Karnataka High Court
M/S Children S Corner vs Smt Yashoda N Rai on 17 October, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF OCTOBER, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
COMMERCIAL APPEAL NO. 498 OF 2024
BETWEEN:
1 . M/s. CHILDREN'S CORNER
A PARTENERSHIP FIRM
REP. BY ITS MANAGING DIRECTOR
SMT. NISHALI RAI
HAVING ITS OFFICE AT
14-4-507/5
HOTEL ROOPA BLDG
BALMATTA ROAD
MANGALORE-575 001
2 . SMT. NISHALI RAI
AGED ABOUT 47 YEARS
W/O ASHWIN SHETTY
MANAGING PARTNER
M/s. CHILDREN'S CORNER
HAVING ITS OFFICE AT
ROOPA BLDG
BALMATTA ROAD
MANGALORE-575 001
...APPELLANTS
(BY SRI. SAMPAT ANAND SHETTY, ADVOCATE)
AND:
1 . SMT. YASHODA N RAI
W/O LATE NARAYANA T. RAI
AGED ABOUT 72 YEARS
-
2
2 . ADITYA N. RAI
S/O LATE NARAYANA T. RAI
AGED ABOUT 45 YEARS
BOTH ARE R/AT No.3-W-30-2393/2
KADRI B, KADRI RESIDENTIAL-5
BELOW ROAD, 30, POUND GARDEN
BEHIND CITY HOSPITAL, KADRI
MANGALURU-575 003
3 . M/s. THE CHILDREN'S CORNER
A REGISTERED PARTNERSHIP FIRM
REP. BY ITS MANAGING PARTNER
SMT.YASHODA N. RAI
HAVING ITS REGISTERED OFFICE AT
DOOR No.14-4-507/5
HOTEL ROOPA BUILDING
BALMATTA ROAD
MANGALORE-575 001
...RESPONDENTS
(BY SRI. K. CHANDRANATH ARIGA, ADVOCATE FOR R1 & R2;
R3 IS SERVED)
THIS COMMERCIAL APPEAL IS FILED UNDER SECTION
13(1A) PROVISO OF COMMERCIAL COURTS ACT, 2015, PRAYING
TO SET ASIDE THE ORDER DATED 16.10.2024 PASSED BY THE IV
ADDITIONAL DISTRICT JUDGE, MANGALURU IN I.A.No.3 IN COM.
O.S. No.284/2024.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 15.10.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
-
3
CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)
This Commercial Appeal is preferred against an order
dated 16.10.2024 passed by the IV Additional District Judge,
Mangaluru in Com.O.S.No.284/2024 on I.A.No.3 filed by the
defendants under Order VII Rule 11(d) (provision wrongly
mentioned in I.A.No.3) of the Code of Civil Procedure for
rejection of plaint.
2. We have heard Shri. Sampath Anand Shetty,
learned counsel appearing for the appellants and Shri.
Chandranath Ariga, learned counsel appearing for
respondents No.1 and 2.
3. The plaint was filed seeking a permanent
prohibitory injunction restraining the defendants, their men
and servants from carrying on any business whatsoever, in
'A' schedule premises, in the name of any new partnership
firm, alleged to have been formed by them or in the name of
any other entity adopted by them.
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4. The facts necessary for considering the dispute
raised are as follows:-
Appellant No.1 is a Partnership Firm. A partnership
was entered into initially by the father of appellant No.2
along with respondent No.1, their mother. On 12.04.2013,
the firm was reconstituted. Appellant No.2 and respondent
No.2 were included as additional partners. Late Narayana
Thimmappa Rai, father of appellant No.2 and respondent
No.2, passed away on 08.11.2018 and the firm was again
reconstituted. Thereafter, disputes arose between the
parties and appellant No.2 issued a notice for Dissolution of
the Firm. Since the Partnership Deed contained an
arbitration clause, the parties have raised a dispute which is
being considered in arbitration. However, while so, it is
submitted that respondents No.1 and 2 registered a new
firm named M/s.Children's Corner in schedule 'A' property,
which is the asset of appellant No.1 firm and started running
business in all the schedule properties. On these allegations,
the plaint was filed seeking a permanent prohibitory
injunction as stated earlier.
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5. The respondents filed an application under Order
VII Rule 11(d) of CPC seeking rejection of the plaint. The
reasons stated in the application were that the firm is not
registered and plaintiff No.2 is not shown as a partner in the
Register of Firms. It was therefore, contended that the suit
is not maintainable under Section 69(2) of the Partnership
Act. Further, it was contended that the dispute is liable to
be subjected to Arbitration and Section 11 of the
Commercial Courts Act, 2015 bars the jurisdiction of the
Commercial Courts since the plaintiff has filed CMP
No.403/2024 before this Court for appointment of an
arbitrator.
6. An objection was raised by the plaintiff stating
that an Interlocutory Application seeking rejection of plaint
on the ground that the plaintiff's firm is not a registered firm
is liable to be rejected since the present suit is not filed for
enforcement of any contractual right and that the suit for
simple injunction is perfectly maintainable. It was further
contented that the disputes with regard to the dissolution of
the firm being admittedly pending in proceedings under the
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Arbitration and Conciliation Act, 1996. The question whether
the defendants could carry on business in the same or
deceptively similar name requires a consideration on its
merits.
7. The learned counsel appearing for the appellants
submit that the decisions relied on by the appellants had
been made extracted and narrated in the impugned order.
