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Judgment
M.R. Shah, J.—Present Appeal From Order is preferred by the appellant herein-original plaintiff under Order XLIII, Rule 1(r) of the CPC
challenging the impugned order dated 14-10-2008 passed by the learned Principal Senior Civil Judge, Vadadora below applications Exhs. 5 and
Exh. 6 in Special Civil Suit No. 163 of 2008 by which the learned trial Court has dismissed the aforesaid applications submitted by the plaintiff for
interim injunction as well as application Exh. 6 for appointment of Receiver.
The appellant-original plaintiff had instituted Special Civil Suit No. 163 of 2008 for accounts of the partnership firm - Sun Corporation against
defendant Nos. 1 to 7 being partners of Sun Corporation - partnership firm. A declaration is also sought in the said suit by the plaintiff declaring
that remaining land of land bearing revenue Survey No. 2 situated at Sayajipura, Vadodara belonging to partnership firm of plaintiff and defendant
Nos. 1 to 7, defendant Nos. 1 to 7 alone have no right and/or authority to sell transfer, alienate the said land. A declaration is also sought that the
sale-deed executed by defendant Nos. 1 and 2 in favour of defendant No. 8 dated 29-3-2008 with respect to land bearing revenue Survey No. 5
be declared as illegal, without consideration and without authority. A declaration is also sought that defendant Nos. 1 to 8 alone have no right or
authority to execute any writing and/or sell, transfer aforesaid properties/land, and therefore, permanent injunction is sought against them from
entering into any transaction and/or executing in writing to sell, transfer, alienate aforesaid land in any manner whatsoever. A declaration is also
sought that as plaintiff is legal partner of partnership firm therefore, defendants have no right or authority to restrain/obstruct plaintiff from attending
partnership firm''s office and the place and/or obstructing plaintiff from verifying accounts of partnership firm and the business. Permanent injunction
is also sought to the effect that as the plaintiff is legal partner of partnership firm, defendants be permanently restrained from obstructing plaintiff
from attending office of the partnership firm and place of business of partnership firm and properties of the partnership firm and verifying the
accounts of the partnership firm by the plaintiff. Permanent injunction is also sought against defendant No. 9-Union Bank of India restraining the
said Bank from clearing cheque of partnership firm signed by any of the partners of partnership firm. It appears from the pleadings and the
aforesaid plaint that it is the case on behalf of the plaintiff that he is partner of partnership firm - Sun Corporation along with defendant Nos. 1 to 7
and he has got 25% share in the profit and loss of partnership firm and rest of the defendants have 75% share in the profit and except one Hardik
Navnitlal, rest of the partners have 75% share in loss. That Bank account of the partnership firm was to be operated with joint signature of any two
of the partners. That during the course of the business of partnership firm, land bearing revenue Survey Nos. 2 and 5 situated at Sayajipura,
Vadodara admeasuring 57668 sq.mtrs. has been purchased by the partnership firm on executing agreement to sell, development agreement,
possession receipt etc. in favour of partnership firm. Huge amount has been paid to original land owners towards sale consideration by the said
partnership firm. It is further averred in the plaint that since long defendant Nos. 1 to 7 are not furnishing any account of partnership firm though
demanded time and again and are not permitting the plaintiff to attend office premises and business of partnership firm. Partnership firm had
constructed residential houses, after completing the same in the land bearing Survey No. 2 and on selling the said residential house, true and
correct account is to be furnished. However, defendant Nos. 1 and 2 are administrating partnership firm and managing affairs of partnership firm as
if they are the only partners. It is further averred in the plaint that so far as land bearing Survey No. 5 is concerned, defendant Nos. 1 and 2 have
sold the said land in favour of defendant No. 8 by registered sale-deed dated 29-3-2008 for sale consideration of Rs. 2,19,90,000/- only against
market price of land in question at Rs. 13,75,00,000/-. Without consent of the plaintiff, defendant No. 8 had purchased the said property in
collusion with defendant Nos. 1 and 2, therefore, it is contended that said registered sale-deed executed in favour of defendant No. 8 with respect
to land bearing Survey No. 5 is bogus, without consideration and without authority, therefore, the plaintiff has instituted suit for aforesaid reliefs
with aforesaid averments in the plaint. In the said suit, the plaintiff submitted application Exh. 5 for interim injunction under Order XXXIX, Rules 1
and 2 of the CPC restraining defendants from transferring, selling remaining land out of land being Survey No. 2 situated at Sayajipura, Vadodara
and restraining defendant No. 8 from transferring, alienating and/or selling land bearing revenue Survey No. 5 situated at Sayajipura, Vadodara.
