Andhra Pradesh High Court - Amravati
Dasari Sambasiva Rao vs M/S Sri Srinivasa Service Station on 22 January, 2021
Bench: M.Venkata Ramana
MVR,J
C.R.P.No.2208 of 2019
1
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
HONOURABLE SRI JUSTICE M. VENKATA RAMANA
C.R.P.No.2208 of 2019
Between:
Dasari Sambasiva Rao, S/o.Venkata Rattaiah
... PETITIONER
AND
M/s. Sri Srinivasa Service Station,
Rep.by its Managing Partner
Dammalapati Srinivas and two others
... RESPONDENTS
DATE OF ORDER PRONOUNCED: 22.01.2021
SUBMITTED FOR APPROVAL
HONOURABLE SRI JUSTICE M. VENKATA RAMANA
1. Whether Reporters of Local Newspapers
may be allowed to see the order? Yes/No
2. Whether the copy of order may be
marked to Law Reporters/Journals? Yes/No
3. Whether His Lordship wish to see the
fair copy of the order? Yes/No
____________________
M.VENKATA RAMANA, J
MVR,J
C.R.P.No.2208 of 2019
2
*IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
*HONOURABLE SRI JUSTICE M. VENKATA RAMANA
+ C.R.P.No.2208 of 2019
% Dated : 22.01.2021
Between:
# Dasari Sambasiva Rao
... PETITIONER
AND
$ M/s. Sri Srinivasa Service Station, rep.by its Managing Partner
Dammalapati Srinivas and two others
... RESPONDENTS
! Counsel for petitioner : Mr. M.Chalapati Rao
^Counsel for Respondents : None appeared
<GIST :
>HEAD NOTE:
? Cases referred:
1. 2018(1) ALT 684
2. AIR 2003 AP 418
3. 1994(6) SCC 322
4. 1985 AIR 1096
5. AIR 1976 CAL 1471
6. AIR 11942 MAD.252
7. AIR 1945 MAD.146
____________________
M.VENKATA RAMANA, J
MVR,J
C.R.P.No.2208 of 2019
3
HON'BLE SRI JUSTICE M. VENKATA RAMANA
C.R.P.No.2208 of 2019
ORDER:
This Civil Revision Petition is directed against order in E.A.No.121
of 2018 in E.P.No.82 of 2006 in O.S.No.693 of 2004 on the file of the
Court of learned II Additional Senior Civil Judge, Vijayawada.
2. The petitioner is first J.Dr. The first respondent is the D.Hr. and
the respondents 2 and 3, who are no more, were J.Drs.2 and 3.
3. The first respondent instituted the suit against the petitioner and
respondents 2 and 3 as a partnership firm, represented by it's partner
Sri Dammalapati Srinivas, on the foot of two promissory notes, in all for
Rs.2,66,672/-. The suit was decreed on 03.03.2006 basing on the
material produced by the first respondent and also for the reason that
the petitioner did not choose to participate during the trial. Thus, it
remained an ex parte decree.
4. In execution of this decree, the first respondent instituted
E.P.No.82 of 2006 for realisation of decretal amount. The mode of
execution sought was by attachment and sale of immovable property.
The petitioner also contested this execution petition and his objections
were overruled. His son Sri Bhanu Mahesh filed a claim petition in
E.A.No.262 of 2011 under Order XXI Rule 58 CPC read with Section 151
CPC. It was dismissed on contest by the executing Court and thereafter
the execution petition was posted for sale of the property to 06.08.2018.
5. The execution petition was dismissed for default since sale papers
were not filed on 23.10.2017. Therefore, the first respondent filed
E.A.No.46 of 2018 for restoration of the same and it was allowed by an
order of the executing Court dated 06.06.2018, rejecting the objections
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C.R.P.No.2208 of 2019
raised on behalf of the petitioner. It appears that objection in terms of
Section 69(2) of Indian Partnership Act as to maintainability of the suit
and thus questioning the decree was raised as one of the objections
while opposing E.A.No.46 of 2018.
