutory
right under Section 108( q) read with Section 111 (a) of the Property Act.
Enforcement of that right had nothing to do with earlier contract which
had stood determined by efflux of time. As the decree for possession is
passed on the basis of both parts of causes of action, even if it is not
supportable on the first part, it will remain well sustained on the second
C part of the very same cause of action. [517-A-H]

1.5. Even if the suit is filed by an unregistered partnership firm
against a third party and treated to be incompetent as per Section 69(2)
of the Partnership Act, if pending the suit before a decree is obtained the
D plaintiff gets itself registered, the defect in the earlier filing which even
though may result in treatiug the original suit as still born, would no
longer survive if the suit is treated to be deemed to be instituted on the
date on which registration is obtained. If such an approach is adopted, no
real harm would be caused to either side. However, on the facts of the
present case, it is not necessary for this Court to express any final opinion
· E on this question or to direct reference to a larger Bench for reconsidera-
tion. [522-A-B; F-G]

, Sivjnanam Abraham & Anr. v. Mathevan Pillai, AIR (1952) (Vol. 39)
Travancore 359; Mrs. 171ayam111mal v. People's Charity Fund, Bangalore &
F Ors., AIR (1978) Karnataka 125 and Padam Singh lain v. Mis. Chandra
Bros. & Ors., AIR (1990) Pat 95, distinguished.

Mis. Goraklmath Champa/al Pandey v. Hansraj Manot, Calcutta Week-
ly Notes, Vol. 74 (1969-70) 269; Approved.

G Mis. Jammu Cold Storage & General Mills Ltd. v. Mis. Khairati Lal &
Sons, AIR (1960) J&K 101; Danma/ Parshotam Dass (Finn) v. Babu Ram
Chhote Lal (Finn), (1936) AIR All 3; Dwijendra Nath Singh v. Govinda
Chandra & A11r., AIR (1953) Cal 497; C./. T., AP v. Mis. layalakshmi Rice
and Oil Mills Contractor Co., [1971] 1 SCC 280; Mis. Shriram Finance
H C01poration v. Yasin Khan & Ors., [1989) 3 SCC 476; Sunder/al & Sons v.
RAPTAKOS BREIT AND CO. LID. v. GANFSH PROPERTY [S.B. MAJMUDAR.J.J 489

Yagendra Nath Singh & Anr., AIR (1976) Cal 471; Jakiuddin Badruddin & A
Ors. v. Vithoba Jaga1111ath Gadali & Anr., AIR (1939) Nag 301; Nazir Ahmad
& Ors. v. Peoples Bank of Northern India Ltd., AIR29 (1942) Lah 289; Abdul
Karim v. Ramdas Naraya11das Shop, ILR (1951) Nag 31; Des Raj Prem
Chand &Anr. (Fi.mt) v. Hira Lal Kali Ram &Anr., AIR (1952) Punjab, 415;
Puran Mal Ganga Ram (Fi.mi) v. Celltral Bank of India Ltd., AIR (1953) B
Pun. 235; Smt. Saiyada Mossarat v. Hindustan Steel Ltd., Bhilai Steel Plant
& Ors., [1989] 1SCC272; Mumbai Kamgar Sabha, Bomb. v. Mis. Abdulbhai
Faizullabhai & Ors., [1976] 3 SCC 832; Sreenivasa Ge11eral Traders & 01:~.
v. State of AP, [1983] 4 SCC 353; Bansidhar Sa11karlal v. Md. Ibrahim &
A11r., AIR (1971) SC 1292; Everest Coal Co. Pvt. Ltd. v. State of Bihar, AIR
(1977) SC 2304; Udhav Singh v. Madhav Rao Sci11dia, [1976] 2 SCR 246;
c
Ram Swarup Gupta (dead) by Lrs. v. Bi.shun Narai11 Inter College, [1987] 2
SCC 555; Ganga Dutt Murarka v. Kartik Chandra Das & Ors., [1961] 3 SCR
813; M.C. Chockalingam & Ors. v. V. Ma11ickayasagam & Ors., [1974] 1 SCC
48 and R. V. Bhupal Prasad v. State of A.P., [1995] 5 SCC 698, referred to.
D
Concise Oxford Dictionary, 7th Edition.; Foa's Ge11eral Law of
La11dlord aiid Tenallt, 8th Edn. Hill a11d Redman 011 Landlord & Tenllllt,
17th Edn. Mu/la, Tra11Sfer of Property Act, 8th Edn., referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4657 of
~- E

From the Judgment and Order dated 11.8.97 of the Calcutta High
Court in F.A. No. 253 of 1992.

R.F. Nariman, Gopal Jain, R.N. Karanjawala, Ms. Nandini Gore,
F
Bhaskar Pradhan, Arunabh Choudhary and Ms. Manik Karanjawala for the
Appellant.

Dr. A.M. Singhvi, Jaydeep Gupta, Pradeep Sanchati and Pranab
Kumar Mullick for the Respondent. ·
G
The Judgment of the Court was delivered by

S.B. MAJMUDAR, J. Leave granted.

We have heard learned counsel for the parties finally in this appeal.
Hence, this appeal is being disposed of by this judgment. H

..
490 SUPREME COURT REPORTS (1998) SUPP. 1 S.C.R.

A This appeal by special leave seeks to challenge the decision
rendered by learned Single Judge of the High Court ·of Judicature at
Calcutta confirming decree for possession passed against the appellant-
defendant by the learned Judge, 7th Court of City Civil at Calcutta in
Title Suit No. 1481 of 1986. In order to appreciate the grievance of the
B · appellant-defendant, it is necessary to note· ~ few relevant background
facts. '

FACTUALMATRIX:
,...,
The respondent-plaintiff is the owner of suit premises consisting of
C ground floor of a building situated at Marquis Street, Calcutta. The said
premises were rented to the appellant -defendant on a monthly rent of Rs.
2045 by a registered lease dated 16th March, 1964. This lease was for a
period- of 21 years commencing from 16th March, 1964 and ending on 15th
March, 1985. On the expiry of the said period, the respondent-plaintiff
D alleging to be a registered partnership firm, filed the aforesaid suit praying
for a decree for possession as well as damages @ Rs. 200 per day for illegal
occupation of the premises by the appellant-defendant. The defence of the
appellant-defendant was that after the expiry of the lease period, it had
continued to be a tenant by acceptance of rent by the defendant-landlord
E and hence it had become a tenant by holding over under Section 116 of
the Transfer of Property Act, 1882 (for short 'the Property Act'). Further
defence was taken by the appellant-defendant by way of a separate applica-
tion seeking dismissal of the suit under Order 7 Rule 11(d) of Code of Civil
Procedure (for short 'CPC') on the ground that the suit for possession as
F filed by the ·plaintiff-respondent, which was an unregistered partnership
firm, was not maintainable.

Learned Trial Judge, framed relevant issues on the pleadings and
came to the conclusion that the defendant-appellant was not a tenant
holding over and was in unlawful possession of the premises after the expiry
G of the lease period. On the question of maintainability of the suit, the Trial
Court held that the suit was not hit by Section 69 sub-section (2) of the
Indian Partnership Act, 1932 (for short 'the Partnership Act'). Accordingly,
a decree for possession was passed. The appellant-defendant carried the .
-
matter in first appeal before the High Court. As noted earlier, the learned
H · Single Judge who decided the said appeal, held against the appellant-

..
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR,J.] 491

defendant and dismissed the appeal. That is how the appellant-defendant A
is before us in the present case.

RIVAL CONTENTIONS:

Learned senior counsel, Shri R.F. Narirnan for the appellant- defen-
dant, placed a solitary contention for our consideration. He submitted that
B
on a proper reading of the plaint as filed by the respondent. it has to be
held that the respondent sought to enforce a right arising out of the
...... contract of lease between the parties and as on the date of the suit, the
respondent was not a registered partnership firm, the suit was ex-facie not
maintainable and was required to be dismissed on this ground alone. c
However, he fairly stated that on merits, as the West Bengal Rent Act does
not apply to a lease for 21 years and more and as the finding of the courts
below that the appellant was not a tenant by holding over, he cannot urge
any other contention save and except the aforesaid solitary one. In support
of his contentio'ii he also submitted that it is a fact that even though pending D
the suit the respondent plaintiffs firm got registered, the said registration
was of no avail to the respondent as the suit which was a still born one
could not be revived on account of this subsequent event. In support of
this contention Shri Narirnan placed reliance on various decisions of this
Court and High Courts to which we will make a reference at an appropriate E
stage in latter part of this judgment.

Learned senior counsel Dr. A.M. Singhvi for the respondent-plaintiff
contested the aforesaid contention and contended that only the averments
made in the plaint have to be seen on demurer for deciding whether the
suit was barred under Section 69 sub- section (2) of the Partnership Act, F
that on a conjoint reading of relevant clauses of the plaint it has to be held
that the suit was not filed for enforcing any right arising from a contract
which was already at an end by efflux of time and that the suit was not
based on any of the contraetual terms. Reference to the said contract or
any of its clauses was purely for mentioning a historical event for support- G
ing the plaintiff's case for decision and such factual narration of past events
did not form the foundation of the plaint nor did they form part of the
. cause of action. In the alternative, it was contended by Dr. Singhvi that
even assuming that the suit could be said to have been partly based on any
of the terms of the contract so as to attract the bar of Section 69(2) of the H
492 • SUPREME COURT REPORTS (1998) SUPP. l S.C.R.

