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TMI Blog1997 (12) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... da, another deed of partnership was made consisting of the old six partners and the newly admitted partner Smt. Jijiben Mohanlal Chawda. As a matter of fact, the induction of the new partner was not brought to the notice of the Registrar of Firms by forwarding the required particulars. It is on record that still later on 3.11.1992 another partnership deed was brought into existence consisting of the same partners. It is also on record that yet another partner Smt. Hemkuver B. Kotak (S. No. 4 above) died in September, 1994. The fact of death of this partner also was not intimated to the Registrar of Firms. While so, the 1st respondent gave a notice of dissolution of the firm to the appellants and also filed a suit for the dissolution of the partnership firm bearing suit No. 5016/94 on 15.12.94 in the High Court of Judicature at Bombay on the original side. Initially in the plaint, the constitutional validity of Section 69(2A) of the Indian Partnership Act (hereinafter called the "Act"), as amended by Maharashtra Act, was not raised. The 1st respondent moved a Chamber Summon No. 301/97 seeking permission of the Court to carry out certain amendments to the plaint. Briefly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment consists of two parts. The first part is only a factual aspect which has been sought to be introduced in order to demonstrate that the bar Under Section 69(2A) is not attracted. There is no reason as to why such an amendment should not be granted. The second part of the amendment pertains to the constitutional challenge of the validity of Section 69(2A). As we have already taken a view that Section 69(2A) is not attracted, the question of challenge does not survive and, therefore, it is not necessary to grant the amendment containing constitutional challenge." 8. Ultimately the appellate court allowed the appeal and permitted the amendment only regarding the factual portions and not regarding the constitutional validity of Section 69(2A). 9. Aggrieved by the judgment of the Division Bench, the appellants have preferred this appeal by special leave. 10. In this appeal, the following substantial question of law arises for our consideration :- "Whether on the facts of this case the suit for dissolution and account of partnership is hit by Sec. 69(2A) of the Act as amended in the State of Maharashtra" 11. For answering the question, it is necessary to set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be signed by all the partners, or by their agents specially authorised in this behalf. [(1A) The statement under Sub-section (1) shall be sent or delivered to the Registrar within a period of one year from the date of Constitution of the firm : Provided that in the case of any firm carrying on business on or before the date of commencement of the Indian Partnership (Maharashtra Amendment) Act, 1984, such statement shall be sent or delivered to the Registrar within a period of one year from such date]. (2) Each person signing the statement shall also verify it in the manner prescribed. (3)... (4)... 59. Registration [(1)] When the Registrar is satisfied that the provisions of Section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall file the statement. [On the date such entry is recorded and such statement is filed, the firm shall be deemed to be registered.] [(2) The firm, which is registered, shall use the brackets and word "(Registered)" immediately after its name.] 63. Recording of changes in and dissolution of a firm. (1.) When a change occurs in the Constitution of a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the firm : Provided that the requirement of registration of firm under this sub-section shall not apply to the suits or proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for accounts of a dissolved firm or to realise the property of a dissolved firm.] (3)... [69A. Penalty of contravention of Sections 60, 61, 62 or 63, If any statement, intimation or notice under Sections 60, 61, 62 or 63 in respect of any registered firm is not sent or given to the Registrar, within the period specified in that section, the Registrar, may, after giving notice to the partners of the firm and after giving them a reasonable opportunity of being heard, refuse to make the suitable amendments in the records relating to the firm, until the partners of the firm pay such penalty, not exceeding ten rupees per day, as the Registrar may determine in respect of the period between the date of expiry of the period specified in Sections 60, 61, 62 or as the case may be, 63 and the date of making the amendments in the entries relating to the firm.] Rule 3. Forms of Statements. - The Statements required to be sent or delivered to the Registrar under Sections 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized in this behalf on solemn affirmation before a Magistrate or other officer duly empowered to administer Oaths. Note 4. - Making a false, untrue, or incomplete statement is punishable under Section 70 of the Indian Partnership Act, 1932. (h) In case there are any minors admitted to the benefits of partnerships :- 12. We are sending the prescribed registration fee by cash/money order. We the above named, solemnly affirm that what is stated in paragraphs is true to our own knowledge and that what is stated in the remaining paragraphs is stated on information and belief, and I/We believe the same to be true. 13. We also declared on solemn affirmation that up to the date of submission of this application there has not been any change whatever in any of the particulars aforesaid. 