Final Order 1

Order Details: Notice of Motion
Pdf Text: NM 151-18 in S.C.Suit no.140-1988
H.C.Suit No. 1951 of 1988 1 Date :27.01.2020
IN THE BOMBAY CITY CIVIL COURT FOR GREATER MUMBAI
NOTICE OF MOTION NO. 151 OF 2018
IN
S.C.SUIT NO. 140 OF 1988
(H.C.SUIT NO. 1951 OF 1988)
(CNR MHCC01-000507-2018)
Khimji H. Bharapuria & Ors. .. Plaintiffs
Versus
Pandurang Gajanan Naik & Ors. .. Defendants
Appearances :-
Adv.Maulik Tanna a/w Miraj for plaintiff.
Adv.Nitin Shukla for defendant no.1 and 4.
Coram : His Honour Judge
Shri. A.H.Laddhad
Judge
CR No. : 07
Date : 27.01.2020
ORDER
1. The defendants have filed instant Notice of Motion for
rejection of plaint under Order 7 Rule 11 of Code of Civil
Procedure. On the ground that suit is barred by law under Section
58 r/w. 69 of the Partnership Act, 1932, Section 16 R/w. 20 of
Code of Civil Procedure, 1908, under Arbitration and Conciliation
Act, and under Section 40 and 42(a) of the Partnership Act, 1932
r/w. Article 5 of Limitation Act.
2. It is contended by the defendants that plaintiff filed present
suit for dissolution of the firm and for accounts. It is contended
that admittedly, the Partnership Firm M/s. Mahalaxmi Rice Milll
was unregistered Firm. The plaintiffs filed instant suit against
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partners of unregistered firm. Hence, in view of bar contained
under Section 59 r/w. Section 69 of the Partnership Act, present
suit is not maintainable. Hence, plaint is liable to be rejected
under Order 7 Rule 11(d) of the Code of Civil Procedure.
3. It is further contended that admittedly the first defendant
resided in Thane. The subject matter of asset of the unregistered
partnership is situated at Thane. Therefore, this Court have no
territorial jurisdiction to try and entertain the present suit.
Therefore, on the aforesaid ground, the plaint required to be
returned to the plaintiff or liable to be rejected under Order 7 Rule
11(d) of Code of Civil Procedure. It is barred under Section 16 r/
w. 20 of C.P.C.
4. It is further contended that the Partnership Deed dated
05.02.1977 containing Clause of Arbitration. Therefore, present
dispute is referable and entertainable before Arbitrator. Hence,
this Court have no jurisdiction to try the present suit.
5. It is further contended that in view of Section 40 of
Partnership Act, the firm may be dissolve with the consent of all
the partners or in accordance with the contract of the partners.
The Partnership Deed dated 05.02.1977 contained clause 24
whereby it was decided that the partnership shall be for a period
of five years subject to further extension with the consent of all the
partners. Thus, in view of the above facts, the partnership firm
was for a period of five years i.e. upto 04.02.1982 and thereafter
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there is no further extension by the consent of all the parties. In
view of Article 5 of Limitation Act, the plaintiff ought to have been
filed suit within three years from the date of dissolution, which is
not filed within limitation. Hence, the plaint needs to be rejected.
The defendants in support of his submission relied on the
following judgments :
a. Loonkaran Sethia etc. V/s. Mr. Ivan E. John & Ors.
reported in AIR 1977 SC 336.
b. Gandhi Company V/s. Krishna Glass Private Limited
reported in 1983 Mh.L.J. page 1036.
c. Gandhi Company V/s. Krishna Glass Private Limited
reported in 1987 Mh.L.J. page 348.
d. Mahendra Singh Chaudhary & Anr. V/s. Tej Ram
Singh & Ors. reported in 1987 Allahabad 152
e. M/s. Shivraj Fine Art Litho Works & Ors. V/s.
Purushottam & Ors. reported in AIR 1993 BOMBAY
30.
f. V. Subramaniam V/s. Rajesh Raghuvendra Rao
reported in 2001(1) ALL MR 311.
g. Abdul Azeez & Anr. V/s. M.K.P. Kader Mohideen &
Ors. reported in AIR 1963 Madras 428 (V 50 C 148).
h. Saligram Rupal Khanna & Anr. V/s. Kanwar Rajnath
reported in AIR 1974 Supreme Court 1094.