A Partnership Act, this was in fact based on two causes of action; (i) on the
covenant contained in the erstwhile contract; (ii) on the law of the land,
namely, common law as well as Section lll(a) read with Section 108(q) of
the Property Act and so far as this latter cause of action is concerned, it
cannot in any way be said to be arising out of the contract. Hence the said
B cause of action was not in any way hit by Section 69(2) of the Partnership
Act. He lastly contended without prejudice to his aforesaid contentions
that even if a view is taken that the suit as a whole was hit by Section 69(2)
of the Partnership Act, as pending this suit before the decree could be
passed, the plaintiff-respondent had put his house in order and got the firm
C registered the initial defect, if any, which made the suit dormant got cured
and consequently it could not be said that the decree passed by the Trial
Court was in any way erroneous in law. In support of his contentions, he
also invited our attention to a number of decisions of this court and various
High Courts to which we will make a reference hereafter.

D In view of the aforesaid rival contentions, the following points arise
for our consideration :

(i) Whether the suit filed by the respondent was barred under
Section 69 sub-section (2) of the Partnership Act either
wholly or in part; •<--..
E
(ii) If the suit was so barred, whether subsequent registration of
the plaintiffs firm under the Partnership Act could revive the
suit or to make it competent at least from the date on which
such registration pending the suit was obtained by the respon-
F· dent firm;

(iii) What final order?

We shall deal with these points in the same sequence in which they
are catalogued herein above.
G
'-
Point No. 1:

In order to appreciate the rival contentions centering round this
point, it will be necessary to note the relevant provision of the Partnership
H Act. Section 69 sub-section (2) reads as under :
RAPTAKOS BREIT AND CO.LID." GANF.5H PROPERTY (S.B. MAIMUDAR, J.) 493

"69. Effect of 11011-registration - A

(1) xxx xxx xxx

(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 B
are or have been shown in the Register of Firms as partners
in the firm".

A mere look at the aforesaid provision shows that the suit filed by an un-
registered firm ag.llnst a third party for enforcement of any right arising from a
contract with such third party would be barred at its very inception. To attract c
the aforesaid bar to the suit the following conditions must be satisfied:

(i) That the pfaintiff partnership _firm on the date of the suit must
not be registered under the provisions of the Partnership Act
and consequently or even otherwise the persons suing are not D
shown in the Register of Firms as partners of the firm, on the
date of the suit.

(ii) Such unregistered firm or the partners mentioned in th~ sub-.
section must be suing the defendant third party.
E
(iii) Such a suit must be for enforcement of a right arising from
a contract of the firm with such a third party.

Chapter VII of the Partnership Act deals with registration of firms. As per
Section 56 thereof the State Government of any State may, by notification
in the Official Gazette, direct that the provisions of this Chapter shall not F
apply to that State or to any part thereof specified in the notification. It is
not the case of any party that any such exemption has been granted so as
not to make applicable the said Chapter to the pending controversy be-
tween the parties. As per Section 57, the State Government may, by
notification, appoint a Registrar of Firms for the purpose of the Act. As G
per Section 58, the registration of a firm can be effected at any time by
sending by post or delivering to the Registrar of the area in which any place
of business of the firm is situated or proposed to be situated, for the
purpose of getting the firm registered by furnishing relevant data as re-
quired by the said Section. As per Section 59, when the· Registrar is
satisfied that provisions of Section 58 have been duly complied with, he H
494 SUPREME COURT REPORTS (1998] SUPP.1 S.C.R.

A shall record an entry of the statement in a register called the Register of
Firms, and then he has to file the statement furnished to him by the firm
concerned. It is in the light oi the aforesaid statutory provisions of Chapter
VII that the effect of non-registration has to be considered as laid down
by Section 69 in its various sub-clauses. We are concerned in the present
case only with Section 69 sub-section (2) as extracted earlier. ....
B
Coming back to the consideration of the requirements of Section 69
sub-section (2) under which bar to file such a suit would arise on the part
of the unregistered firm it may be noted that on the facts of the present
case it is not in dispute between the parties that when the suit was filed in
C 1986 the first condition for attracting this bar squarely got attracted namely,
-
that the respondent firm was not a registered firm though it was wrongly
mentioned in the plaint that it was a registered firm. Second condition for
attracting the bar was also found satisfied as the appellant was a third party
being erstwhile tenant against whom the suit was filed. It is the third
condition which is the bone of serious contention between the parties.
D Learned senior counsel Shri Nariman for the appellant submitted that the
third condition was also satisfied on the facts of the present case as the
suit filed by the respondent-plaintiff unregistered firm was for enforce-
ment of the right of the respondent-plaintiff arising _from the contract
of lease which was entered into between the parties in 1964 for a period
of 21 years and which had expired at the end of 15th March, 1985. It is
E this contention of learned senior counsel Shri Nariman that has been ..·
vehemently contested by learned senior counsel Dr. Singhvi for the respon-
dent-plaintiff. At the outset he submitted that for deciding the question
whether the suit is barred under Section 69 sub-section (2) of the Partner-
ship Act or not only averments in the plaint as a whole will have to be seen.
F In this connection, h:: rightly invited our attention to Order VII Rule 11
Clause (d) of the CPC which reads as under : .

"ORDER VII : xxx xxx xxx

11. Rejection ofplaint - The plaint shall be rejected in the following
G cases:

(a) xxx xxx xxx

(b) xxx xxx xxx

H (c) xxx xxx xxx
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR,J.) 495

(d) where the suit appears from the statement in the plaint to be A
barred by any law" :

We have, therefore, to see the averments m the plaint for deciding
whether on the averments in the plaint, the suit can be said to have been
barred under Section 69 sub-section (2) of the Partnership Act as that
B
is the only bar which is relied upon by the learned senior. counsel for
the appellant for non-suiting the plaint. The plaint in the present case
is a very short one consisting of five paragraphs. It would, therefore, be
>- appropriate to reproduce these paragraphs. They are as under :

"l. The defendant was a Lessee under the plaintiff in respect C
of ground floor of the main building (except the stair-
case and common spaces) as premises No. 6, Marquis
Street, Calcutta, butted and bounded as given in the
schedule hereunder at a monthly rent of Rs. 2045 payable
according to English Calendar month for a term of twenty D
one years commencing from 16th March,1964 and ending
on 15th March, 1985 under a Registered Lease dated 16th
March, 1964.

2. The said lease dated 16th March, 1964 in respect of the
suit-premises terminated by efflux of time on the expiry of E
15th March, 1985 but the defendant has failed and neglected
· to quit, vacate and deliver up peaceful possession of suit
premises to the plaintiff as required under the covenant of
the said lease and law of land.
F
3. The plaintiff in this suit seeks to recover from the defendant
khas possession of the suit premises which the defendant has
failed to vacate and is in wrongful occupation thereof. The
plaintiff also claims and seeks to recover mesne profits or
damages @ Rs. 200 per day or at such rate as the learned
Court may determine, from 16th March, 1985 till recovery of G
khas possession.

4. The cause of action for this suit arose at 6, Marquis Street,
Calcutta, P.S. Taltola, within the jurisdiction of this Court on
the expiry of 15th day of March, 1985 and subsequently. H
496 SUPREME COURT REPORTS [1998J SUPP. 1 S.C.R.

A 5. For the purpose of jurisdiction and court fee the value of the
suit has been assessed at Rs. 25,540 (monthly rent Rs. 2045.00
x 12) for recovery of possession and tentatively valued at Rs.
10.00 for recovery of mesne profit or damages. The plaintiff
undertakes to pay further court fee as may be assessed."

B Based on these averments, the plaintiff has prayed for decree for khas
possession and mesne profits @ Rs. 200 per day or at such rate as the
Court may determine from 16th March, 1985 till recovery of khas posses-
sion. Our attention was invited by learned senior counsel for the parties on
the moot question as to how the averments in the plaint have to be
C construed. Shri Nariman invited our attention tO a decision of this Court
in Udhav Singh v. Madhav Rao Sci11dia, [1976] 2 SCR 246. In the ~aid report
at page 254, Sarkaria, J, speaking for the Court made the following per-
tinent observations :

"We are afraid, this ingenious method of construction after com-
D partmentalisation, dissection, segregation and inversion of the lan-
gtlage of the paragraph, suggested by Counsel, runs counter to the
cardinal cannon of interpretation, according to which, a pleading
has to be read as a whole to ascertain its true import. It is not
permissible to call out a sentence or a passage and to read it out
E of the context, in isolation. Although it is the substance and not
merely the form that has to be looked into, the pleading has to be
construed as it stands without addition or substraction of words,
or change of its apparent grammatical sense. The intention of the
party concerned is to be gathered, primarily, from the tenor and
terms of his pleading taken as a whole."
F
On the other hand, Dr. Singhvi for the respondent, invited our attention to
a decision of this Court in Ram Saro.p Gupta (Dead) by Lrs. v. Bishu11
Narain Inter College & Ors., [1987] 2 SCC 555 at page 562, wherein it is
observed that.
G ".. ;..The pleadings however should receive a liberal construction;
no pedantic approach should be adopted to defeat justice on
hair-splitting technicalities ...."