14. Solemnly affirmed at 15. Certified that the persons who have signed the application have signed in my presence and have solemnly affirmed that the particulars furnished therein are true. FORM 'E' INDIAN PARTNERSHIP ACT, 1932 Notice of change of Constitution or Dissolution of Firm (See rule 4) FIRM REGN. NO. and DATE Firm Name... Registered Address.... Partners in the above nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registrar/Assistant Registrar of Firms Bombay, Pune, Nagpur, Aurangabad. ---- 16. Before proceeding further, we remind ourselves that we are concerned with a suit filed by a partner for dissolution and accounts. No third party rights or liabilities are involved in the present suit filed by respondent no. 1. 17. Undoubtedly counsel on both sides addressed arguments covering larger questions. But we propose to confine ourselves strictly to the facts of the case and decide the controversy without touching upon the larger issues or connected issues arising out of the pleadings because the maintainability of the suit is the sole issue based on Section 69(2A) of the Act. 18. Section 69(2A) (extracted above) requires two conditions before a partner can sue for dissolution of a firm and for accounts : 1. The firm must be registered. 2. The person suing is or has been shown in the register of firm as partner in the firm. 19. It is not in dispute that the partnership, as entered into under a deed dated 28.11.1979, was duly registered and a certificate of registration was granted. It is also an admitted fact that the plaintiff, first respondent herein, was one of the founder partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Dull Ganesh Lal AIR1939Pat323 ; Meenakshi Achi and Another v. P.S.M. Subramanian Chettiar and Others AIR 1957 Mad. 8 and Gouri Sankar Sheroff and Others v. Central Hindustan Bank Ltd. and Others, AIR1959Cal262 . He also submitted that the partners entered into another deed on 3.11.1992 and they have expressly treated the firm as reconstituted one. In other words, according to the learned senior counsel, the deed dated 20.10.86 in the absence of such expression' (reconstituted firm) the understanding was the old firm, ceases to be in existence and a new firm was brought into existence. For this, he also placed reliance on clauses 4 and 5 regarding 'Commencement' and 'Accounting Year'. He also placed reliance on a passage from Lindley on the Law of Partnership, 15th Edition, page 374 : "Each partner is, it is true, the agent of the firm; but as before pointed out, the firm is not distinguishable from the persons from time to time composing it; and when a new member is admitted he becomes one of the firm for the future, but not as from the past, and his present connection with the firm is no evidence that he ever expressly or impliedly authorised what may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Counsel, it is the substance of the matter that is relevant to be looked into and not the phraseology employed by the parties. In other words, the test is whether after the execution of the deed dated 20.10.1986, for all intents and purposes, the firm as reconstituted was a different unit or remained the same unit in spite of change in its constitution. Looked at from this angle, the unit remained the same as it originally was in spite of change in its Constitution and the contention to the contrary, according to the learned Senior Counsel, was not correct. To support this, he pointed out the similarities between the two deeds. The alleged dissimilarities as found in Clauses 4 and 5 of the Document dated 20.10.1986 are really not dissimilarities but consequential and incidental changes. 23. In support of his contentions, he placed reliance on the following judgments of this Court and other High Courts : Commissioner of Income-Tax, West Bengal v. A.W. Piggies & Co. and Others [1954] 5 SCR 171; M/s. Wazid All Abid Ali v. C.I.T. Lucknow [1988]169ITR761(SC) ; Tyresoles (India) Calcutta v. Commissioner of Income-Tax, Coimbatore, [1963]49ITR515(Mad) ; Firm Girdhar Mal Kapur Chand v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the appellants on this aspect. Clauses 4 and 5 relate to commencement of the partnership and accounting year. These are minimal changes introduced in the second Deed of Partnership by reason of the introduction of a new partner in place of Clauses 4 and 5 in the first Partnership Deed and in other respects, namely, the name of the partnership firm, the address and location of the firm, the business carried on and shares allotted among the partners and duration of the partnership, are identical. Moreover a careful reading of clauses 5 of and 6 of the second partnership deed will give an impression that the partners have agreed to continue the existing firm. The profits or losses for the period prior to and up to the death of deceased partner is dealt with and provided. There is no indication that the old firm was dissolved. Likewise, reliance placed on the recitals in the third Deed of Partnership drawn on 3.11.92 will not come to the help of the appellants. Learned counsel for the appellants placed reliance on the term used in the third Partnership Deed reconstituted in the Preamble portion. We are of the opinion that this does not make any substantial difference when we lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, and an incidental redistribution of the shares of the partners." 