6. The Notice of Motion is opposed by the plaintiff by filing say.
It is contended by the plaintiff that suit has been filed by the
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plaintiff in the year 1988 and after a period of 30 years, the
defendant filed instant Notice of Motion which clearly shows their
intention to delay the proceedings. The defendants could have
filed the aforesaid Notice of Motion much earlier. It is further
contended that originally the suit was filed before Hon’ble High
Court. The plaintiff obtained leave under Clause XII of Letters
Patent Act. Hence, the objection of defendants in respect of
territorial jurisdiction is not tenable. The Partnership though was
for five years but same has been extended by conduct of the
parties. As the partners let out the plot of partnership firm,
therefore, contention of the defendants that suit is barred by
limitation is not tenable.
7. It is further contended by the plaintiff that provisions of 69
sub-clause 2(a) was held to be unconstitutional by the
Hon’ble
Supreme Court in case of V. Subramaniam V/s. Rajesh
Raghuvendra Rao. Hence, plaintiff prayed for dismissal of the
present Notice of Motion.
8. Heard both the sides. Perused Notice of Motion, reply as
well as pleadings of the plaint. The defendant filed instant Notice
of Motion for rejection of plaint under Order 7 Rule 11 of C.P.C. It
is well settled law that for rejection of the plaint Court has only to
see the pleadings of the plaint and not concerned with the Written
Statement.
9. The defendant filed instant Notice of Motion for rejection of
the plaint on the ground that suit filed by the plaintiff who are the
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partners of unregistered firm, hence, in view of Section 69 of
Partnership Act, the suit is not maintainable.
10. It is further ground of challenge,
“that the subject matter of
the partnership business is situated within jurisdiction of Thane
Court. Hence, this Court have no territorial jurisdiction. That the
alleged Partnership Deed containing the Arbitration Clause
therefore, in view of the Arbitration Act, this Court can not try the
present suit. As per Clause 5 of the alleged Partnership Deed, the
partnership was only for five years which appears to be ended on
1982, the suit filed in the year 1988. Hence, alleged partnership
was for specific term which has been expired. Therefore, as per
Section 42(a) of Partnership Act the alleged Partnership comes to
an end. Hence, no relief can be granted.”
11. The defendant in support of his claim relied on the
following judgments :
a. 1997(4) SCC 467 in case of T. Arivandandam V/s.
T.V.Satyapal & Anr. in which the Hon’ble Apex Court held that
Trial Court must remember that if on a meaningful reading of
the plaint it is manifestly vexatious and meritless in the sense
of not disclosing a clear right to sue, it should exercise its
power under Order VII Rule 11 of C.P.C. and rejecting the
plaint. It is further held that if clever drafting has created the
illusion of a cause of action, the court must nip it in the bud at
the first hearing by examining the party under Order X of
C.P.C.
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b. AIR 1998 Supreme Court 634 in case o I.T.C. Limited V/
s. Debts Recovery Appellate Tribunal & Ors. wherein Hon’ble
Supreme Court held that fact that issues have been framed in
the suit can not come in the way of consideration of
application filed under Order 7 Rule 11 of C.P.C.
c. AIR 2012 Supreme Court 3912 in case of The Church of
Christ Charitable Trust & Educational Charitable Society rep.
By its Chairman V/s. M/s. Ponniamman Educational Trust
Rep. By its Chairperson / Managing Trustee wherein Hon’ble
Supreme Court held that the application under Order VII Rule
XI of C.P.C. has to be decided only on the basis of averment
made in the plaint. The plea taken in Written Statement are
immaterial. Hon’ble Supreme Court further held that failure
to disclose the cause of action, the suit needs to be rejected
under Order 7 Rule 11 of C.P.C. It is further held by the
Hon’ble Apex Court that the aforesaid plea can be raised at
any stage of the proceedings.
d. AIR 2015 Supreme Court 2301, in case of Fatehji &
Company & Anr. V/s. L.M. Nagpal & Ors. wherein the Hon’ble
Apex Court held that the suit for specific performance filed
after three years is beyond limitation.
e. 2017 ALL SCR 2194 in case of Madanuri Sri Rama
Chandra Murthy V/s. Syed Jalal wherein the Hon’ble Apex
Court laid down the principles for rejection of plaint under
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Order 7 Rule 11 and exercise of the powers by Court and its
scope.