6. Against the order in E.A.No.46 of 2018, the petitioner presented
C.R.P.No.3754 of 2018 on the file of the then High Court of Andhra
Pradesh, at Hyderabad. In respect of nature of such objection, the
observations in the above C.R.P. in the order dated 06.07.2018 are as
under:
"The learned counsel for the revision petitioner
contended that the decree itself was a nullity on account
of unregistered partnership firm filing the suit. But this is
a question that the petitioner should have either raised
before the trial Court or should at least raise in the
execution proceedings. This cannot be raised in an
application for restoration of the E.P. Therefore, leaving it
open to the petitioner to raise all objections available to
him under law within a week from the date of receipt of a
copy of the order, this Civil Revision Petition is dismissed.
No costs."
7. On the strength of these observations, the petitioner filed
E.A.No.121 of 2018 purportedly under Section 47 CPC read with Section
151 CPC to declare that the decree dated 03.03.2006 passed in the suit
O.S.No.693 of 2004 is null and void.
8. The main contention of the petitioner in the above petition was
basing on the status of the first respondent as an unregistered
partnership firm, which cannot enforce any liability against a third party
in terms of Section 69(2) of Indian Partnership Act. The main ground
thus urged was that the first respondent was not registered under
Section 59 of Indian Partnership Act and that Sri Dammalapati Srinivas,
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being its managing partner. Another objection raised was that the
property mentioned in the schedule of the execution petition did not
stand in the name of the petitioner and that it belonged to his son Sri
Bhanu Mahesh.
9. Thus, validity and executability of the decree were questioned in
terms of Section 47 CPC.
10. The first respondent resisted the above petition mainly
contending that institution of the suit by it as an unregistered
partnership firm and bar under Section 69(2) of Indian Partnership Act
were never urged either in the suit or in the execution petition or in
claim application filed by the son of the petitioner in E.A.No.262 of
2011. Therefore, the first respondent contended that it is not open for
the petitioner to raise the same for the first time by means of this
petition. He also contended that an application in terms of Section 47
CPC is not maintainable in the circumstances and such petition was filed
only to harass him by vexatious means. He also disputed the claim of
the petitioner that this property against which execution proceedings
have been levied did not belong to him and that it belonged to his son.
11. In the executing Court, the petitioner examined himself as P.W.1
and relied on Ex.A1 to Ex.A4, in support of his contention. No evidence
was let-in on behalf of the first respondent.
12. On the material, the executing Court held that a bar in terms of
Section 69(2) of Indian Partnership Act, is not applicable to the present
case on the premise that the suit was instituted basing on two
promissory notes, which are covered by Sections 30 and 37 of Negotiable
Instruments Act. It was further observed that the bar set out by the
petitioner is applicable only in case of enforcement of terms of contract
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and not with reference to the claim based on the promissory notes, viz.
the negotiable instruments.
13. Sri M.Chalapati Rao, learned counsel for the petitioner
strenuously contended that the executing Court lost sight of the fact
that a negotiable instrument is nothing but reflection of the contract
entered into between the parties and the observations of the executing
Court in this context are not only surprising but also strange.
Contending that very initiation of the proceedings by nature of the suit
against the petitioner by the first respondent is impermissible, since the
suit as such could not have been presented in terms of Order XXX Rule 1
CPC when the first respondent is not a registered partnership firm on
account of bar under Section 69(2) of Indian Partnership Act, the decree
is stated being a nullity, which could not be put in, in execution against
the petitioner. It is further contended that such decree being nullity
and void ab initio, absence of an objection on this score at earlier stages
of the litigation is not a bar by itself, since in terms it relates to
executability of the decree itself. Thus, learned counsel justified the
action of the petitioner in filing a petition under Section 47 CPC
questioning the decree and sought to set aside the order of the
executing Court impugned in this matter.
14. The first respondent though served notice in this revision petition,
did not choose to enter appearance through an advocate. Therefore,
the matter is required to be decided basing on the material available.
15. Now, the point for determination is, "Whether the decree in
question being null and void against the petitioner, cannot be executed
and if it is amenable to consider under Section 47 CPC?"
