Final Order 15

Order Details: COPY OF ORDER
Pdf Text: CS (Comm)-585/2023
Avantae Overseas v/s Alka Gupta
11.08.2025
Present : None for plaintiff.
1. The present commercial suit is filed by the plaintiff
which is a partnership firm against defendant seeking recovery of
Rs.18,04,825.93p along with pendente-lite and future interest @
18% per annum till realization with costs.
2. The matter is at the stage of final arguments and to
support its case, the plaintiff has relied upon documents i.e. copy
of Partnership Deed, copy of GST certificate registration, copy fo
Fax intent, copy of tax invoices, copy of Statement of Accounts
and Ledger, copy of legal notice, postal receipts, undelivered
envelopes containing legal notices, copy of Non-Starter report,
certificate under Section 65B of the Evidence Act and
Declaration on Oath by way of affidavit under Order XI Rule 6
CPC as amended by the first schedule of Commercial Courts Act,
Commercial Division, Commercial Appellate Division of High
Courts Act, 2015. However, no document suggesting that the
plaintiff firm is registered with the Registrar of Firms is filed.
Resultantly, it is presumed that the plaintiff firm is unregistered.
3. Section 69 of the Indian Partnership Act outlines the
consequences of failing to register a partnership firm. It
specifically restricts the ability of partners in an unregistered firm
to enforce contractual rights against the firm, other partners or
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third parties to Court. This restriction applies to suits arising from
contracts or conferred by the Act itself. However, there are some
exceptions such as, suits for dissolution, rendition of accounts or
realization of dissolved firms assets.
4. In the judgment of Sunkari Tirumala Rao & Ors v/s
Penki Aruna Kumari, decided on 17.01.2025 by the Hon’ble
Supreme Court in Petition for Special Leave to Appeal (C) No.
30442/2019, the Hon’ble Supreme Court while dealing with
Section 69 of the Indian Partnership Act observed as under:-
8. It is evident from a reading of sub-sections (1) and (2)
of Section 69 that it assumes a mandatory character. Section
69(1) prohibits a suit amongst the partners of an unregistered
partnership firm, for the enforcement of a right either arising
from a contract or conferred by the Act, unless the suit
amongst the partners is in the nature of dissolution of the
partnership firm and/or rendition of accounts. Section
69(2) prohibits the institution of a suit by an unregistered firm
against third persons for the enforcement of a right arising
from a contract. As a consequence, a suit filed by an
unregistered partnership firm and all proceedings arising
thereunder, which fall within the ambit of Section 69 would
be without jurisdiction.
9. This Court in Seth Loonkaran Sethiya and Others v. Mr.
Ivan E. John and Others reported in (1977) 1 SCC 379 had
categorically held that Section 69 is mandatory in character
and a suit instituted by a plaintiff in respect of a right which
was vested in him by virtue of a contract and entered into in
his capacity as a partner of a partnership firm, would be void,
if such a firm was unregistered. The relevant observations are
as under:
“21. A bare glance at the section is enough to show
that it is mandatory in character and its effect is to
render a suit by a plaintiff in respect of a right vested
in him or acquired by him under a contract which he
entered into as a partner of an unregistered firm,
whether existing or dissolved, void. In other words, a
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partner of an erstwhile unregistered partnership firm
cannot bring a suit to enforce a right arising out of a
contract falling within the ambit of Section 69 of the
Partnership Act. In the instant case, Seth Sugan
Chand had to admit in unmistakable terms that the
firm “Sethiya & Co.” was not registered under
the Indian Partnership Act. It cannot also be denied
that the suit out of which the appeals have arisen was
for enforcement of the agreement entered into by the
plaintiff as partner of Sethiya & Co. which was an
unregistered firm. That being so, the suit was
undoubtedly a suit for the benefit and in the interest of
the firm and consequently a suit on behalf of the firm.
It is also to be borne in mind that it was never pleaded
by the plaintiff, not even in the replication, that he
was suing to recover the outstandings of a dissolved
firm. Thus, the suit was clearly hit by Section 69 of
the Partnership Act and was not maintainable.”
5. From the plain reading of Section 69 of the Indian
Partnership Act and the settled law, it is crystal clear that there is
an embargo on an unregistered partnership firm to institute a suit
to enforce a right arising from a Contract against any third party.
Since the plaintiff firm is a unregistered firm, the present suit
cannot be entertained and is liable to be rejected under Order VII
Rule 11 (d) CPC.
6. Plaint is accordingly rejected.
7. File be consigned to Record Room.
HEMANI MALHOTRA
District Judge (Commercial Court-03)
PHC / New Delhi / 11.08.2025
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