Further injunction is also sought restraining defendant No. 7 from obstructing and/or restraining the plaintiff from attending office premises and
business of the partnership firm and further restraining them from obstructing the plaintiff from verifying the accounts of the partnership firm.
Further, injunction is also sought restraining defendant No. 9 from making any payment from the Bank account of the Sun Corporation. Plaintiff
also submitted application Exh. 6 for appointment of Receiver. Said application Exhs. 5 and 6 were resisted by the defendants. It was contended
on behalf of defendant Nos. 1 to 7 that as partnership firm is not registered partnership firm said suit by the plaintiff is not maintainable as per bar
u/s 69 of the Partnership Act (hereinafter referred to as ''the Act''). It was contended on behalf of the defendants that so far as the plaintiff is
concerned, he has already retired since 2002 after settling the accounts, and therefore, the plaintiff is not entitled to any relief as prayed for. It was
also further submitted that so far defendant No. 1 is concerned, he has purchased disputed land on payment of sale consideration and that too after
giving public notice and no objection was raised by the plaintiff at any time, and therefore, defendant No. 8 is bona fide purchaser of the disputed
land in question being revenue Survey No. 5, and therefore, defendant No. 8 being purchaser may not be restrained from using and/or developing
the land in question. Therefore, it was requested to dismiss application Exhs. 5 and 6. The learned trial Court by impugned order dismissed both
application Exhs. 5 and 6 by holding that said suit by the plaintiff is barred u/s 69 of the Act as partnership firm is not registered partnership firm
and also on other grounds. Being aggrieved and dissatisfied with the impugned orders passed by the learned trial Court below Exhs. 5 and 6, the
appellant-plaintiff has preferred present Appeal From Order and Civil Application therein for interim relief.
Mr. Mihir Joshi, learned Senior Advocate appearing on behalf of the appellant-original plaintiff has submitted that the learned trial Court has
materially erred in holding that suit filed by the plaintiff is barred u/s 69 of the Act. It is further submitted that even the learned trial Court has
materially erred in holding that defendant No. 8 is bona fide purchaser of land bearing revenue Survey No. 5. It is submitted that against market
value of Rs. 8 crores, property bearing revenue Survey No. 5 has been sold by defendant Nos. 1 and 2 in favour of defendant No. 8 for sale
consideration of Rs. Rs. 2,19,90,000/- only and to that Rs. 1.90 crores was to be paid in future therefore, considering above the learned trial
Court ought to have held that sale-deed in favour of defendant No. 8 is prima facie without full consideration. Therefore, the learned trial Court
ought to have granted injunction as prayed for. It is further submitted by Mr. Joshi, learned Senior Advocate for appellant that the learned trial
Court has materially erred in holding that suit by the plaintiff is not maintainable and/ or barred u/s 69 of the Act. It is submitted that the learned trial
Court has not properly appreciated and considered reliefs sought in the plaint/suit. It is further submitted that in the suit the plaintiff has also sought
relief declaring sale-deed in favour of defendant No. 8 as illegal, without consideration and not binding to the plaintiff, and therefore, for such
reliefs, it cannot be said that suit is barred u/s 69 of the Act. It is submitted that even in the written statement by the defendants, they have disputed
existence of partnership firm and/or status of plaintiff as partner, and therefore, it cannot be said that suit filed by the plaintiff is barred u/s 69 of the
Act. Mr. Joshi, learned Senior Advocate has relied upon decision of the Hon''ble Supreme Court in the case of Mukund Balkrishna Kulkarni v.
