SHREERAM FINANCE CORPORATIONversusYASIN KHAN AND OTHERS

A                 SHREERAM FINANCE CORPORATION
                               v.
                     YASIN KHAN AND OTHERS

                                  JULY 21, 1989

B                  [K.N. SINGH AND M.H. KANIA, JJ.)

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

C         Under a Hire Purchase !lgreement entered into with the appellant,
    a firm reglst~red under the Partnership Act, 1932, carrying on the
    business of hire-purchase !lf automobile vehicles, Respondent No. 1
    hired the truck owned by the appellant, under the agreement Respon-
    dent No. 1 !lgrfed to pay Uiitial hire charge of Rs.10,000 and certain monthly
    hire charges on due dates. On the failure of Respondent No. 1 to pay the
D   monthly hire charges, after paying the initial hire charges and charges
    for one month, the appellant filed a suit against Respondent No. 1 and
    bis guarantor on July 22, 1968, for the recovery of a sum of
    Rs.13,422.23 for breach of terms and conditions of the agreement.

          There was a change in the constitution of the firm on July 1, 1967
E   with the retirement of two of the then partners, and addition of one new
    partner as also admission of two minors to the benefits of the Partner-
    ship. This change was notified to the Registrar of Firms on August 28,
    1968 and was duly taken note of in the Register of Firms subsequently.
    Thus, no notice of the change had been given to the Registrar of firms.
    The Trial Judge dismissed the suit as not maintainable In view of
F   Section 69(2) of the Partnership Act, 1932. Upholding this decision, .the
    High Court dismissed the appeal of the firm. Hence, the appeal, by
                                                                                     J
    special leave, by the appellant firm.

          Dismissing the appeal, the Court.

G         HELD: Sub-section (2) of Section 69 of the Partnership Act lays
    down that no suit to enforce a right arising from a contract shall be
    instituted in any Court by or on behalf of a firm against any third-party        ~
    unless the firm is registered and the persons suing were or had been
    shown in the R~r of Finns as partners in the firm. [487C)

H         ln the present case, tht! suit tiled by the appellant firm is clearly
                                         484
                      RNANeE-eeRPN:·-v. YASIN KHAN !KANIA, J.]                 485

         hit by the provisions of sub·sectiori (2) of Section 69 of the said Partner-
-1       ship Ad, as on the date when the suit was filed, two of the partners
                                                                                      A,   ._,,

         shdwn as partners .as per _the relevant entries in the Register of Firms
••
~~
         were not, in fact, partners, one. new partner had come in and two
         minors had been admitted to t}le benefit of the partnership firm regard-
f
         Ing which change no notice was given to the Registrar of Firms. Thus,
         the persons suing, namely, the current partners as on the date of the B
~-       suit were not shown as partners in the Register of Firms. Therefore, the
         suit was not maintainable in view of the provisions of sub-section (2) of
         section 69 of the Partnership Act, 1932. (4871).E)

     )         Although the plaint was amended on a later date, that cannot save
         the suit.
                                                                                      c
    t"         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1548
         of 1974.

              From the Judgment and Order dated 12.12.1972 of the Bombay
         High Court in F.A. No. 152 of 1972.                             D

             V.A. Bobde, B.R. Agarwala ahd R.B. Hathikhanwala for the
         Appellants.

)              M.S. Gupta for the Respondents.
                                                                                      E
               The Judgment of the Court was delivered by

               KANIA, J. This is an appeal by special leave granted under
         Article 136 of the Constitution of India against the judgment of a
         Division Bench of the Bombay High Court (Nagpur Bench} in First
         Appeal No. 152 of 1972, the judgment having been delivered on F
         December 12, 1972.

              The appellants are a firm registered under the Partnership Act,
         1932 and inter alia carry on the business of hire-purchase of auto-
         mobile vehicles. The appellants were the owners of a diesel truck
         complete with tools and other accessories. On January 24, 1962 G
         respondent No. 1 hired the said truck from the appellants under a Hire
         Purchase Agreement in writing of the same date. Under the said
         agreement, respondent No. 1 agreed to pay to the appellants a sum of
         Rs.10,000 as initial. hire charges and certain monthly hire charges. It
         was provided under the said agreement that on the payment of all the
         monthly hire charges and other amounts payable under the agreement H
    486                     SUPREME COURT REPORTS              [1989] 3 S.C.R.