The decisions were specifically to the effect that Section
69(2) of the Indian Partnership Act, 1932 bars a suit for
enforcing a right arising from the contract or a right
conferred by the Partnership Act alone, but does not take
away the right of the partners of an unregistered firm to
enforce their right under other enactments or their common
law rights. It is submitted that after referring to all the
judgments which are perfectly clear, the trial Court held as
under:-
"In the present suit, as stated relief is also sought
against the third parties defendant Nos.2 and 3.
Further, the authorities relied are applicable when the
relief is sought against the partners of the firm and
not against third parties. Hence, the contention of
-
exercising of right under common law/tort holds no
substance.
Further, as admitted, plaintiff has invoked the
arbitration clause by filing AA No.6/2024 for interim
relief. Hence, filing of the suit is an abuse of process
of Court."
8. On these findings, the Interlocutory Application
filed for rejection of plaint was allowed.
9. The learned counsel for the appellants submits
that a plain reading of Section 69 of the Partnership Act
would make it clear that the bar with regard to filing of a
suit by an unregistered firm would have no application
whatsoever in the facts of the instant case, where the suit is
one for bare injunction as against passing off.
10. The learned counsel has placed reliance on the
decision of the Apex Court in the case of M/s. Haldiram
Bhujiawala and another v. M/s. Anand Kumar Deepak
Kumar and another1.
AIR 2000 SC 1287
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11. The learned counsel appearing for respondents
No.1 and 2, would, on the other hand, contend that since
the dispute between the parties who are mother and
children are already pending under the provisions of the
Arbitration and Conciliation Act, there was absolutely no
reason for the appellants to have approached the Court with
a suit for injunction which is intricately connected to the
main matter of dissolution. Further, it is contended that
even if the suit were to be maintainable, the same cannot
be entertained for want of pre-conciliation mediation under
Section 12A of the Commercial Courts Act.
12. The learned counsel would also place reliance on
the judgment of the Apex Court in the case of Dhanbad
Fuels Private Limited v. Union of India and Another2,
to contend that even if such a contention is not raised, the
Commercial Court should suo motu consider whether a suit
filed without complying with Section 12A of the Commercial
Courts Act is liable to be rejected at the threshold or not.
2025 SCC Online SC 1129
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13. Having considered the contentions advanced, we
notice that the contention raised by the respondents before
the Court of the first instance was specifically that the suit
was not maintainable on account of Section 69(2) of the
Partnership Act. Section 69 of the Partnership Act reads as
follows:-
"69. Effect of non-registration.-(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 suing 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.
(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.
(3) The provisions of sub-sections (1) and (2)
shall apply also to a claim of set-off or other proceeding
to enforce a right arising from a contract, but shall not
affect,-
(a) the enforcement of any right to sue for the
dissolution of a firm or for accounts of a
dissolved firm, or any right or power to
realise the property of a dissolved firm, or
-
(b) the powers of an official assignee, receiver
or Court under the Presidency-towns
Insolvency Act, 1909 (3 of 1909) or the
Provincial Insolvency Act, 1920 (5 of
1920) to realise the property of an
insolvent partner.
(4) This section shall not apply,-
(a) to firms or to partners in firms which have
no place of business in [the territories to
which this Act extends], or whose places
of business in [the said territories], are
situated in areas to which, by notification
under [section 56], this Chapter does not
apply, or
(b) to any suit or claim of set-off not
exceeding one hundred rupees in value
which, in the Presidency-towns, is not of a
kind specified in section 19 of the
Presidency Small Cause Courts Act, 1882
(5 of 1882), or, outside the Presidency-
towns, is not of a kind specified in the
Second Schedule to the Provincial Small
Cause Courts Act, 1887 (9 of 1887), or to
any proceeding in execution or other
proceeding incidental to or arising from
any such suit or claim."
14. It is clear that the present suit is only a suit for
injunction simpliciter and therefore is not directly the
subject matter of the arbitration which has been initiated
between the parties. In any view of the matter, the
application filed by the defendants under Order VII Rule
11(d) of CPC has been allowed only on the grounds that:-
-
(i) The suit is barred under Section 69 of the
Partnership Act; and
(ii) The same cannot be considered in view of the
arbitration clause contained in the partnership
deed.
Though other grounds are being urged before us in this
appeal by the respondents, we notice no such grounds had
either been raised or argued before the Court of the first
instance.
15. Having considered the contentions advanced, we
have no hesitation to hold that the bar under Section 69(2)
of the Partnership Act would under no circumstances apply
to a suit seeking the reliefs as sought for in the instant case.
The bar under Section 69(2) of the Partnership Act is
specifically for filing of a suit arising out of contract or under
the provisions of the Partnership Act and in no other case.
In the instant case, the relief sought for is for a permanent
injunction from utilizing the trade name or against passing
off. Since the suit is not for enforcing any right arising out
of contract, we are of the clear opinion that the suit could
-
not have been rejected on the grounds as stated in the
impugned order. We are therefore of the opinion that the
impugned order cannot be sustained, the same is liable to
be set aside.
16. Accordingly:-
(i) The Commercial Appeal is allowed.
(ii) The order dated 16.10.2024 passed by the
IV Additional District Judge, Mangaluru in
Com.O.S.No.284/2024 on I.A.No.3, is set
aside.
(iii) The suit in Com. O.S.No.284/2024 is
restored to its original file.
(iv) However, we make it clear that we have
made no comment on the maintainability of
the suit and that the same is liable to be
considered by the Competent Court in
accordance with law.
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All pending interlocutory applications shall stand
dismissed.
There is no order as to costs.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(VIJAYKUMAR A. PATIL)
JUDGE
cp*