Keeping in view this settled legal position, let us see what has the plaintiff
H, alleged in the suit as the basis of its cause of action. This can be culled out
RAPTAKOS BREIT AND CO. LID. v. GANESH PROPERTY [S.B. MAJMUDAR,J.] 497

on a conjoint reading of all the aforesaid paragraphs of the plaint. So far A
as the first paragraph is concerned, it is obvious that the plaintiff has relied
on background facts for introducing its case against the defendant. It has
traced the history of the relations between the parties and has tried to show
how the defendant came to occupy the suit premises. Reference to
registered lease of 16th March, 1964 in the first paragraph, therefore,
cannot be said to be the foundation of the right to sue as tried to be got
B
enforced by the plaintiff through the machinery of the court. It is not
possible to agree with the contention of the learned senior counsel Shri
Nariman for the appellant that the first paragraph shows the foundation of
the right of the plaintiff for evicting the defendant. It is obvious that unless
the history of the relationship of the parties is traced the plaintiff cannot c
show how the defendant has continued to remain in posstssion after the
expiry of the lease period. However, the subsequent paragraphs 2 to 5 have
been relied upon by the counsel for both the parties for supporting their
respective cases and, therefore, they require a closer scrutiny. So far as the
second paragraph is concerned, it is clearly stated that despite the efflux D
of time permitting the lease, the defendant had failed to evict and deliver
actual possession of the suit premises to the plaintiff on expiry of 15th
March, 1985. It is also obvious that this averment is based on and expressly
refers to the covenant in the lease which required the defendant on expiry
of the lease to deliver vacant and peaceful possession to the plaintiff. So
far as the said covenant is concerned, when we turn to the lease deed we E
find mentioned therein at Clause 11, the following material recitals :

"11. That the lessees shall quit and deliver peaceful and vacant
possession of the said demised premises to the lessors or their
agents on the. expiry of the tenure of this lease and/or sooner
determination thereof for any reason whatsoever."
F

Similar recitals are found in Clause 14 of the lease deed which reads as
under:

"That on the expiry of the period of the terms of herein mentioned G
and/or sooner determination thereof for any reason whatsoever the
lessee shall peacefully and quietly quit, yield and deliver vacant
possession of the said demised premises to the lessors of their
nominees anci agents in good order, condition and tenantable
repair with usual wear and tear and damages caused by other H
498 SUPREME COURT REPORTS (1998] SUPP. 1 S.C.R.

A causes as mentioned in Item No. 6, above excepted."

A conjoint reading of these clauses in the lease deed with the averments
in paragraph 2 of the plaint, therefore, clearly indicate that the plaintiff
had sought to enforce through court, amongst others its right to get
B restoration of the peaceful possession of the suit premises from the defen-
dant arising from the alleged breach of these relevant covenants on the part
of the defendant on the expiry of the lease period. If the averments in
paragraph 2 had rested at this stage, Shri Nariman would have been
perfectly justified in submitting that the plaintiff was trying to enforce solely
its right arising out of the erstwhile contract. However, the very same
C paragraph proceeds further and states in the last line thereof that the
defendant had not vacated the premises under the law of the land. This
raises the moot question whether the plaint as framed is based on two
causes of action or only on one solitary cause of action as submitted by
Shri Nariman, learned senior counsel for the appellant-defendant. Dr.
D Singhvi, learned senior counsel for the plaintiff at the outset submitted that
the recitals in paragraph 2 regarding the covenants was by way of a
historical fact and the suit is purely based on the law of the land, namely,
the Common Law as well as Section 108(q) read with Section lll(a) of the
Property Act. While Shri Nariman for the appellant took an entirely
opposite stand by submitting that these very recitals in paragraph 2 show
E that the suit as based solely on the right arising from the a11eged breach of
covenant by defendant and the reference to law of the land is by way of
abundant caution. As we shall see hereinafter, neither of these extreme
covenants can be countenanced. Turning to paragraph 3, it is no doubt true
as submitted by Dr. Singhvi for the respondent that the plaintiff has clearly
F stated that it is seeking to recover possession from the defendant as the
defendant failed to vacate and is in wrongful occupation of the premises.
The words "wrongful occupation of the premises" according to Dr. Singhvi
show that the plaintiff was alleging in clear terms that the defendant was
in unauthorised occupation of the premises after the termination of the
G contract. Placing reliance on a number of decisions of this Court it was
submitted by Dr. Singhvi that on the expiry of the period of tenancy the
erstwhile tenant in the absence of any evidence of tenancy by holding over
has to be treated as a tenant at sufferance akin to a trespasser and,
therefore, the averments in paragraph 3 of the plaint clearly show that the
suit was for enforcing the legal right arising from any law or under any
H relevant provision of the Property Act and the suit cannot .be said to be
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY IS.B. MAJMUDAR, J.] 499

. based on any covenant of the erstwhile lease which was dead and gone by A
efflux of time. In this connection, strong reliance was placed by Dr. Singhvi
in the latter part of paragraph which indicated that the plaintiff was seeking
to recover mesne profits of damages @ Rs. 200 per day which had nothing
to do with the erstwhile lease rent fixed under the contract. According to
Dr. Singhvi this averment clearly indicated that the plaintiff treated the
defendant to be in unlawful possession and hence the claim for damages.
B
On the other h~rtd, Shri Nariman learned senior counsel for the appellant
submitted that the term "wrongful occupation" as found in paragraph 3
when read in the light of paragraph 2 would indicate that according to the
plaintiff, defendant was in breach of covenant of handing over of peaceful
possession on expiry of lease as enjoined on the defendant under the c
contract of lease and that. "wrongful occupation" due to alleged breach of
contract was different from "unlawful occupation". In our view, this hyper
technical submission of Shri Nariman cannot be countenanced as there is
no real distinction between the terms "wrongful occupation" and "unlawful
occupation". Whatever is unlawful cannot be said to be rightful and would D
necessarily be wrongful. In Concise Oxford Dictionary, 7th Edition, the
term "wrongful" is defined at page 1240 as under :

"characterised by unfairness or injustice; contrary to law; (of per-
son) not entitled to position etc. occupied;"
E
It is, therefore, obvious that.recitals in paragraph 3 can support the case
of the plaintiff both on the ground, if any, that the defendant had com-
mitted breach of the covenant and therefore, it was in wrongful occupation
and also equally on the ground that under law of the land, the defendant
was not entitled to continue in possession after the termination of the F
. period of lease and, therefore, it was in unlawful or wrongful occupation.
The words "wrongful occupation" cannot, therefore, be inter!'lreted to mean
only 'in breach of any of the terms and conditions of the contract' and can
legitimately take in its sweep unlawful occupation after the lease expired
on efflux of time as per Section 111(a) of the Property Act read with
Section 108(q) thereof. The restricted meaning of the term 'wrongful G
occupation' as tried to be suggested by Shri Nariman cannot be accepted.
On the contrary, the claim of mesne profits @ Rs. 200 per day as found in
paragraph 3 of the plaint clearly shows that the plaintiff treated the
defendant to be in unauthorised and illegal occupation after the efflux of
time of the lease and therefore, the demand was for mesne profits at the H
500 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A aforesaid rate per day. That had no nexus with the rental of the premises.
Turning to the cause of action paragraph 4 it is seen that it is also in
general terms and refers to the situation after the expiry of 15th March,
1985 when the lease period was over. It states that the cause of action for
recovery of possession arose within the territorial jurisdiction of the court
B from that date and such cause of action continued subsequently thereafter.
Consequently, paragraphs 3 and 4 of the plaint can be said to be equivocal
and not necessarily confined to the breach of the covenant of the lease as
mentioned in paragraph 2 of the plaint.

They can as well support th_e case of the plaintiff for possession also
C under general law of the land as recited in last lines of paragraph 2. So far
as paragraph 5 regarding the court is concerned, it is now well settled that
if the plaintiff seeks possession of the demise premises from the erstwhile
tenant, court fee payable would not be on the market value of the suit
property, but on the basis of the valuation of the premises computed on
D the basis of 12 months rent as it would not be a suit simpliciter on title
against a rank trespasser. Only in the latter type of suits that the market
value would be the valuation for the purpose of court fees.

Having seen the aforesaid relevant averments in the plaint, now it is
time for us to consider the rival contentions pressed for our consideration
E by learned senior counsel for both the parties. Shri Nariman, learned senior
counsel appearing for the appellant vehemently contended that the phrase
"arising from" or "arising out of" a contract as employed by Section 69
sub-section (2) of the Partnership Act is of wider import as compared to
the term "arising under". In support of his contention, he invited our
F attention to a decision of this court in Jagdish Chander Gupta v. Kajmia
Tradw (India) Ltd., [1964] 8 SCR 50 at page 51. In the said case, this court
was concerned with the question whether the application moved by an
unregistered partnership firm under Section 8 sub-section (2) of the Indian
Arbitration Act, 1940 for appointment of an arbitrator in the light of the
arbitration agreement between the parties was covered by Section 69
G sub-section 3 of the Indian Partnership Act. In this connection this court
observed that :

"That since the arbitration clause formed a part of the agreement
constituting the partnership it is obvious that the proceeding which
H is before the Court is to enforce a right which arises from a
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR, J.) 501

contract. Whether one views the contract between the parties as a A
whole or one views only the arbitration clause it is impossible to
think that the right to proceed to arbitration is not one of the rights
which are founded on the agreement of the parties."