Kulkarni Powder Metallurgical Industries and Anr. reported in 2004 (13) SCC 750 and relying upon aforesaid decision, it is submitted that bar u/s
69 of the Act will not be applicable in the facts of the present case and suit in question. It is submitted that one has to consider prayers and reliefs
sought in the plaint/suit. It is submitted that in the suit prayer of the plaintiff is with respect to declaration as narrated hereinabove, therefore, it
cannot be said that suit barred u/s 69 of the Act. Therefore, it is submitted that the learned trial Court has committed error in not properly
appreciating scope of Section 69 of the Act. Considering same along with reliefs sought in the plaint/suit and thereby the learned trial Court has
committed error in not granting injunction as prayed for. Therefore, it is requested to allow present Appeal From Order.
Appeal From Order is opposed by Mr. J. M. Patel, learned Advocate for respondent Nos. 1 to 7 herein-original defendant Nos. 1 to 7 and
Mr. Vijay Patel, learned Advocate for M/s. H. L. Patel Advocates for respondent No. 8-original defendant No. 8 purchaser of land bearing
Survey No. 5 situated at Sayajipura, Vadodara. It is submitted that in the facts and circumstances of the case and relief sought in the plaint/suit it is
by partner for accounts of partnership firm and as partnership firm is not registered partnership firm, the suit filed by the plaintiff-partner is not
maintainable and/or barred. It is submitted in the plaint case of plaintiff is based upon his assertion that he is partner of partnership firm - Sun
Corporation and he has got 25% share, and accordingly, he has prayed for declaration, permanent injunction as well as suit for accounts, and
therefore, bar u/s 69 of the Act would be applicable. It is also further submitted that even declaration sought by the plaintiff to declare sale-deed in
favour of defendant No. 8 is also based upon asserting his right as partner, and therefore, for the said relief also Section 69(1) of the Act would be
applicable. It is submitted that it is not that the defendant Nos. 1 to 7 have disputed that plaintiff was not partner of partnership firm at all. It is
submitted that as per defendant''s case in the written statement plaintiff has retired as partner since 1-2-2002. It is further submitted that even in the
application submitted by the defendants under Order VII, Rule 11 of the C.P.C. and/or for invocation of arbitration was on the basis that it is
partnership firm. It is further submitted that as the suit is not for dissolution of partnership firm or suit for accounts of dissolution of partnership, firm,
therefore, Section 69(1) would not be applicable. Bar u/s 69(1) of the Act would be attracted. It is submitted that on facts decision of the Hon''ble
Supreme Court in the case of Mukund Balkrishna Kulkarni (supra) relied upon by the learned Advocate for the appellant would not be applicable.
It is submitted that in the case before the Hon''ble Supreme Court declaration was sought by the plaintiff to declare that he is partner of partnership
firm and prayed for declaration of existence of partnership and the shares between the parties was sought and considering the same, the Hon''ble
Supreme Court has held that such a prayer is to be a partner by the plaintiff, and therefore, such suit is not barred by Section 69(1) of the Act. It is
further submitted that in the case before the Hon''ble Supreme Court, on facts Hon''ble Supreme Court has held that Section 69(3)(a) would be
applicable. Therefore, it is submitted that said decision would not be applicable to the facts of the present case. It is submitted that the learned trial
Court has rightly held that considering relief sought bar u/s 69(1) of the Act would be applicable and the learned trial Court has rightly refused to
grant injunction as prayed for. It is further submitted that defendant No. 8 is a bona fide purchaser of land being land Survey No. 5 and inspite of
public notice before purchase of land by defendant No. 8, plaintiff never objected to the same and thereafter defendant No. 8 purchased said land
therefore, the learned trial Court has rightly refused to grant injunction in favour of plaintiff with respect to land bearing Survey No. 5, therefore, it
is requested to dismiss present Appeal From Order.
Heard the learned Advocates for the respective parties.