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16. The first respondent instituted the suit as a partnership firm
represented by its managing partner Sri Dammalapati Srinivas against
the petitioner and the respondents 2 and 3. It should be in terms of
Order XXX Rule 1 CPC. It reads as under:
"1. Suing of partners in name of firm:-
(1) Any two or more persons, claiming or being liable as
partners and carrying on business in India may sue or be sued
in the name of the firm (if any) of which such persons were
partners at the time of the accruing of the cause of action, and
any party to a suit may in such case apply to the court for a
statement of the names and addresses of the persons who
were, at the time of the accruing of the cause of action,
partners in such firm, to be furnished and verified in such
manner as the Court may direct.
(2) Where persons sue or are sued as partners in the
name of their firm under sub-rule(1), it shall, in the case of any
pleading or other document required by or under this code to
be signed, verified or certified by the plaintiff or the defendant
suffice if such pleading or other document is signed, verified by
any one of such person."
17. The cause of action to lay the suit as seen from the decree arose
on 01.02.2002 when the petitioner executed two promissory notes in
favour of the first respondent and also when a legal notice was issued on
13.11.2003 to him at Vijayawada. Therefore, for the purpose of filing
the suit, in terms of Order XXX Rule 1 CPC on the date when the cause of
action arose, it should be proved that the first respondent being
a partnership firm had partners including Sri Dammalapati Srinivas.
18. In terms of Section 59 of the Indian Partnership Act, a partnership
firm is required to be registered and in such process, it shall be entered
in a register called 'the Register of Firms' by the Registrar of Firms.
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A statement in respect thereof, which shall be in terms of Section 58 of
Indian Partnership Act including furnishing names and addresses of the
partners, shall be filed before the Registrar of Firms.
19. For the present purpose, Section 69 of Indian Partnership Act,
which refers to effect of non-registration, is relevant. In as much as the
petitioner is a third party to this firm, it is appropriate to consider
effect of Section 69(2) of Indian Partnership Act. It reads as under:
"69. Effect of non-registration:(1)...................
(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 suing are or have been shown in the Register of
Firms as partners in the firm."
20. Therefore, no suit to enforce against a third party on behalf of
a firm, shall be instituted unless it is registered and through the
partners, who are shown in the Register of Firms in such capacity.
21. When effect of Section 69(2) of Indian Partnership Act is read in
conjunction with Order XXX Rule 1 CPC, it leads no matter of doubt that
on the date when the cause of action for institution of the suit arises, in
order to enforce a liability against a third party on behalf of a firm, the
suit sought to be instituted, should necessarily meet the requirements in
terms of Section 59 and Section 69(2) of Indian Partnership Act.
22. Admittedly, the first respondent was not a registered partnership
firm meeting above requirements on the date when the suit was
instituted, viz., on 14.06.2004 (date of presentation of the plaint).
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23. The executing Court did consider the fact that the first
respondent firm was not registered in terms of Section 69(2) of Indian
Partnership Act.
24. However, the executing Court took into consideration absence of
defence from the petitioner in terms thereof either in the suit
proceedings or at the initial stages in the execution proceedings
including in the claim petition filed by the son of the petitioner. Thus,
the resistance of the first respondent as set out in the counter and in the
enquiry before it weighed with the executing Court.
25. In as much as very institution of the suit by an unregistered firm
suffers bar on account of infraction of Section 69(2) of Indian
Partnership Act, which in terms should be the requirement to institute
a suit by a partnership firm following Order XXX Rule 1 CPC, any inaction
or absence of defence in that respect cannot be a measure to make the
decree passed, acceptable or valid. The question relating to this bar in
failing to follow the mandatory provision of the statute, which clearly
bars right to enforce the claims by a un-registered partnership firm
against third parties, a decree so passed remains a nullity and is void.
26. In this context, Sri M.Chalapati Rao, learned counsel while
referring to this situation rightly relied on NEW INDIA ASSURANCE
CO.LTD. REP.BY ITS DIVISIONAL MANAGER, TADEPALLIGUDEM v. M/S.
VARSHA AQUA FARM, SARVASIDDI, VISAKHAPATNAM, REP.BY ITS
MANAGING PARTNER1. One of the learned Judges of this Court in this
context observed that a suit is not maintainable which was filed by an
unregistered firm, to enforce a right arising from a contract. The facts
in the above case mostly considered, the effect of registration of a firm
2018(1) ALT 684
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pendente lite, and yet, the observations concerning application of
Section 69(2) of Indian Partnership Act, are relevant.