So far as the aforesaid decision is concerned, it has to be noted that when
B
an application is moved under Section 8 sub-section (2) of the Arbitration
Act for appointment of an arbitrator, such an application has necessarily
to be based on the arbitration clause which is a part of the main contract
between the parties. Such an application was, therefore, rightly held to be
having a direct nexus with the main contract between the parties which
covered the arbitration clause. In the facts of the present case, we fail to c
appreciate how this decision can be of any assistance to Shri Nariman. In
the present suit by erstwhile landlord against the erstwhile tenant the claim
for possession by itself has nothing to do with the contract of tenancy which
had already come to an end more than a year back. For such claim there
is no question of the source of right to possession being its erstwhile D
contract which is dead and gone. It cannot necessarily be the foundation
of the cause of action unless the plaint itself refers to such a cause of action
arising out of the terms and conditions of the erstwhile contract which
according to the plaint are still subsisting on the date of the suit. Thus, it
cannot be generalised that in every case when on the expiry of period of
lease the landlord seeks to recover possession from the erstwhile tenant E
such a suit must necessarily be said to be one for enforcement of right
arising from the contract of tenancy with third party ex-tenant. On the
other hand, Dr. Singhvi appearing for the respondent rightly contended
placing reliance on a catena of decisions of this court that on expiry of the
period of lease, the erstwhile tenant who continues in possession, in the F
absence of being a tenant holding over, has to be treated as tenant at
sufferance whose right of occupation arises not from the erstwhile contract
which is dead and gone but which may arise under the general law of the
land particularly against forcibly re-entry by ex-landlord or under any
statutory law protecting the possession of statutory tenants under the
relevant rent Act if applicable. In this connection, Dr. Singhvi invited our G
attention to a decision of this court in Ganga Dutt Murarka v. Kartik
Chandra Das & Ors., [1961] 3 SCR 813. Shah, J., speaking for a three Judge
Bench of this Court in the aforesaid decision held at page 819 of the Report
that after the expiry of the lease if the erstwhile tenant continues in
possession against the wish of the landlord he cannot be said to have H
502 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A continued in possession pursuant to a contract which is already non-exis-
tent. The following pertinent observations in this connection were pressed
in service by Dr. Singhvi :

"...... Of course, there is no prohibition against a landlord entering
into a fresh contract of tenancy with a tenant whose right of
B occupation is determined and who remains in occupation by virtue
of the statutory immunity. Apart from an express contract, conduct
of the parties may undoubtedly justify an inference that after
determination of the contractual tenancy, the landlord had entered
into a fresh contract with the tenant, but whether the conduct
c justifies such an inference must always depend upon the facts of
each case. Occupation of premises by a tenant whose tenancy is
determined is by viltue of the protection gra11ted by the statute a11d
not because of a11y right arising from the contract which is deter-
mi11ed. The statute protects his possession so long as the conditions
which justify a lessor on obtaining an order of eviction against him
D do not exist. Once the prohibition against the exercise of jurisdic-
tion by the court is removed, the right to obtain possession by the
lessor under the ordinary law springs into action and the exercise
of the lessor's right to evict the tenant will not unless the statute
provides otherwise, be conditioned."
E
(Emphasis supplied)

He also invited our attention to another decision of this Court in M. C.
Chockalingam & Ors. v. V. Manickayasagam & Ors., [1974] 1 SCC 48,
wherein Goswami, J, speaking for the Court considered the question
F whether a contractual tenant after the termination of the tenancy can be
said to be in lawful possession of the cinema theatre and would be entitled
to renewal of cinema licence as per Rule 13 of the relevant rules. Consider-
ing the status of the erstwhile tenant on the expiry of the lease to be that
of a person in wrongful possession, the following observations were made
G in paragraph 16 of the Report :

"16. Law in general prescribes and insists upon a specified conduct
in human relationship or even otherwise. Within the limits of the
law, courts strive to take note of the moral fabric of the law. In
the instant case, under the terms of the lease, the property had to
H be handed over to the lessor. Besides under Section 108(q) of the
RAITAKOS BREIT AND CO. LIB. v. GANESJI PROPERTY (S.B. MAJMUDAR, J.] 503

Transfer of Property Act, on the determination of the lease, the A
lessee is bound to put the lessor into possession of the property.
Since the landlord has not assented to the lessee's continuance in
possession of the property, the lessee will be liable to mesne profits
which can again be recovered only in term of his wrongful posses-
sion. Under Section 5(1) of the Act, the licensing authority in
deciding whether to grant or refuse a licence has regard, amongst
B
others, to the interest of the public generally. Public interest is,
therefore, also involved in granting or refusing a licence. That being
the position, the expression 'lawful possession' in Rule 13 assumes
a peculiar significance of its own in the context of the provisions
of the Act. Hence in any view of the matter possession of the c
respondents on the expiry of the lease is not lawful possession
within the meaning of rule 13."

Dr. Singhvi in this connection also vehemently relied upon the decision of
this court in the case of R. V. Bhupal Prasad v. State of A.P. & Ors., [1995) D
5 SCC 698, wherein a two Judge bench of this Court, speaking through
Ramaswamy, J., made the following pertinent observations in paragraph 8
of the Report :

"8. Tenant at sufferance is one who comes into possession of land
by lawful title, but who holds it, by wrong after the termination of E
the term or expiry of the lease by efflux of time. The tenant at
sufferance is, therefore, one who wrongfully continues in posses-
sion after the extinction of a lawful title. There is little difference
between him and a trespasser. In Mulla's Transfer of Property Act
(7th Ed.) at page 633, the position of tenancy at sufferance has F
been stated thus : A tenancy at sufferance is merely fiction to avoid
• continuance in possession operating as a trespass. It has been
described as the least and lowest interest which can subsist in
reality. It, therefore, cannot be created by contract and mises only
by implication of law when a person who has been in possession
under a lawful title continues in possession after that title has been G
determined, without the consent of the person entitled. A tenancy
at sufferance does not create the relationship of landlord and
tenant. At page 769, it is stated regarding the right of a tenant
holding over thus : The Act of holding over after the expiration
of the term does not necessarily create a tenancy of any kind. If H
504 SUPREME COURT REPORTS (1998] SUPP. 1 S.C.R.

A the lessee remaining in possession after the determination of the
term, the common law rule is that he is a tenant on sufferance.
The expression "holding over" is used in the sense of retaining
possession. A distinction should be drawn between a tenant con-
tinuing in possession after the determination of the lease, without
the consent of the landlord and a tenant doing so with the
B landlord's consent. The former is called a tenant by sufferance in
the language of the English law and the latter class of tenants is
called a tenant holding over or a tenant at will. The lessee holding
over with the consent of the lessor is in a better position than a
mere tenant at will. The tenancy on sufferance is converted into a
c tenancy at will by the assent of the landlord, but the relationship
of the landlord and tenant is not established until that rent was
paid and accepted. The assent of the landlord to the continuance
of the tenancy after the determination of the tenancy would create
a new tenancy. The possession of a tenant who has ceased to be
a tenant is protected by law. Although he may not have a right to
D
continue in possession after the termination of the tenancy, his
possession is juridical."

(Emphasis supplied)

E On the same lines are the decisions of this Court in Smt. Shanti Devi v.
Amal Kumar Bmwjee, (1981) 2 SCC 199, Murlidhar Jalan (since deceased)
through his Lrs. v. State of Meghalaya & Ors., (1997) 5 SCC 480 and D.H.
Maniar & Ors. v. Waman La.xman Kudav, (1977) 1 SCR 403.

In view of the aforesaid settled legal position, it must be held that on
F the expiry of the period of lease, the erstwhile lessee continues in posses-
sion because of the law of the land, namely that the original landlord
cannot physically throw out such an erstwhile tenant by force. He must get
his claim for possession adjudicated by a competent court as per the
relevant provisions of law. The status of an erstwhile tenant has to be
G treated as a tenant at sufferance akin to a trespasser having no inde-
pe11dent right to continue in possession.

However, the aforesaid conclusion will not clinch the matter one way
or the other. The reason is obvious. While considering the question
whether the suit as filed is hit by Section 69 sub-section (2) of the Partner-
H ship Act or not, we have to see what the plaintiff claims as his cause of
RAPTAKOS BRETT AND CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR. J.] 505

action. It is obvious that if the suit is based solely on the ground that the A
erstwhile tenant defendant unlawfully remained in possession after the
expiry of the lease and is required to hand over possession to the plaintiff,
the suit can be said to be based on the sole cause of action for enforcement
of a right arising at general law and under the Transfer of Property Act in
favour of the plaintiff and against the defendant who was earlier protected
by the contract between the parties. Shri Nariman in this connection was
B
right when he contended that the aforesaid decisions of this Court only
dedde the status of such an erstwhile tenant and there can not be any
dispute that the appellant on the expiry of the lease, especially when there
was no evidence to show that !J.e was a tenant by holding over, had
continued in occupation as a tenant at sufferance. However, the nature of c
the right sought to be enforced by the plaintiff has to be culled out from
the recitals in the plaint even against such. a tenant at sufferance.

Once this stage is reached in the course of arguments of learned
counsel for the parties, it becomes at once necessary to see as to whether D
~he relevant recitals in the plaint as seen by us earlier can be said to have
referred to the erstwhile contract between the parties purely by way of a
historical event or whether the plaintiff sought to base its cause of action
for possession on any of the terms of the contract and or on provisions of

- general law simpliciter. Dr. Singhvi for the respondent-plaintiff in support
of his case submitted that reference to the covenant of the leese as found E
in paragraph 2 was purely of a historical n"ture and it only meant that after
the expiry of 15th March, 1985 when the contract was determined by efflux
of time on that date, the defendant had not acted according to the covenant
of the contract on expiry of 15th March, 1985 but that was purely a
historical event when the suit was filed ir.. 1986. The cause of action of the F
present suit was, therefore, based on the law of the land. In this connection
he vehemently placed reliance on paragraphs 3 and 4 of the plaint noted
by us earlier. As we have already seen, paragraphs 3 and 4 of the plaint
are of general nature and can support the cause of action of the plaintiff
both on the ground of breach of covenant by defendant to hand over vacant
... possession as agreed to by it as well as on the ground that under the G
common law of the land the defendant was liable to be evicted having not
acted upon the statutory requirement of the provisions of Section 108(q)
read with Section 111(a) of the Property Act. It is, therefore, not possible
for us to agree with Dr. Singhvi for the respondent that on a conjoint
reading of paragraphs 2, 3 and 4 of the plaint, it has to be held that thP. H
506 SUPREME COURT REPORTS (1998) SUPP. 1 S.C.R.

