KRISHNARAO NARAYANRAO CHAWATE Vs. SHANKAR SAHADEV MUNGEKAR

JUDGEMENT

(1.) His Lordship, after narrating the facts and dealing with the evidence in the case, proceeded]: -I now pass to the legal contention which was pressed before me at the very outset of the hearing of this case by Mr. Jethmalani, learned Counsel for the defendant, The contention was that the suit was not maintainable as the dissolved firm of Cipra Bakelite Co. in which plaintiff No. 1 and the defendant were partners had not boon registered under the Partnership Act. The argument was that this was a suit substantially by plaintiff No. 1 who was suing to enforce a right arising from a contract and also to enforce a right conferred by the Partnership Act and fell within the purview of Section 69(1) of that Act which is as follows : 69.(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person being as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. It was then said that the exception contained in the first part of Sub -section 3(a) of that section which rendered the provisions of Sub -section (1) inapplicable to suits for enforcement of any right to sue for the dissolution of the firm or for accounts of a dissolved firm had no bearing on the present case. Therefore, so it was argued, this suit must fail. Now, there is no doubt that this case does not fall under any exception laid down in Sub -section (3) of that section. The question yet remains whether the agreement before me is hit by the provisions of Sub -section (1). I have been asked by learned Counsel to sub -scribe to the proposition which was boldly and baldly thus stated: An agreement between partners of a dissolved firm or between partners in anticipation of dissolution of the firm, whereby a partner intending to continue the business on his own account agrees to take over the same on certain stipulations, is not enforceable unless the firm had been registered. The argument by which this proposition was sought to be sustained was that a suit to enforce any stipulation of such a nature was a suit by a partner to enforce a right arising from a contract or to enforce a right conferred by the Partnership Act. My decision here must rest on a neat question of construction of Sub -section (1) of Section 69. I have read and re -read that sub -section in the light of principles governing such cases and the irresistible conclusion seems to me to be that its operation can only extend to any suit in which a partner sues his co -partner or the firm to enforce any right arising from the contract between the partners as such or to enforce any right which the Act can be said to have conferred on partners. The contract between them would be the contract of partnership regulating their rights and obligations inter se. Ordinarily the rights, duties and obligations of partners are to be ascertained from the agreement of partnership entered into by them since the agreement is the very foundation of the relationship. It is also open to partners, if all of them agree, to vary from time to time any arrangement regulating their mutual rights and obligations. Now, the rights and obligations arising from their relation are regulated primarily by the express contract between the partners, so far as the express contract extends and continues in force; and when there is no express contract or the express contract does not reach to all those rights and obligations, they are enforced if any implied agreement is established. The implied agreement may be inferred from the course of dealings between the partners. Section 11 of the Act in terms lays down that the contract of partnership may be express or may be implied by a course of dealing. The law allows an agreement between partners to be made and varied from time to time, formally or informally, on all matters affecting their rights and obligations to one another. All these would be 'rights arising from a contract' as envisaged by that expression in Sub -section (1) of Section 69.

(2.) THE Act also confers various rights on partners. The contract between partners at times does not reach to all the rights and obligations which should normally exist in case of partners and such rights are, therefore, in terms recognized and conferred by the Act. Some instances of these rights are to be found in Sections 12 and 13 of the Act, which relate to the conduct of the business and the mutual rights and liabilities of partners. These rights are often of importance when determining the relation of partners inter se. Of course, they are subject to contract between the partners, that is, they regulate the relation in so far as they are not varied or negatived by express agreement or course of dealing amounting to an implied agreement. An examination of the provisions of the Act shows that there are a number of provisions which recognise and confer rights most of which may be regulated and some of which cannot be regulated by the contract of the partners themselves. Thus, for instance, there is the right of a partner, recognised by Section 10 to claim indemnity for any loss caused to the firm by any fraud by the other partner or partners in the conduct of the business. Another instance of this, but of a different kind, is the right of a partner to claim interest on advances made by him to the firm which is recognised in Section 13(d). These and similar rights are envisaged by the expression 'rights conferred by this Act' to be found in the first part of Sub -section (1) of Section 69.

(3.) THE section enacts provisions which are express and mandatory and it is the paramount duty of the judicial interpreter to give full effect to the language used by the law -maker. At the same time there is an equally important duty on the Court in expounding stringent provisions like those contained in the present section which forbid certain suits being instituted in respect of partnerships which have not been registered by entailing dismissal of such suits, to see that no case is brought within the enactment which is not covered by its express language or manifest intention. Now, the mischief primarily intended to be prevented by the mandatory provisions of Section 69 was the hardship and difficulty to which third parties dealing with a firm were subjected in the matter of proving as to who were the persons carrying on the business of that firm as partners. As to the provisions affecting partners themselves it seems clear that the main object and intention of the Legislature was to prevent a partner from enforcing his claims against his fellow partners if the firm was not registered and to compel in such a case dissolution of the firm by laying down that the Court will entertain suits between partners relating to the partnership business only where dissolution and account and winding up of the affairs of the firm is sought or where account and winding up of the affairs of an already dissolved firm is sought. In case of an enactment of this nature it is reasonable to expect that the Legislature would not leave its intention to be gathered by mere doubtful inferences or from vague words but would express it in words of sufficient clarity and comprehensiveness. I am, therefore, unable to see how it can be said that the intention of the Legislature was to bring within the purview of Sub -section (1) any suit of the nature before me.