27. Before the executing Court, on behalf of the petitioner the
judgment of Division Bench of the then High Court of Andhra Pradesh at
Hyderabad in ANDHRA PRADESH CO-OPERATIVE WOOL SPINNING
MILLS LTD. AND OTHERS v. G. MAHANANDI AND COMPANY
WOOL LTD.2 was relied on. In this ruling, effect of a decree passed in
favour of an unregistered partnership firm, was considered in an appeal
under Section 96 CPC though no such defence in terms of Section 69(2)
of Indian Partnership Act was raised in the trial Court. In para 12 of this
ruling, it is observed in this context as under:
12.............................
"The defence that a suit by a firm which is not
established to be a registered firm is not maintainable-in our
view is not defence based on facts on which the party relies
forms upon the existence or otherwise of a jurisdictional facts.
Assuming for the sake of argument the appellants herein took
such a plea; they could not have established the fact that the
first respondent firm is an unregistered firm as it is a negative
fact. It is only the plaintiff who can plead and prove that the
firm is a registered firm if at all it is; in our view the burden to
plead and prove that the plaintiff is a registered firm and
therefore is entitled to maintain the suit against a third party is
always on the firm in view of the legislative mandate
under Section 69(2) of the Indian Partnership Act - otherwise
the cause of action for such a suit is not complete. The
Supreme Court in Bloom Dekor Limited v. Subhash Himat Lal
Desai3, held as follows:
AIR 2003 AP 418
1994 (6) SCC 322,
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"By "cause of action" it meant every fact, which, if traversed, it
would be necessary for the plaintiff to prove in order to
support his right to a judgment of the Court. In other words, a
bundle of facts which it is necessary for the plaintiff to prove in
order to succeed in the suit..."
28. Further, in para-13 of the same ruling, it is observed to the effect
that the question relating to registration of a partnership firm is a
jurisdictional fact and becomes a part of cause of action. The relevant
observations in this para-13 are extracted hereunder:
"13. In the context of a suit by a partnership firm the
fact that the partnership firm is a registered firm and therefore
entitled to maintain a suit against a third party becomes a
jurisdictional fact and becomes part of the cause of action in
the absence of any pleading or proof in that regard that cause
of action is incomplete. In our view the suit must fail on that
count. The Supreme Court in Jaswant Singh v. Custodian of
Evacuee Property, New Delhi4, held as follows:
".. ..A cause of action for a proceeding has no relation whatever
to the defence which may be set up nor does it depend upon
the character of the relief prayed for by the plaintiff or the
applicant. It refers entirely to the grounds set forth in the plaint
or the application as the case may be to the cause of action or
in other words to the media upon which the plaintiff or the
applicant asks the Courts to arrive at a conclusion in his
favour....."
29. Observations in SUNDERLAL AND SONS v. Y.N. SINGH5, of justice
Sabhyasachi Mukherjee (as his lordship then was) are extracted in this
context in para-6 of this decision and it is desirable to reproduce them
hereunder:
1985 AIR 1096
AIR 1976 CAL 1471
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"In this case the decree has been passed. If the decree is
a nullity then of course this point can be taken. But the
question is whether a decree passed without this point having
been taken is nullity or not. In view of the language of the
section, in my opinion, a plaint filed by an unregistered firm
would not be a plaint at all. If that be so, all proceedings
thereunder will be proceedings without jurisdiction. Support
for this proposition can be had from the observations of the
Division Bench of Madras High Court in the case of K.K.A.
Ponnuchami Gounder v. Mathusami Goundar6. Similar view
was taken in the case of A.T. Ponnappa Chettiar v. Podappa
Chettiar7, Shriram Sardarmal Diwani v. Gourishankar, Firm
Laduram Sagarmal v. Jamuna Prosad Chaudhuri, AIR 1939 Pat.
239 and Dwijendra Nath Singh v. Govinda Chandra. This
contention, in my opinion, can also be taken at this stage.
Reliance in this connection may be placed on the observations
of the Judicial Committee in the case of Surajmall Nagoremull
v. Triton Insurance Co., Ltd, 52 Ind App 126 - (AIR 1925 PC 83)
and in the case of Gopinath Motilal v. Ramdas, AIR 1936 Cal.