Suit has been filed by the appellant-plaintiff for accounts of the partnership firm - Sun Corporation against defendant Nos. 1 to 7 being partners
of Sun Corporation - partnership firm. A declaration is also sought in the said suit by the plaintiff declaring that remaining land of land bearing
revenue Survey No. 2 situated at Sayajipura, Vadodara is belonging to partnership firm of plaintiff and defendant Nos. 1 to 7 and defendant Nos.
1 to 7 alone have no right and/ or authority to sell transfer, alienate the said land. A declaration is also sought that the sale-deed executed by
defendant Nos. 1 and 2 in favour of defendant No. 8 dated 29-3-2008 with respect to land bearing revenue Survey No. 5 be declared as illegal,
without consideration and without authority. A declaration is also sought that defendant Nos. 1 to 8 alone have no right or authority to execute any
writing and/or sell, transfer aforesaid properties/land, and therefore, permanent injunction is sought against them from entering into any transaction
and/or executing any writing to sell, transfer, alienate aforesaid land in any manner whatsoever. A declaration is also sought that as plaintiff is legal
partner of partnership firm, therefore, defendants have no right or authority to restrain/ obstruct plaintiff from attending partnership firm''s office and
the place and/ or obstructing plaintiff from verifying accounts of partnership firm and the business. Permanent injunction is also sought to the effect
that as the plaintiff is legal partner of partnership firm, defendants be permanently restrained from obstructing plaintiff from attending office of the
partnership firm and place of business of partnership firm and properties of the partnership firm and verifying the accounts of the partnership firm
by the plaintiff. Permanent injunction is also sought against defendant No. 9-Union Bank of India restraining the said Bank from clearing cheque of
partnership firm signed by any of the partners of partnership firm. It appears from the pleadings in the aforesaid plaint that it is the case on behalf of
the plaintiff that he is partner of partnership firm - Sun Corporation along with defendant Nos. 1 to 7 and he has got 25% share in the profit and
loss of partnership firm and rest of the defendants have 75% share in the profit and except one Hardik Navnitlal, rest of the partners have 75%
share in loss; That Bank account of the partnership firm was to be operated with joint signature of any two of the partners; That during the course
of the business of partnership firm, land bearing revenue Survey Nos. 2 and 5 situated at Sayajipura, Vadodara admeasuring 57668 sq.mtrs. has
been purchased by the partnership firm on executing agreement to sell, development agreement, possession receipt etc. in favour of partnership
firm; huge amount has been paid to original land owners towards sale consideration by the said partnership firm. It is further averred in the plaint
that since long defendant Nos. 1 to 7 are not furnishing the accounts of partnership firm though demanded time and again and are not permitting the
plaintiff to attend office premises and business of partnership firm. That partnership firm had constructed residential houses and after completing the
same in the land bearing Survey No. 2 and on selling the said residential house, true and correct account is to be furnished. However, defendant
Nos. 1 and 2 are administrating partnership firm and managing affairs of partnership firm as if they are the only partners. It is further averred in the
plaint that so far as land bearing Survey No. 5 is concerned, defendant Nos. 1 and 2 have sold the said land in favour of defendant No. 8 by
registered sale-deed dated 29-3-2008 for sale consideration of Rs. 2,19,90,000/- only against market price of land in question at Rs.
13,75,00,000/-, without consent of the plaintiff, and defendant No. 8 had purchased the said property in collusion with defendant Nos. 1 and 2.
Therefore, it is contended that said registered sale-deed executed in favour of defendant No. 8 with respect to land bearing Survey No. 5 is bogus,
without consideration and without authority. On aforesaid arguments and pleadings in the plaint, the plaintiff had instituted suit for aforesaid reliefs
with aforesaid averments in the plaint. It is specific case on behalf of the plaintiff that he is partner of partnership firm - Sun Corporation and having
25% share in profit and loss of the partnership firm and looking to above, it appears that suit filed by the plaintiff is essentially suit for accounts.
