CHHOTELAL NANAKRAM GUJRATHI Vs. GOPALDAS GULABDAS BANIYA

JUDGEMENT

(1.) THE plaintiff sued the defendant in respect of money which he alleged was due to him on the basis of transactions in an unregistered partnership into which he and the defendant and one other had entered for the sale of cotton seed. Profit and loss were to be shared equally, and the capital was advanced by the plaintiff in the shape of calculation of the amount used with interest. No capital appears actually to have been provided since the business was to be done on the basis of a number of pallas of cotton and the capital was to be calculated on the costs' of the cotton dealt with in this specified quantity. Profits were to be shared equally and so were losses. It is claimed that the partnership was dissolved and that on a calculation, as the venture had been unprofitable, the defendant owed the plaintiff a specified sum of money. The defence was that the terms of Section 69, Partnership Act, rendered the suit untenable as the partnership was unregistered. Both the Courts below have concurred, although for different reasons, in holding that Section 69, Partnership Act, afforded no bar and decreed the plaintiff's claim. This is a second appeal by the defendant. The trial Court assumed that the suit was one for accounts of a dissolved firm and held that there was no bar as Section 69(3), Partnership Act, provided that the provisions of Sub-sections(1) and (2) should not affect the enforcement of any right to sue for accounts of a dissolved firm (Sub-section (3)(a) of Section 69). The lower Appellate Court considered the reasoning of the trial Court wrong in that the suit was not for accounts of a dissolved firm. It held however that the Section could have no application as Sub-sections(1) and (2) deal only with subsisting firms and Sub-section (3) with firms which had been dissolved before the institution of the suit. The firm now in question is such a firm, but the learned Judge has considered that as the sum due to the plaintiff was already ascertained after the dissolution of the partnership, the relations between the parties were those of creditor and debtor. The learned Judge interprets the first two sub-sections of Section 69 as relating in the present tense alone and considers it essential for these two sub-sections to operate that "firm" should be "existing firm."

(2.) ONLY one case has been cited before me in the course of arguments, and that has been cited by the learned Counsel for the appellant, and it is a case which appears to me to be entirely in point. It is S.H. Patel v. Husseinbhai Mahomed (1937) 24 AIR Bom 225 where Beaumont C.J. held that the language of Sub-sections(1) and (2) of Section 69 is wide enough to cover suits relating to a dissolved firm and that Sub-section (1) covers a suit by a plaintiff suing in respect of a right vested in him or acquired by him as a partner in a firm, and that it is not essential that the firm should be actually in existence at the date when the suit was instituted. The facts are parallel to those in the case now before me, and I am in respectful agreement with the view there enunciated. I do not consider that the scheme of the Act is, as the learned District Judge holds, that the first two subsections only apply where the firm is still in existence and the last to firms which are not in existence. The scheme rather appears to me to be this: It is impossible to legislate entirely against unregistered partnerships, but the intention of the Legislature was to discourage non-registration as far as possible; to prohibit the enforcement of any right to sue for the dissolution of a firm, even though unregistered, or for accounts in the case of an unregistered firm which had been dissolved, would not have been practicable, since the moneys in possession of such a firm would not then be amenable to any realization after the firm had in fact been dissolved, or the affairs of the firm were in such a state as to render dissolution in fact inevitable. It is for this reason that Sub-section (3)(a) has been enacted. But it does not follow that a claim in respect of an ascertained sum, a sum which could only be ascertained on the terms of the partnership, should come within this necessarily excepted catalogue of rights to sue, and I am of opinion that the words in Sub-section (1) "suing as a partner in a firm" include a suit on a cause of action which is based on a right acquired solely as a partner in a firm; and as the present firm was unregistered, no such suit can, in my judgment, be brought.