133. In the aforesaid view of the matter I am of the opinion
that the firm not being registered the decree was a nullity and
as such cannot be executed."
".....Jurisdiction as observed by Lord Reid, in the case
of Anisminic Ltd. v. Foreign Compensation Commission, (1969)
2 AC 147, at p. 171 of the report of the entitlement of the
tribunal to enter upon the inquiry in question. That entitlement
in my opinion can only arise from a competent plaint instituted
by a plaintiff. If the plaint was incompetent, there was no
plaint. There was no suit. Ex facie and without any dispute
there was no valid suit. A decree based on such a patent and
indisputable error would be an error of jurisdiction and decree
passed on such error would be nullity. It, however, the error
AIR 1942 Mad. 252
AIR 1945 Mad. 146
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depends upon adjudication of disputes, either of fact or law
different considerations would apply. After all as the Supreme
Court has observed that the question whether there was an
error within the jurisdiction or an error of jurisdiction depends
upon the nature of the error. In view of the express provision
and public policy indicated in Section 69 of the Partnership Act
in my opinion entertaining a suit in derogation of that
mandatory provision would defeat the purpose of the statute
and such an error would amount to an error of jurisdiction and
a decree passed on such an error would be a nullity. In the
aforesaid view of the matter, in my opinion, on this ground also
this decree cannot be executed."
30. In this backdrop, whether a decree passed in those circumstances
could be questioned in terms of Section 47 CPC as to its executability
needs consideration.
31. In the circumstances, it cannot be stated that the petitioner
cannot make an attempt to reopen this issue under the garb of Section
47 CPC when he did not choose to raise such defence or question, during
earlier stages of litigation. The prohibition under Section 69(2) of Indian
Partnership Act, is penal and plenary. When such is its impact, mere
omission or silence on the part of the petitioner to raise such defence at
earlier stages of the litigation cannot benefit the D.Hr., viz., the first
respondent. This serious omission as to want of registration of the firm
goes to the root of the matter affecting the very institution of the suit.
When a plaint presented in such manner, by a firm, which is
incompetent to do likewise, cannot lead to proper and legal institution
of the suit. Therefore, when this objection is with reference to very
maintainability of the suit, a decree passed thereon is not only void but
also in improper exercise of jurisdiction amounting to an illegality. It is
well known that there cannot be contracting out of the statutory
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provisions and a decree passed in derogation of the terms of Section
69(2) of Indian Partnership Act cannot be legally sustained. A decree of
this kind, can indeed, be questioned at any stage.
32. As rightly contended by Sri M.Chalapati Rao, learned counsel for
the petitioner, the basis on which the executing Court rejected the
contention of the petitioner that the promissory note is not a contract,
to say the least is on inappropriate understanding and application of
law. Therefore, the basis on which the objection of the petitioner was
rejected by the executing Court cannot be sustained. An illegality
cannot be elevated to a legal status, in the circumstances. Thus,
Section 47 CPC in the circumstances is clearly applicable and it has been
rightly invoked by the petitioner questioning this decree.
33. Therefore, the order under revision requires interference and
consequently, it has to be set aside.
34. In the result, this Civil Revision Petition is allowed setting aside
the order of the learned II Additional Senior Civil Judge, Vijayawada, in
E.A.No.121 of 2018 in E.P.No.82 of 2006 in O.S.No.693 of 2004, declaring
that decree in O.S.No.693 of 2004 dated 03.03.2006 against the
petitioner is a nullity and is un-executable against him. Consequently,
proceedings in E.P.No.82 of 2006 against the petitioner (1st J.Dr.) cannot
continue and to that extent E.P.No.82 of 2006 in O.S.No.693 of 2004
stands dismissed. Attachment of E.P. schedule property, with reference
to the interest of the petitioner (1st J.Dr.) is raised. No costs. All
pending petitions stand closed.
____________________
M. VENKATA RAMANA, J
Dt:22.01.2021
Rns
MVR,J
C.R.P.No.2208 of 2019
HON'BLE SRI JUSTICE M. VENKATA RAMANA
C.R.P.No.2208 of 2019
Date:22.01.2021
Rns