A plaintiff was not at all basing his case on the relevant clauses of the
erstwhile contract.

It is easy to visualise that convenant mentioned in paragraph 2 of the
plaint regarding the appellant's liability to hand over vacant and peaceful
possession of the suit property to the plaintiff lessor would come into
B operation only after the period of the lease is over. Therefore, it cannot be
said that the said covenant would not remain effective and pending
between the parties after the lease gets determined by efflux of time. To
that extent the extreme contention of Dr. Singhvi that this part of the cause
of action did not arise out of the contract of lease cannot be accepted.

C However, the aforesaid conclusion of ours cannot put an end to the
controversy between the parties. Reason is obvious. The plaintiff in clearest
terms has based its cause of action also on the law of the land as found in
paragraph 2 of the plaint. So far as this part of the cause of action is
concerned, it is a distinct cause of action apart from the cause of action
emanating from the alleged breach of the covenant on the part of the
D defendant. So far as the law of the land is concerned, it is obviously the
common law under which the erstwhile tenant on expiry of the lease has
to hand over vacant possession to the erstwhile landlord. But that apart,
the said obligation on the part of the erstwhile tenant is statutorily recog-
nised by Section 108(q) read with lll(a) of the Property Act Section 111
E Clause, (a) reads as under : ...
•
"111. A lease of immovable property determines -

(a) by efflux of the time limited thereby.

F (b) xxx xxx xxx

(c) xxx xxx xxx

(d) xxx xxx xxx

G (e) xxx xxx xxx

(t) xxx xxx xxx

(g) xxx xxx xxx

H (h) xxx xxx xxx
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY (S.B. MAJMUDAR, J] 507

In the present case we are not concerned with any of the other clauses of A
Section 111. We confine the present decision only on the aforesaid mode
of determination of lease of immovable property by efflux of time. It is
obvious that such a lease gets determined by efflux of time. The determina-
tion is automatic and does not depend upon any Act either on the part of
the landlord or on the part of the tenant. When such automatic statutory B
determination of lease takes place, Section 108(q) gets simultaneously
attracted against the erstwhile lessee. Section 108 of the Property Act deals
with rights and liabilities of lessors and lessees. The said Section reads as
under:

"108. In the absence of a contract or local usage to the contrary, C
the lessor and the lessee of immovable property, as against one
•
another, respectively, possess the rights and are subject to the
liabilities mentioned in the rules next following, or such of them
as are applicable to the property leased :

A. Rights and Liabilities of the Lessor. D

(a) xxx xxx xxx

(b) xxx xxx xxx

(c) xxx xxx xxx E

B. Rights and Liabilities of the Lessee.

(d) xxx xxx xxx

(e) xxx xxx xxx F
(f) xxx xxx xxx

(g) xxx xxx xxx

-
(h) xxx xxx xxx G
(i) xxx xxx xxx

G) xxx xxx xxx

(k) xxx xxx xxx H
508 SUPREME COURT REPORTS [1998] SUPP. l S.C.R.

A (1) xxx xxx xxx

(m) xxx xxx xxx

(o) xxx xxx xxx

B (p) xxx xxx xxx

(q) on the determination of the lease, the lessee is bound to put
the lessor into possession of the property".

It is, therefore, obvious that a statutory obligation is foisted on the lessee
C on the determination of the lease which earlier existed in his favour.
Therefore, on a conjoint reading of Section lOS(q) read with Section lll(a)
of the Property Act, it becomes obvious that under law the erstwhile
landlord is entitled to base his cause of Action on the statutory obligation
of the erstwhile lessee on determination of the lease to put the lessor in
D possession of the property. It is this statutory right of the lessor and the
corresponding statutory obligation of the lessee that can be said to have
been relied upon by the plaintiff for getting peaceful possession from the
defendant as per the recitals in second part of paragraph 2 read with
paragraphs 3 and 4 of the plaint.

E It,is of course true that in paragraph 2 of the plaint reliance is also
placed on the non-delivery of vacant and peaceful possession of the suit
premises to the plaintiff by the defendant as per the covenants which as
we have noted are covenants being clauses 14 and 17 of the lease. As they
are express covenants relied on by the plaintiff, it is not necessary for us
F to examine the wider question whether there is any implied covenant on
the part of the lessee to hand over possession to the lessor on the expiry
of the lease as tried to be suggested by learned senior counsel Shri N ariman
placing reliance on a decision of the Division Bench of the Travancore
High Court in Sivjnanam Abraham & Anr. v. Mathevan Pillai Bhoothalin-
gam Pillai & Ors., AIR (1952) Vol. 39 Travancore page 359 and also on
G the decision of the Karnataka High Court in the case of Mrs. 17iayarammal
v. People's Ch01ity Fund, Bang/ore & Ors., AIR (1978) Karnataka 125. All
the same we may briefly deal with them. In the case of Sivjnanam Abraham
& Anr. v. Mathevan Pillai Bhoothalingam Pillai & Ors. (supra), the court
was not directly concerned with the interpretation of Section 69 sub-section
H (2) of the Partnership Act. The question before the court was whether on
RAPTAKOS BREIT ANU CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR, J.] 509

the determination of lease erstwhile tenant was liable to restore the pos- A
session of the property to the plaintiff. Analysing the landlord's claim for
recovery of possession on determination of tenancy it was observed in
paragraph 7 that :

"7. The landlord's claim for recovery of possession of the properties
from a tenant on the determination of tenancy need not be based B
on any contract expressly entered into that behalf. The right of the
landlord to get and the liability of the tenant to surrender posses-
sion of the properties leased, on the determination of the tenancy,
is inherent in the very relationship of landlord and tenant and will
be implied by the law. This is known as the rule in HENDERSON c
v. SQUIRE, (1869) LR 4 QB 170.

"The duty of the tenant upon the determination of the tenancy
.................. is simply to yield up peaceable and complete possession
of the premises demised to him together with all fixtures except
those which he is entitled to remove .... This duty will be implied D
in law if not expressed in the contract between the parties and the
tenant will not discharge the duty by merely going out of possession
unless he restores possession to the landlord" Foa on the Relation-
ship of Landlord and Tenant, 6th Ed. P 838.
E
"A lease usually contains a covenant on the part of the lessee to
deliver up the premises on the determination of the term. In the
absence of such a covenant or of any express stipulation, the tenant
is under an implied contract to restore possession to the landlord".
The complete Law of Landlord & Tenant by Redman, edited by
Hill, 8th Ed. (1939) p. 459. F

-
;
See also "VENKATESH NARAYAN v. KRISHNAJI ARJUN, 8
Born. 160. Section 108(q) of the Transfer of Property Act has
recognised this obligation on the part of the tenant. Indeed one
does not come across an instance of this plea having been ever G
seriously put forward."

We fail to appreciate ·how this decision can advance the case of the
appellant. All that it says is that on determination of tenancy the tenant
would be bound to restore the possession of the demised premises to the
erstwhile landlord and if there is an express term/convenant in the lease to H
510 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.
I
A that effect it would apply and if there is no express covenant the law will
imply an obligation to that effect of the erstwhile tenant. As we have noted
in the present case there is an express covenant in the lease which also was
relied upon by the plaintiff. But in the absence of such an express covenant
the law would imply a statutory obligation on the part of the ex-tenant to
B deliver and restore vacant possession of demised premises to the landlord
on determination of the lease. That would obviously create a legal right in
favour of the landlord and correspondent legal duty and obligation on the
part of the ex-tenant. That is precisely what is being sought to be enforced
by the plaintiff by basing its right to possession also on the law of the land.
Similarly, the decision of the learned Single Judge, M. Rama Jois, in the
C case in Mrs. Thayarammal v. People's Cha1ity Fund, Bangalore & Ors.
(supra) also cannot be of any avail to learned senior counsel for the
appellant. The learned Judge in the said decision has taken the view
following this Court's decisions that on expiry of the lease, the erstwhile
lessee cannot be said to be in lawful possession within the meaning of Rule
D 6 of the Karnataka Cinemas (Regulation) Act (23 of 1964). It is of course
true that while referring to Section 108(q) of the Property Act it has been
observed that on the expiry of the lease period the lessee was bound to put
the lessor into possession of the property and that it would be an implied
term of the contract. It imposes an obligation in law on the erstwhile tenant
to restore possession to the landlord.
E
It is difficult to see how these observations of the learned Judge can
advance the case of the appellant. The obligation to restore possessions by
the ex-lessee Vlill flow from the statutory provisions and not from any term
of the contract. It is easy to visualise that any term in contract which is
F parallel to the statutory obligation of the contracting party would be based
on such legal obligation and cannot be said to be laying down any
inconsistent but legally permissible contractual term. In this connection
Shri Nariman, learned senior counsel for the appellant also invited our
attention to the observations in Foa's General Law of Landlord and

-
Tenant, 8th Edn., at page 711. It has been observed by the learned.
G author in paragraph 1083 of Chapter 2 dealing with Rights and
Remedies of the Landlord that :

"Subject to the provisions of the Rent Restriction Acts and to any
stipulation or local custom to the contrary (a), and to the right
H conferred upon him in lieu of emblements by statute (b), the duty
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY [S.8. MAJMUDAR, J.) 511

of the tenant upon the determination of the tenancy is to yield up A
peaceable and complete (c) possession ·of the premises demised
to him, together with all fixtures except those which he is entitled
to remove; and after entry and demand of possession by the
landlord, or any Act upon such entry showing an intention to.
resume possession, the tenant and all persons claiming under him
are liable to be treated as trespassers (d). This duty will be implied
B
in law if not expressed in the contract between the parties, and the
tenant will not discharge it by merely going out of possession,
unless he restores possession· to the landlord (e)."