30. To the same effect, this Court in Commissioner of Income-tax, West Bengal-Ill v. M/s. Pigot Champan & Co., [1982]135ITR620(SC) observed as follows : "The principle is well settled that it is on examination of relevant documents and relevant facts and circumstances that the Court has to be satisfied in each case as to whether there has been a succession or a mere change in the Constitution of the partnership. It cannot be disputed that 'dissolution' and 're-constitution' are two distinct legal concepts, for, a dissolution brings the partnership to an end while a re Constitution means the continuation of the partnership under altered circumstances but in our view in law there would be no difficulty in a dissolution of a firm being followed by the Constitution of a new firm by some of the erstwhile partners who may take over the assets and liabilities of the dissolved firm." 31. The next question is whether the registration given to the firm under the first Partnership Deed ceases when a new partner was introduced into the firm. For this, we refer to Sections 58, 59 and 63, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law." 33. In Pratapchand Ramchand & Co. (supra), the Bombay High Court observed as follows : "Dealing in particular with Section 63(1), that sub-section among other things provides that when a registered firm is dissolved any person who was a partner immediately before the dissolution, or the agent of any such partner or person specially authorized in this behalf, may give notice to the Registrar of such change or dissolution, specifying the date thereof, and the Registrar shall make a record of the notice in the entry relating to the firm in the Register of Firms, and shall file the notice along with the statement relating to the firm filed under Section 59. Pausing there, that Section evidently contemplates in the case of a dissolution of a firm by death that notwithstanding the death the firm should still be treated for the purpose of the Act as still registered. Mr. Davar has argued that by reason of the death and the dissolution of the firm the firm ceased to be registered, and in his argument he went so far as to say that the firm ought to have been registered again. No doubt it would have been logical having regard to Section 42 if the Act had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Constitution of the firm given to the Registrar, it may well be that the firm as then constituted could not sue, because although it was a registered firm some of the persons then suing would not be shown in the Register of Firms as partners in the firm at the date of the suit. That is not this case. The partners who are suing were shown in the register originally and are still shown, and the firm according to my construction of the Act remained registered notwithstanding the death of one of the original partners." 34. The above view of the Bombay High Court was followed and applied by the Calcutta High Court in Jogendra Chunder Goopta (supra), Punjab High Court in Mis. Durga Das Janak Raj (supra) and the Rajasthan High Court in Kesrimal & Am. (supra). 35. In our opinion, the view taken by the Bombay High Court and followed by the other High Courts is the right view. 36. Learned counsel for the appellants placed strong reliance on the Objects and Reasons for the amendments introduced in the Maharashtra Act. According to the learned counsel, if his contention is not accepted, the object with which Section 69(2A) was introduced will be lost. We do not think so. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not in dispute. The name of the newly introduced partner, of course, does not find a place in the Register of Firms. That means the person whose name does not find a place in the Register of Firms may incur certain disabilities and that will not disable the Plaintiff to press the suit against the firm, which was registered against the persons whose names find a place in the Register of Firms. We are not called upon to decide what are the disabilities of the person, whose name does not find a place in the Register of Firms. For the purpose of Section 69(2A), the partnership firm will mean the firm as found in the certificate of registration and the partners as found in the register of firms maintained as per rule in Form 'G'. The present suit being one for dissolution and accounts by one of the partners, whose name admittedly finds place in the Register of Firms alongwith the names of all the appellants, the requirements of Section 69(2A) are satisfied. Section 4 of the Act is also complied with for this limited purpose. 39. Our conclusion is that on the induction of the second respondent,' the existing firm was only reconstituted on the facts of this case and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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