    on the respective due dates and fulfilment of the other terms and
A   conditions of the agreement, respondent No. 1 would have the option
   -to p11rchase the said truck. However, if any of the monthly hirc-
   Cl"i<n-ges were not paid or there was a breach of any of th' terms and
    conditions of the agreement, the appellants were entitled to take pos-
    session of the truck. Until respondent No. 1 validly exercised the
B ' option to purchase the said truck, the said truck was to remain the
    property of the appellants. Respondent No. 2 is the guarantor. Re-
    spondent No. 1 failed to pay the monthly hire charges to the appellants
    as provided under the agreement. In fact, he paid only the initial hire
    of Rs.10,000 and hire charges for one month only. Giving up certain
    claims for damages and other items the appellants filed a suit in the
C Court of Civil Judge (Senior Division) at Nagpur for recovery of a sum
    of Rs.13,422.23 p against the respondents. Several issues were framed
    by the learned Trial Judge and they were all decided in favour of the
    appellants. However, the learned Trial Judge dismissed the suit on the
    ground that it was not maintainable in view of the provisions of section
    69(2) of the .Partnership Act, 1932. The appellants preferred an appeal
D against this decision to the Bombay High Court (Nagpur Bench). The
    said appeal was, howev.er, dismissed by the High Court upholding the
    view of the learned Trial Judge regarding the non-maintainability of
    the suit. It is against this decision, that the present appeal is directed. ·

         In order to appreciate the controversy before us, it is necessary
 E to take note of a few further facts none of which is disputed.

             The appellant~firm was registered under the Partnership Act,
       1932 on November 2, 1960. There was a change in the constitution of
       the firm on July 1, 1962 but we are not concerned with that change.
       What is material is that, on July 1, 1967, there was another change in
. F the constitution of the firm whereby two of the then partners retired
   · . and one new partner, namely, Smt. Sarita Agrawal joined as a partner
     . of the said firm; and two minors, namely, Ashish Kumar and Rohit             -..J
       Kumar were admitted to the benefits of the said partnership firm. On           ;
    the said date, namely, July 1, 1967 two of the then partners, namely,
    Smt. Sheela R. Agrawal and Shri Ramkishan retired as aforestated
 G from the said partnership firm. The suit was instituted on July 22, I
  - 1968. The notice regarding the change in the constitution of the said
    firm as aforesaid was given to the Registrar of Firms on August 28,
--- 1968 and a note was taken of the said change in the Register of Firms             t
    subsequently. Thus, as pointed out by the learned Trial Judge, on the
    date when the suit was filed, two partners shown as partners in the
 H appellant-firm in the relevant entries in the Register of Firms had
              FINANCE CORPN. v. YASIN KHAN [KANIA, J.l                  487

already retired, one new partner had joined the said firm and two              A
minors had been admitted to the benefit of the said partnership firm
and no notice had been given to the Registrar of Firms in respect of
these changes. The notice regarding these changes was given to the
Registrar of Firms subsequently and noted on November 19, 1968.
                                                                               B
     Section 69 of the said Partnership Act deals with the effect of
non-registration of firms. Sub-section (2) of the said section, which is
material for the purposes of this appeal, runs as thus:

            "(2). No suit to enforce a right arising from a contract shall
            be instituted in any Court by or on behalf of a firm against
            any third-party unless the firm is registered and the persons      c
            suing are or have been shown in the Register of Firms as
            partners in the firm."            '

      In the present case the suit.filed by the appellants is clearly hit by
the provisions of sub-section (2) of section 69 of the said Partnership
                                                                               D
Act, as on the date when the suit was filed, two of the partners shown
as partners as per the relevant entries in the Register of Firms were
not, in fact, partners, one new partner had come in and two minors
had been admitted to the benefit of the partnership firm regarding
which no notice was given to the Registrar of Firms. Thus, the persons
suing, namely, the current partners as on the date of the suit were not
                                                                               E
shown as partners in the Register of Firms. The result is that the suit
wa~ not maintainable in view of the provisions of sub-section (2) of
section 69 of the said Partnership Act and the view taken by the Trial
Court and confirmed by the High Court in this connection is correct.
Although the plaint was amended on a later date that cannot save the
suit. Reference has been made to some decisions in the judgment of
the Trial Court; however, we do not find it necessary to refer to any of       F
them as the position in law, in our opinion, is clear on a plain reading
of sub-section (2) of section 69 of the said Partnership Act.

      In the result, the appeal fails and is dismissed with costs.

N.P.V.                                                  Appeal dismissed.      G




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