We fail to appreciate how these observations can change the complexion C
of the controversy in the present case. Even it there is no express covenant
in the contract, law will imply duty on the tenant to hand over the
a
possession on determination of lease. This will be legal obligation covered
by the express law of the land on which reliance is placed in paragraph 2
of the plaint. Similar observations are found in Hill & Redman on D
Landlord & Tenant, Seventeenth Edition, Chapter 6, paragraph 425 at
page 520. Our attention was also invited by Shri Nariman to the observa-
tions in Mulla in "The Transfer of Property Act", 8th ED., at pages 843 and
844. Shri Nariman placed strong reliance on the observations of the learned
author at page 844 to the following effect :
E
Sec. 108 - This section, as said by Coutts Trotter, J., sets out in a
convenient form the implied covenants usually subsisting in a lease
(i). Nearly all the clauses were said by Rankin, CJ., to be expres-
sions of well settled principles familiar to the law of England G).
The section has no application to a tenancy at will, for a tenancy
F
at will is not a lease as defined in the Act (k)."

Even these observations do not in any way dilute the contention of
learned senior counsel for the respondent that when the plaintiff has relied
on law of the land, any implied covenant as contemplated by the statutory
provisions of Section 108( q) would still remain in the domain of statutory G
obligation on the part of the appellant to hand over vacant possession to
the respondent on determination of lease by efflux of time. Consequently,
the decisions of Travancore and Karnataka High Courts which have taken
the view that there is an implied term in the contract of lease that after
the expiry of the lease period the lessee would put the lessor in possession H
512 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A would not be of any assistance to the appellant. It has to be noted that so
"'
long as this implied term runs parallel to the statutory obligation of such
erstwhile lessee as per Section 108(q) it cannot be said that the said
statutory obligation gets obliterated and repealed merely because such
implied term can be culled out from the contract itself. Such an implied
B obligation or term in the contract cannot in any way reduce the legal
efficacy of the statutory obligation foisted upon such a lessee by the express
provisions of Section 108(q) read with Section lll(a) of the Property Act.

So far as the applicability of the bar of Section 69 sub-section (2) of
the Partnership Act is concerned, it is true that it is a penal provision which
C deprives the plaintiff of its right to get its case examined on merits by the
court and simultaneously deprives the court of its jurisdiction to adjudicate
on the m~rits of the controversy between the parties. It will, therefore, have
to be strictly construed. It is also true that once on such construction of
this provision the bar under Section 69(2) of the Act gets attracted, then
D the logical corollary will be that the said provision being mandatory in
nature would make the suit incompetent on the very threshold. Conse-
quently, it is not necessary for us to examine various decisions of this court
rendered in connection with Section 80 of the CPC or Sectwn 77 of the
Indian Railways Act to which our attention was invited by learned senior
E counsel Shri Nariman. We my proceed on the basis that for sustaining a
suit which falls within the sweep of Section 69 sub-section (2), the condition
precedent is that the firm must be registered at the time of filing of the
suit. If it is not registered the suit must be held to be incompetent from
the inception. In this connection we may refer to a decision of the Division
F Bench of the Calcutta High Court in the case of M/s. Goraknath Champa/al
Pandey v. Hansraj Manot, (Calcutta Weekly Notes, Vol. 74 (1969-70) at
page 269, which has confirmed the decision of the learned Single Judge of
the san;e High Court in the case of Hansraj Manot v. M/s. Goraknath
Champa/al Pandey, (Calcutta Weekly Notes, Vol. 66 (1961-62} at page 262.
It was held in the said decisions that the conditions of Section 69 sub-sec-
-
G tion (2) were mand1tory in nature. However, it must be observed that the
said decisions were rendered in an entirely different fact situation wherein
during the subsistence of the contract of tenancy the tenant had failed to·
pay rent and consequently the landlord had filed the suit for possession on
the ground that the tenant had committed breach of the term of tenancy
H about regular payment of rent. The said suit obviously was a suit for
RAPTAKOS BRETT AND CO. LTD. v. GANESH PROPERTY (S.B. MAJMUDAR,J.] 513

enforcement of the right arising out of a contract of tenancy for regular A
payment of stipulated rent which was subsisting between the parties. The
said suit filed by plaintiff unregistered firm was rightly held to be barred
by Section 69 sub-section (2) of the Partnership Act. In this connection we
may also refer to a decision of the Patna High Court in Padam Singh Jain
v. M/s. Chandra Brothers & Ors., AIR (1990) Patna 95, wherein a learned
B
Single Judge of the Patna High Court had taken the view that after the
expiry of the contractual tenancy when the tenant had continued in occupa-
tion as a statutory tenant and when the landlord based his suit for posses-
sion on any of the ground av~ilable under the Rent Act it cannot be said
to be a suit for enforcement of a right arising from the contract of tenancy.
The said decision rendered on its own facts cannot advance the case of c
either side. Similarly, the aforesaid decisions of the Calcutta High Court
equally cannot advance the case of either side. In the present case we are
concerned with the lease which has come to an end and the erstwhile
tenant has remained in occupation as a tenant at sufferance. Under law
the erstwhile landlord is entitled to restoration of-possession by enforce- D
ment of statutory obligation of the erstwhile tenant as statutorily imposed
on him under Section lOS(q) read with Section lll(a) of the Property Act.
The non-compliance of the statutory obligation by the defendant when
made subject matter of corresponding legal right of the erstwhile laii.dlord
cannot be said to be giving rise to enforcement of any contractual right of E
the plaintiff arising from the expired contract of tenancy. As seen earlier,
the controversy would have clearly ended in favour of the respondent and
against the appellant if the plaint has referred to only the law of the land
under which the defendant was required to be evicted on the expiry of the
lease. But unfortunately for the plaintiff the suit is also based on the breach F
of the covenant of the lease as seen from paragraph 2 of the plaint. It is,
therefore, not possible to interpret the averments with reference to the
covenant of the lease only as referring to a historical fact as tried to be
submitted by Dr. Singhvi for the respondent.

The net effect of this discussion, therefore, is that the plaint as G
framed by the plaintiff respondent is based on a composite cause of Action
consisting of two parts. One part refers to the breach of the covenant on
the part of the defendant when it failed to deliver vacant possession to the
plaintiff lessor on the expiry of the lease after 15th March, 1985 and
H
514 SUPREME COURT REPORTS (1998] SUPP. l S.C.R.

, A thereafter all through out and thus it was guilty of breach of covenants 14
and 17 of the lease. The second part of the cause of Action, however, .is
based on the statutory obligation of the defendant lessee when it failed to
comply with its statutory obligation under Section 108(q) read with Section
111( a) of the Property Act. So far as this second part of the cause of Action
B is concerned it cannot certainly be said that it is arising out of the erstwhile
contract.

However, one contention of learned senior counsel for the appellant
is required to be noted so far as this second part of the cause of Action
is concerned. It was submitted that Section 108(q) of the Property Act
C itself provides that it is subject to the contract or local usage to the
contrary and that Section 4 of the Property Act lays down that chapters
and sections of this Act which relate to contracts shall be taken as part
of the Indian Contract Act, 1972. Our attention, in this connection, also
was invited to Section 1 of the Indian Contract Act, 1872 which provides
D that:

"nothing herein contained shall affect the provisions of any Statute,
Act or Regulation not hereby expressly repealed, nor any usage or
custom of trade, nor any incident of any contract, not inconsistent
with the provisions of this Act".
E
We fail to appreciate how these provisions are of any assistance to
the learned senior counsel for the appellant. Section 108 of the Property
Act l~ys down that in the absence of a contract to the contrary the rights
and liabilities of the lessor and lessee would be those which are ccvered
F by the rules mentioned in that Section. Consequently it must be held t_hat
as compared to what is laid down by this Section by way of rights and
liabilities to the lessor and lessee, if the contracting parties have not
provided anything to the contrary to such statutory rights and liabilities in
their contract, then these statutory rights and liabilities would prevail. But
if any contrary provision is mentioned in the contract qua such rights and
G liabilities then because of Section 4 of the Property Act such a contrary
provision in the contract will get saved on the combined operation of
Section 4 of the Property Act and Section 1 of the Indian Contract Act,
1872. But that would also be subject to the rider that such an inconsistent
contract should not be inconsistent with the provisions of the Indian
Contract Act. Thus in absence of any contrary provision in the contract,
I H Section 108 will operate on its own. If there is any contrary provision in
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY (S.B. MAJMUDAR, J.] 515
l
the contract it wili prevail over the provision in Section 108, provided such A
contrary provision in the contract is not inconsistent with the main
provision of the Indian Contract Act. The combined operation of Section
108 and Section 4 of the Property Act and Section 1 of the Indian Contract
Act can be better visualised by illustrations. Clause (b) of Part A of Section
108 deals with statutory rights of lessor to put the lessee in possession of
the property leased at the lessee's request. That is the mandate of the B
aforesaid statutory provision. This statutory right of the lessee and cor-
responding liability of the lessor can be subject to a contract to the
contrary. If under the contract of lease the parties have agreed to a
stipulation that the lessor will put the lessee in possession after a period,
say, three or four months within which the lessor will effect necessary
repairs to the premises by way of white wash etc., then the statutory right c
of the lessee to be put in possession on the extent of the lease as per the
said sub-section (b) would get ..:urtailed or superimposed by the contractual
right of the lessor to \Vait for the aforesaid period of delay and it will
simultaneously cut across the statutory right of the lessee to be put in
possession on the later's request. Such contrary provision in the contract D
will in its turn be saved by Section 4 of the Property Act read with Section
1 of the Contract Act as it in its turn is not inconsistent with any of the
provisions of the present Indian Contract Act. We may take another
illustration. Part B of Section 108 deals with Rights and Liabilities of lessee.
When we turn to Clause (q) thereof, we find that there is a statutory
obligation of the lessee on determination of lease to put the lessor in E
possession of property. There can still be a contract between the parties at
the time of entering into lease or even thereafter that on the determination
of lease the lessee will be given six months time to remove his fixtures and
to vacate the premises when such a locus poenetentiae is given to the lessee
under the contract by the lessor, the statutory obligation of the lessee
flowing from Section 108(q) to immediately put the lessor in possession of F
the property on determination of lease would get superseded and
postponed by six months as stipulated in the contract. This will be a
contract contrary to what is statutorily provided under Section 108(q). It
is such a contra~t to the· contrary which would be saved by Section 4 of the
Property Act as such a contract to the contrary is expressly saved by G
Section 108 and it also cannot be said to be consistent with any of the
provisions of the Indian Contract Act. Hence section 1 of the Contract Act
also will not hit the said contract to the contrary. Thus on a conjoint
reading of the statutory scheme of Section 108 and Section 4 of the
Property Act and Section 1 of the Contract Act it must be held that in
absence of such contrary legally permissible contracts, the statutory rights H
516 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A and liabilities of lessors and lessees is laid down under Section 108 of the
Property Act, especially Section 108(q) in the present case would remain
fully operative by force of the statute itself. It is not the contention of either
side that there was any contract to the contrary which permitted the lessee
to continue in possession after the determination of lease by efflux of time
even for a day more. In this connection, we may usefully refer to a decision
B of this court. While interpreting the phrase "contract to the contrary'' as
found in Section 108 of the Property Act, this court in the case of Madan
Lal v. Bhai Anand Singh & Ors., [1973] 1 SCC 84, speaking through Shri
Beg. J ., held that if the tenant on determination of lease wants to show that
he is not bound to hand over the vacant possession forthwith to the
landlord as he has paid the market value of the construction put in by him
c on the leased premises, there should be an express term to the contrary in
the contract of tenancy which would override Section 108(q) obligation and
as in the case before this court there was no such express term to the
contrary in the lease deed it was held that the obligation under Section
108( q) had to be complied with by the tenant. In this connection following
D pertinent observations were made in paragraph 4 of the Report as under:

"... .If this had really been the intention of the parties, there was
nothing to prevent them from inserting such a term in the deed so
as to make that intention explicit. It appears to us that the more
natural construction of the clause is that rights of ownership,
E including the right to take possession of the building, would be-
come vested in the lessor at the expiry of the period of the lease,
and that 50% of the market -value of the building, which was to be
paid in any case, became a condition attached to this ownership
of the building when it vested in the lessee. The lessor was, in any
F case, to pay 50% of the market- value of the structure, and, in the
event of a sale, the payment of this amount became a first charge
on the proceeds of sale. It is also significant that it is not mentioned
in the deed that a purchaser of the Cinema house, who would
presumably prefer to obtain possession so as to be able to run it,
could not get possession of it until the market-value was ascer-
G tained or 50% of it was paid. Possession of a Cinema house after
the expiry of a building lease involving the passing of ownership
of the building on such expiry is, after all, an important matter. In
view of Section 108( q) of the Transfer of Property Act the burden
of proving "a contract to the contrary" was on the lessee; and,
something to indicate an agreement to the contrary should be
H
there, on such a matter involving a valuable right before this burden
RAPTAKOS BRETI AND CO. LTD. v. GANESH PROPERTY (S.B. MAJMUDAR,J.) 517

could be held to have been duly discharged." A ,

On the facts of the present case it has to be held that there is no
further locus poeneientiae given to the tenant to continue to remain in
possession after the determination of lease by efflux of time on the basis
of any such contrary express term in the lease. Consequently, it is legal
obligation flowing from Section 108( q) of the Act which would get B
squarely attracted on the facts of the present case and once the suit is
also for enforcement of such a legal right under the law of the land
available to the landlord it cannot be said that enforcement of such right
) arises out of any of the express terms of the contract w4ich would in
' turn get visited by the bar of Section 69 sub- section (2) of the Partner- C
ship Act. Consequently it has to be held that when paragraph 2 of the
plaint in addition made a reference to right of the plaintiff to get
possession under the law of the land, the plaintiff was seeking enforce-
ment of its legal right to possession against the erstwhile lessee following
from the provisions of Section 108( q) read with Section 111(a) of the D
Property Act which in turn also sought to enforce the corresponding
statutory obligation of the defendant under the very same statutory
provisions. So far as this part of the cause of Action is concerned it
stands completely outside the sweep of Section 69 sub-section (2) of the
Partnership Act. The net result to this discussion \s that the present suit
can be said to be partly barred by Section 69 sub-section (2) so far as E
it sought to enforce the obligation of the defendant under Clauses 14
and 17 of the contract of lease read with the relevant recitals in this
connection as found in paragraph 2 of the plaint. But it was partly not
barred by Section 69 sub-section (2) in so far as the plaintiff based a
part of its cause of Action also on the law of the land, namely, Transfer
F
of Property Act where under the plaintiff had sought to enforce its
statutory right under Section 108(q) read with Section 111( a) of the
Property Act. Enforcement of the right had nothing to do with the
earlier contract which had stood determined by efflux of time. The first
point for determination therefore, has accordingly, to be held partly in
favour of the plaintiff and partly in favour of the defendant. As the G
decree for possession is passed on the basis of both parts of causes of
Action, even if it is not supportable on the first part, it will remain well
sustained on the second part of the very same cause of Action.

In view of our conclusion on point No. 1, though the appellant partly H
518 SUPREME COURT REPORTS (1998] SUPP. 1 S.C.R.

A succeeds thereon the ultimate decree for peaceful possession against the
appellant would remain well sustained.

Poi11t No. 2. :

B In the light of our conclusion on Poipt No. 1, the alternative conten-
tion as to the effect of subsequent registration of the partnership on the
suit would pale into insignificance and would become of academic interest.
It is, therefore not necessary for us to closely examine this alternative
contention. However, as both the learned senior counsel have pressed in
service their respective contentions on this point for our consideration we
C may briefly refer to these contentions without expressing any final opinion
thereon one way or the other.

Shri Nariman, learned senior counsel for the appellant submitted that
the suit filed was barred from inception under Section 69 sub-section (2)
D of the Partnership Act-I it was a still born one and therefore, there was no
question of reviving it on account of subsequent registration of the plaintiff
partnership firm. In support of this contention he invited our attention to
the decisions of various High Courts such as Mis. Jammu Cold Storage and
General Mills Ltd. v. Mis. Khairati Lal a11d Sons, AIR (1960) Jammu &
E Kashmir page 101, Danmal Parshotam Dass (Fimt) v. Babu Ram-Chhote
Lal (Finn), AIR (1936) Allahabad page 3, Dwijendra Nath Singh & Anr. v.
Govinda & Anr., AIR (1953) Calcutta page 497 and also to two decisions
of this Court in the cases of The Commissio11er of /11come Tax, Andhra
Pradesh, Hyderabad v. Mis. Jayalakshmi Rice and Oil Mills Contractor Co.,
F (1971) 1 SCC 280, and in Mis. Shreeram Finance Corporation v. Yasi11 Khan
& Ors., [1989) 3 SCC 476 and in the case of Sunder/al and Sons v. Yagendra
Nath Singh & Anr., AIR (1976) Calcutta 471. He submitted that almost all
the High Courts were unanimous in their decisions that if the suit filed by
an unregistered firm is incompetent from the inception as per Section 69
sub-section (2) subsequent registration of the plaintiff firm will be of no
G avail.

On the other hand, learned senior counsel for the respondent Dr.
Singhvi submitted that so far as the High Courts decisions are concerned,
the Nagpur High Court in Jakiuddin Badrnddin & Ors. v. Vitltoba Jagannath
H Gadali & Anr., AIR (1939) Nagpur 301 and Lahore High Court in Nazir
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR, J.J 519

Ahmad & Ors. v. Peoples Bank of Northem India Ltd., (in liquidation) A
through Official Liquidator & Ors., AIR 29 (1942) Lahore 289 had taken a
contrary view. However, Shri Nariman for the appellant joined issue on this
point and submitted that the aforesaid decision of the Nagpur High Court was
not accepted by a latter decision of the same High Court in Abdul Karim v.
Ramdas Narayandas Shop, ILR (1951) Nagpur page 31 and the aforesaid
Lahore decision was expressly dissented to by two later deci~ions of the
B
Punjab High Court in Des Raj Prem Chand & Anr. (Finn) v. Hira Lal Kali
Ram & Anr. (Finn), AIR (1952) Punjab 415 and in Puran Mal Ganga Ram
(Finn) v. The Central Bank of India Ltd., AIR (1953) Punjab 235.