f. 2014(1) ALL MR 185 in case of Kishorbhai Premchand
Shah V/s. Hirji Bhojraj & Sons Kutchi Oswal Jain Chhatralay
Trust & Ors. wherein the Hon’ble Bombay High Court held
that the plaint can be rejected at any stage of the suit, even
before registering the plaint or after issuing summons to the
defendants or at any time before conclusion of the trial.
g. AIR 1977 Supreme Court 336 in case of Loonkaran
Sethia etc. V/s. Mr. Ivan E. John & Ors. wherein the Hon’ble
Apex Court held that Section 69 is mandatory in character
and its affect is to render a suit by the plaintiff in respect of a
right vested in him or acquired by him contract which he
entered into as a partner of an unregistered firm. The
partners of erstwhile unregistered firm can not bring a suit to
enforce a right arising out of a contract falling within the
ambit of Section 69.
h. 1983 Mh.L.J. in case of Gandhi Company V/s. Krishna
Glass Private Limited wherein the Hon’ble Single Judge of
High Court held that the requirement of the firm being
registered and persons suing shown as partners in the Register
of Firms in section 69(2) have both to be complied with –
They can not be waived person, must be shown as partner in
Register of firms at the time when suit filed by him in the
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name of the firm. The entry of such person as a partner in the
Register of Firms subsequent to filing of suit is of no
consequences.
i. AIR 1987 Bombay 348 in case of Gandhi & Co. V/s.
Krishna Glass Pvt. Ltd. in which the judgment of single Judge
of Bombay High Court was confirmed by the Hon’ble Division
Bench of Bombay High Court in the Appeal.
j. AIR 1993 BOMBAY 30 in the Division Bench of Bombay
High Court again reiterated the same principal that the suit
filed by or on behalf of any unregistered firm is not
maintainable.
k. 2001(1) ALL MR 311 in case of V. Subramaniam V/s.
Rajesh Raghuvendra Rao wherein the Division Bench of
Hon’ble Bombay High Court decided the Constitutional
validity of Section 69(2A) as inserted by Maharashtra Act 29
of 1984 and held that the disability to sue for accounts or for
share of profits of an unregistered firm. The discrimination
between the partners and heirs of deceased partner while
heirs can sue, partners can not sue held that not
discriminatory because heirs have no volition in the matter of
registration or non-registration of the firm. In the aforesaid
judgment Hon’ble Division Bench of Bombay High Court
further held that disability of person of unregistered firm to
sue is not arbitrary or discretionary so as to hit Article 14 of
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the Constitution of India.
l. AIR 1963 Madras 428 in case of Abdul Azeez & Anr.
V/s. M.K.P. Kader Mohideen & Anr. wherein the Hon’ble
Madras High Court held that – in view of Section 42 of
Partnership Act, Partnership is for fixed term, in case of death
or adjudication of a partner, the partnership can stand
automatically dissolved unless there is express contact t the
contrary, that either of the events shall not effect dissolution
of the firm.
m. AIR 1974 Supreme Court 1094 in case of Saligram
Ruplal Khanna & Anr. V/s. Kanwar Rajnath wherein Hon’ble
Apex Court held that when the partnership is for fixed period,
the firm would dissolve on the expiry of said period unless
some contract between the partners to the contrary was
proved. Thus, the suit filed after three years from the date of
dissolution of the firm would be barred under Limitation Act.
12. Per contra Ld. Advocate for the defendant contended
that the application filed by the defendant after lapse of 30
years is misconceived and with intention to delay the trial. He
has further place his reliance on the Judgment of Hon’ble
Apex Court in Civil Appeal No. 7438 of 2000
in case of V.
Subramaniam V/s. Rajesh Raghuvendra Rao reported in
2001(1) ALL MR 311 wherein decision of Hon’ble Division
Bench of Bombay High Court is challenged and Hon’ble Apex
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Court held that restrictions placed by Sub Section 2A of
Section 69 introduced by the Maharashtra Amendment Act of
Partnership Act are arbitrary and of exclusive nature and go
beyond what is in the public interest. Thus, it is held that
restrictions can not be recorded as reasonable.
13. It is further contended by the plaintiff that they have
subsequently pleaded in the plaint that part of the cause of
action have arose in Bombay and the partnership plot is
situated at Thane. Thus, the suit is maintainable at both the
places.
14. I have considered rival submissions of the parties. The
plaintiff filed instant suit for dissolution of the partnership
firm dated 05.02.1977. It is specific contention of the plaintiff
that they have entered into partnership firm for carrying out
Rice Mill under name and style of M/s. Mahalaxmi Rice Milll
and the said business was carried out for one year and
thereafter, it was with mutual consent of the parties stopped.