Even declaration sought by the plaintiff with respect to sale-deed executed in favour of defendant No. 8 with respect to land bearing Survey No. 5
is on assertion of his right as partner of the partnership firm - Sun Corporation. Other reliefs are also with respect to administration and
management of partnership firm -Sun Corporation. It is the case on behalf of the plaintiff that in view of the declaration sought with respect to sale-
deed executed in favour of defendant No. 8 with respect to land bearing Survey No. 5, bar u/s 69(1) would not be attracted. It is also the case on
behalf of the plaintiff that as in the written statement defendants have disputed existence of partnership firm and/or status of plaintiff as partner, bar
u/s 69(1) would not be attracted. On fair reading of written statement as a whole, it cannot be said that defendants have ever disputed that plaintiff
was never partner of the partnership firm and it cannot be said that defendants have disputed the status of the plaintiff as partner of the partnership
firm - Sun Corporation. However, it is the case on behalf of the defendant Nos. 1 to 7 that plaintiff retired partner of partnership firm since 1-2-
2002. It is also required to be noted that it is not the case on behalf of the defendants that disputed land does not belong to partnership firm. It is
the case on behalf of the defendants that plaintiff and defendant Nos. 5 and 6 have retired in the year 2002 after settling the accounts. It is also
required to be noted that even defendant Nos. 1 to 7 have submitted application Exh. 16 u/s 8 of the Arbitration Act to stay the suit and refer the
dispute to the arbitration relying upon Clause 19 of Arbitration agreement. Considering above, it cannot be said that defendants have disputed the
status of the plaintiff as partner at all. Now, in light of reliefs sought and the prayer in the suit, provisions of Section 69 of the Partnership Act is
required to be considered. Section 69 of the Partnership Act reads as under:
Section 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 proceedings 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-town Insolvency Act, 1909 (III of 1909) or the Provisional
Insolvency Act, 1920 (V 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 (Sec. 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 (V of 1882), or outside the Presidency-towns, is not of a kind specified in the Second Schedule
to the Provisional Small Cause Courts Act, 1887 (IX of 1887), or to any proceeding in execution or other proceeding incidental to or arising from
any such suit or claim.
Considering Section 69 of the Act, no suit to enforce a right arising from a contract or conferred by the said 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. Therefore, when the plaintiff is
asserting his right as partner and suit is filed for enforcement of his right as partner; suit is filed for accounts of partnership firm, unless it is
registered, no suit by person/partner is maintainable. However, there is exception to Section 69(1). If a suit is filed by a person/partner 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 in that case, bar u/s 69(1)
of the Act would not be applicable. In the present case, such is not the situation. Suit filed by the plaintiff is not for dissolution of partnership firm or
accounts of dissolved firm or any right or power to realise the property of a dissolved, firm therefore, suit is for accounts by the partnership firm -
Sun Corporation asserting that the plaintiff has 25 % share in profit and loss of the partnership firm and when admittedly partnership firm is not
registered partnership firm, bar u/s 69(1) of the Act would be attracted and such suit for aforesaid reliefs is not maintainable. Therefore, it cannot
be said that the learned trial Court has committed any error in holding that for the reliefs sought in the plaint/suit by the plaintiff such a suit u/s 69(1)
would not be maintainable, and therefore, the learned trial Court has rightly refused to grant injunction in the said suit.