So far as this Court's decisions on this point were concerned Dr. c
Singhvi appearing for respondent submitted that in The Commissioner of
Income Tax, Andhra Pradesh, Hyderabad v. M/s. Jayalakshmi Rice and Oil
Mills Contractor Co., (supra) this court was not directly concerned with the
question which is posed for our consideration. In the said decision the
effect of registration of the firm in the subsequent assessment year as per D
Section 58 of the Partnership Act on the status of the erstwhile un-
registered firm for the earlier assessment year fell for consideration of this
court. It is of course true that Grover, J ., speaking for this court in the said
decision observed in passing that "even under Section 69 of the Partnership
Act which deals with the effect of non-registration it has been consistently
held that the registration of a firm subsequent to the filing of the suit did E
not cure the defect" and that the observations of the Allahabad High Court
in Danmal Parshotamdas (Fim1) v. Babu Ram-Chhotelal (Fi1111), (supra)
were mentioned with approval. Dr. Singhvi submitted that these observa-
tions were clearly obiter. In any case the High Court's decision on the point
even if approved in general should not be treated to be a precedent while
considering the scope and ambit of Section 69 sub-section (2) of the F

- Partnership Act and the effect of subsequent registration of an un-
registered firm on the suit filed earlier when it was not so registered. For
supporting this contention reliance was placed on a decision of this Court
in Smt. Saiyada Mossa"at v. Hi11dusta11 Steel Ltd., Bhilai Steel Plant, Bhilai
(M.P.) & Ors., [1989] 1 SCC 272 paragraphs 4 and 5, The Mumbai Kamgar G
Sabha, Bombay v. M/s. Abdulbhai Faizullabhai & Ors., (1976] 3 SCC 832 at
page 849 and Sreenivasa Ge11eral Traders & Ors. v. 5_tate of Andhra Pradesh
& Ors., (1983] 4 SCC 353 at page 378. Relying on these decisions it was
•. submitted that the observations of this court in (1971] 1 sec 280 (supra)
which were purely obiter should not be treated to be of any binding effect
for deciding the present controversy. So far as the two member Bench H
520 SUPREME COURT REPORTS (1998] SUPP. 1 S.C.R.

A decision of this Court in [1989] 3 SCC 476 (supra) is concerned, it was
submitted by Dr. Singhvi for the respondent that the said decision was
directly concerned with second part of Section 69(2) of the Partnership Act
and it held that subsequent amendment of the plaint filed by a firm whose
reconstitution was not got registered under the Act earlier was of no avail
and suit could not be saved. The said decision had no concern with the
B first part of Section 69(2). Even otherwise it had not taken into considera-
tion various salient features of such litigations. According to Dr. Singhvi
the salient features which were required to be considered were as under :

(i) Subsequent registration of the firm would serve the purpose
of the Section namely, to enable only registered firms to file
c such suits;

(ii) Even if subsequently registered the firm would get the suit
revived from the date of such registration sufficient penalty
would get imposed on the plaintiff firm as it would loose more
D than three years mesne profits from the date of registration
and other financial benefits prior to such a reviving as such
subsequent register would have no retrospective effect.

(iii) the overriding need for such a liberal view would be to avoid
unnecessary multiplicity of proceedings based on mere tech-
E
nicalities.

In this connection it was submitted that even though the suit is found to
be barred under Order 69 Rule (2) of the Partnership Act and, therefore,
the plaint gets rejected under Order 7 Rule ll(d), as per Order 7 Rule 13
F fresh suit can always be filed on the same cause of Action leaving aside the
further question whether the said defective suit could be permitted to be
withdrawn by the plaintiff under Order 23 Rule 1 sub-rule (3) of the CPC
and even in such a contingency the benefit of Section 14 of the Limitation
Act would be available for filing a fresh suit. If that happens all that a
G subsequently registered plaintiff partnership firm could do is to immedi-
ately file a second suit on the ground that it is now already registered and
that could only result in giving a fresh number to the suit which would
further delay the proceedings before the court as it would be a freshly filed
suit having a new number referable to the year of its filing. Thus ad-
judicatory process would be further delayed. That such a situation in the
H present days when the court dockets are heavily loaded and arrears are
RAPTAKOS BREIT AND CO. LID. v. GANESH PROPERTY [S.B. MAJMUDAR, J.J 521

mounting should be avoided and such a technical contention which does A
not advance the case of justice should be rejected. That the courts always
lean in favour of curing such technical obstacles which have no bearing on
the merits of the controversy between the parties. In this connection Dr.
Singhvi pressed in ·service to two decisions of this Court. In Bansidhar
Sankar/al v. Md. Ibrahim & Anr., AIR (1971) SC 1292, Shah, J., speaking
for the two Judge Bench held in paragraph 8 of the report that even if B
a suit or proceeding is instituted by a liquidator without obtaining leave
of the company court as per the provisions of Section 171 of the
· Companies Act, 1913, which even barred the commencement of such
proceedings against a company without the leave of the Court, once the
leave is granted subsequently, the proceedings would be treated as not c
barred on the date granting of leave. That the aforesaid observations of
this Court relied on by Dr. Singhvi are quite relevant and apposite for
deciding the present controversy as such an approach would avoid
placing reliance on pure technicalities and would further the ends -0f
/ justice by enabling the court to adjudicate the matter on merits between
the parties and unnecessary proliferation of litigation will get avoided. In D
this connection Dr. Singhvi also invited our attention to another decision
of this Co1,1rt in Everest Coal Company Pvt. Ltd. v. State of Bihar & Ors.,
AIR (1977) SC 2304, wherein Krishna Iyer, J, speaking for a two Judge
Bench of this Court considered the effect of filing of a suit by a
receiver appointed under Order 40 Rule 1 of the CPC without obtain- E
ing prior leave of the Court. It was held in the said decision that if
. such a suit was filed by a receiver and if subsequently leave was
obtained it would validate the suit. Krishna Iyer, J., noted that filing of
the suit without leave of the Court would amount\ to contempt of the
court and still subsequently obtained leave would/ cure the defect and
remove the sin. In paragraph 11 of the Report it was observed that : F

"....... Once amends are made by later leave being obtained, the
gravamen is gone and the suit can proceed. The pity is that
sometimes even such points are expanded into important questions
calculated to protract Indian litigation already suffering from un- G
- healthy longevity."

Placing reliance on these decisions of this Court, it was submitted by Dr.
Singhvi that the decision of this Court in (1989] 3 SCC 476 (supra) requires
to be reconsidered. H
522 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A We, prima facie, find substance in what is contended by Dr. Singhvi
for the respondent. It is obvious that even if the suit is filed by an
unregistered partnership firm, against a third party and is treated to be
incompetent as per Section 69 sub-section (2) of the Partnership Act, if
pending the suit before a decree is obtained the plaintiff puts its house in
order and gets itself registered the defect in the earlier filing which even
B
though may result in treating the original suit as still born, would no longer
survive if· the suit is treated to be deemed to be instituted on the date on
which registration is obtained. If such an approach is adopted, no real harm
would be caused to either side. As rightly submitted by Dr. Singhvi that,
Order 7 Rule 13 of the CPC would permit the filing of a fresh suit on the
c same cause of Action and if the earlier suit is permitted to be continued it
would continue in the old number and the parties to the litigation would
be able to get their claim adjudicated on merits earlier while on the other
hand if such subsequent registration is not held to be of any avail, all that
would happen is that a fresh suit can be filed immediately after such
D registration and then it will bear a new number of a subsequent year. That
would further delay the adjudicatory process of the court as such a new
suit would take years before it gets ready for trial and the parties will be
..
further deprived of an opportunity to get their disputes adjudicated on
merits at the earliest and the arrears of cases pending in the court would
E go on mounting. It is axiomatic to say that as a result of protracted litigation
spread over tiers and tiers of court proceedings in hierarchy, the ultimate
result before the highest court would leave both the parties completely
frustrated and financially drained off. To borrow the analogy in an English
poem with caption "death the leveller", with appropriate modification, the
situation emerging in such cases can be visualised as under : "upon final
F court's purple alter see how victor victim bleed''. All these considerations
in an appropriate case may require a re-look at the decision of the two
member Bench of this Court in [1989] 3 SCC 476 (supra). However, as we
have noted earlier, on the facts of the present case, it is not necessary for
us to express any final opinion on this question or to direct reference to a
G larger Bench for reconsidering the aforesaid decision. With these observa-
tions we bring down the curtains on this controversy. Point No. 2, therefore,
is answered by observing that it is not necessary on the facts of the present
case in the light of our decision on the first point to decide this point one
way or the other. Point No. 2 is, therefore, left undecided as not surviving
H for consideration.
RAPTAKOS BREIT AND CO. LTD. v. GANESH PROPERTY [S.B. MAJMUDAR,J.) 523

Point No. 3 : A
As a result of the aforesaid discussion, it is held that the suit as filed
by the respondent was partly barred under Section 69 sub-section (2) of
the Partnership Act but was partly not barred and consequently the decree
passed by the Trial Court as confirmed by the High Court is held to have
remained well sustained and calls for no interference in the present appeal. B
In the result, this appeal fails and is dismissed.

At the request of learned counsel for the appellant, time to vacate
the suit premises is granted till 30.6.1999 on the appellant's filing usual
undertaking in the Registry of this Court within four weeks from today and C
also on further condition that from 1.10.1998 till the premises are vacated
or till 30.6.1999, whichever is earlier, the appellant will pay by way of
occupation charges Rs. 50,000 per month. If any of the conditions of the
aforesaid undertaking or the present order is committed breach of, exten-
sion of time will stand recalled and the decree for possession will become D
executable forthwith.

In the facts and circumstances of the case, there will be no order as
to costs.

R.A. Appeal dismissed.

...