In the year 1980, the defendant sold machinery of the
business for a consideration of Rs. 75,000/-. As the plot of
the partnership firm was lying vacant till June 1981,
therefore, on 01.06.1981, the Lease Deed has been executed
between partnership firm and one X’pert Autobody Builders
for lumpsum price of 3,00,000/-. Under the said agreement
licensee paid Rs. 75,000/- by way of earnest money and
agreed to pay Rs. 1,400/- by way of fixed interest. The
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licensee used the aforesaid plot for a period of two years and
in the month of June 1983, the licensee handed over the
vacant possession of the plot with shade standing thereon to
the partnership firm.
15. It is further submitted by the plaintiff that sometimes in
or about May 1987 they found that defendant no. 1 attempted
to deal with the said plot of partnership firm, but defendant
no. 1 did not pay any hid to the object of the plaintiff.
Therefore, plaintiffs constrained to issue legal notice dated
22.06.1988 for dissolution of the partnership firm and for
accounts. However, defendants failed and neglected to
account for distribution of profit of the firm between partners.
Therefore, they have dissolved the firm w.e.f. 24.08.1987 and
filed present suit for the accounts.
16. I have perused alleged purported partnership Deed,
wherein as per clause 24, it is agreed between the parties that
all disputes and questions whatsoever which would arose
either during partnership or afterwards between the partners
or their respective representatives shall be referred to the
arbitrator. The plaintiff filed instant suit on 03.07.1988 as per
Section 8 of Arbitration and Conciliation Act, 1996. Party has
to make application not later than when submitting his first
statement on the substance of the dispute to refer parties to
the arbitration. Admittedly, the defendant filed their Written
Statement on 11.06.1991 and failed to file specific application
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under Section 8 of Arbitration and Conciliation Act before
filing of their Written Statement. Hence, the contention of the
defendant that the suit is barred under Arbitration Act is not
at all maintainable.
17. As per clause 4 of Partnership Deed, it appears that, the
partnership was established for a period of five years with
Rider of extension with consent of all partners. On perusal of
pleadings of the plaintiff, it appears that it was subsequently
extended by leasing out the land and shade standing thereon
of the partnership firm. Therefore, it can not be said that the
present suit is beyond limitation. Moreover, it is well settled
law that the question of limitation is mixed question of law
and facts. Therefore, in my view, on the aforesaid issue, the
plaint can not be rejected at threshold.
18. As far as regarding bar contended under Section 69(2)
of Indian Partnership Act, by insertion of Sub Section 2-A by
way of amendment, the aforesaid bar is made applicable with
respect to the State of Maharashtra. The Hon’ble Apex Court
in case of V. Subramaniam V/s. Rajesh Raghuvendra Rao
reported in 2001(1) ALL MR 311 held that restriction put by
amendment of Sub Section 2-A is arbitrary and excessive in
nature. Thus, Hon’ble Apex Court have stuck down the
aforesaid amendment. Hence, in my view, there is no
substance in the contention of the defendant that suit is
barred under Section 69 of Indian Partnership Act.
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19. It is not in dispute that the application under Order 7
Rule 11 can be made at any stage of the proceedings. Hence,
the contention of the plaintiff that there is a delay in filing the
aforesaid application having no substance at all. In view of
the above discussion, in my view, there is no substance in the
present Notice of Motion and same needs to be rejected. Thus,
I proceed to pass the following order :
ORDER
1. Notice of Motion No. 151 of 2018 is hereby rejected.
2. Parties to bear their own cost.
3. Notice of Motion No. 151 of 2018 is disposed off accordingly.
(A.H.Laddhad)
Judge,
City Civil and Sessions Court,
Dated : 27.01.2020 Greater Bombay.
Dictated on : 27.01.2020
Typed on : 27.01.2020
Draft Submitted on : 28.01.2020
Checked on : 03.02.2020
Signed on : 03.02.2020
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIGNED
JUDGMENT/ORDER.”
05/02/2020 at 11.30 a.m. (Ms. V.V.Sawant)
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
Name of the Judge (With Court room
no.)
Shri A.H.LADDHAD
(C.R. No.7)
Date of Pronouncement of
JUDGMENT/ ORDER
27/01/2020
JUDGMENT/ORDER signed by P.O.
on
03/02/2020
JUDGMENT/ORDER uploaded on 05/02/2020
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