Now, so far as the decision of the Hon''ble Supreme Court in the case of Mukund Balkrishna Kulkarni (supra) relied upon by the learned
Advocate for the appellant is concerned, on facts said decision would not be applicable and/or of any assistance to the appellant. In the case
before the Hon''ble Supreme Court, plaintiff filed suit for declaration of the existence of partnership and shares between the parties and it was a suit
to enforce a right under a contract against the firm. Considering above, Hon''ble Supreme Court held that such a prayer for such a declaration
could not be said to be made by person suing as a partner. It was a prayer to be a partner, and is therefore, not debarred under the provisions of
Section 69(1) of the Act. Hon''ble Supreme Court has further observed considering facts of the said case that what was in fact being prayed for by
the appellant was a declaration of the existence of a contract between the parties, that could not be said to be a suit to enforce a right arising from
a contract. The second prayer of the appellant was not to continue as a partner of the firm but to dissolve the firm and considering above, the
Hon''ble Supreme Court has held that to that extent the appellant was suing ''as a partner'' and he was entitled to do u/s 69(3)(a). Even after
reproducing Section 69(1) of the Act, the Hon''ble Supreme Court has specifically observed and held that Sub-section (1) of Section 69 contains
embargo which must co-exist before a plaintiff can be nonsuited under that sub-section. As observed by the Hon''ble Supreme Court in the said
decision the two embargoes relevant are : (1) that the suit should be filed by person ""suing as a partner in a firm"", and (2) that the suit must be to
enforce a right arising from a contract. Now, considering the facts of the case on hand as the plaintiff has sued as partner of partnership firm - Sun
Corporation claiming that he has 25% share in profit and loss of the aforesaid partnership firm, bar u/s 69(1) of the Act would apply, and
therefore, even on facts, it is to be held that such a suit by the plaintiff with respect to the partnership firm which is unregistered is not maintainable.
Now, so far as the contention on behalf of the plaintiff that in the plaint as declaration is also sought against defendant No. 8 to declare sale-
deed in favour of defendant No. 8 with respect to land bearing revenue Survey No. 5 as illegal and without consideration and invalid, and
therefore, bar u/s 69(1) of the Act would not be applicable is concerned, such submissions seems to be attractive but has no substance at all. It is
to be noted that such declaration is sought by the plaintiff on the basis of his right as partner and having 25% share in the partnership firm.
Therefore, as such in essence claim of the plaintiff is as partner of the partnership firm, and therefore, for such relief also bar u/s 69(1) of the Act
would be attracted and/or applicable. Such reliefs are required to be considered on the basis of averments in the plaint and as stated above
considering averments in the plaint entire suit is based upon assertion of the plaintiff as partner of the partnership firm and having 25% share in
partnership firm. Essentially, suit is filed for accounts, administration and management of the partnership firm, and therefore, in the facts and
circumstances of the case, bar u/s 69(1) of the Act would be attracted and/or applicable, and therefore, for the reliefs sought in the suit/plaint by
the partnership firm, which is not registered firm, said suit is not maintainable. Therefore, the plaintiff is not entitled to any injunction in the said suit.
In view of above, and it is found that bar u/s 69(1) of the Act would be applicable and/or attracted and prima facie it is found that such a suit is
not maintainable considering Section 69 of the Act, plaintiff is not entitled to injunction as prayed for, other aspect with respect to whether
defendant No. 8 can be said to be bona fide purchaser of the land bearing revenue Survey No. 5 is not further required to be considered. Even
otherwise, it appears that defendant No. 8 has purchased property being revenue Survey No. 5 after giving public notice and plaintiff has never
raised any objection, and thereafter, defendant No. 8 had purchased property in question by registered sale-deed. Under the circumstances,
learned trial Court has rightly refused to grant injunction. Considering above, when it is found that suit filed by the plaintiff is not maintainable u/s
69(1) of the Act as partnership firm is not registered partnership firm, the learned trial Court has rightly dismissed application Exh. 5 and Exh. 6
and has rightly refused to grant injunction and refused to appoint receiver.
For the reasons stated above, there is no substance in the present Appeal From Order, which deserves to be dismissed and accordingly, it is
dismissed. In view of dismissal of Appeal From Order, no order in Civil Application.
FURTHER ORDER
Shri Nilesh Pandya, learned Advocate appearing on behalf of the appellant has requested to extend the statement made by the learned Advocate
appearing on behalf of the respondents, which is objected by the learned Advocate appearing on behalf of the respondents.
In the facts and circumstances of the case, when it is specifically held by this Court that the suit is not maintainable, there is no question of extending
the statement. Hence, the prayer of the appellant to extend the statement made by the learned Advocate appearing on behalf of the respondent is
rejected.