In The High Court At Calcutta Ordinary Original Civil Jurisdiction Original Side GA1944of 2017 GA2211of 2017 CS131of 2010 Sanjay Singh & Anr.
versus Hindustan Unilever Limited Before : The Hon’ble Justice Arijit Banerjee For the Plaintiffs : Mr.Reetobroto Mitra, Adv.Ms.Anindita Ghosh, Adv.Mr.Pradip Kumar Sarawagi, Adv.For the defendant : Ms.Moushumi Bhattacharya, Adv.Mr.S.Dutta, Adv.Ms.Anshumala Bansal, Adv.Heard On : 22.06.2017 & 18.07.2017 CAV On : 01.08.2017 Judgment On : 30.08.2017 Arijit Banerjee, J.:(1) G.A.No.1944 of 2017 has been taken out by the defendant for rejection of the plaint on the ground that the suit is barred by law.
G.A.No.2211 of 2017 is also the defendant’s application for an order directing the plaintiffs to give inspection of the Partnership Deed whereby the firm Sanjay & Co.was constituted.
I will consider the earlier application first.
(2) Ms.Bhattacharya, learned counsel for the defendant contended that the defendant had appointed a partnership firm namely, Sanjay & Co., of which the plaintiffs are the partneRs.as redistribution stockiest of the defendant for the products manufactured by the defendant.
The redistribution stockist agreement was terminated by the defendant by its letter dated 30 March, 2010.
The plaintiffs have filed the suit claiming, inter alia, that the letter of termination is null and void, for delivery up and cancellation of the said letter and for a decree for Rs.5,76,09,756/allegedly due to the plaintiffs from the defendant.
The plaintiffs have instituted the suit as partners of the said firm.
However, the said firm is unregistered.
Hence, the suit is barred under Sec.
69(2) of the Indian Partnership Act, 1932 (in short ‘IPA’) which bars a suit on behalf of a firm against any third party to enforce a contractual right 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) Learned Counsel drew my attention to the averments in the plaint and in particular to paragraphs 1, 8, 9, 12, 14 and 45J of the plaint.
I shall revert back to the said paragraphs later.
Relying on the said paragraphs, learned Counsel submitted that the plaintiffs are seeking to enforce an alleged right of the unregistered firm under the redistribution stockist agreement entered into by and between the firm and the defendant and since the firm is unregistered, the suit is hit by Sec.
69(2) of the IPA.
(4) In support of her contention, Learned Counsel relied on a Division Bench decision of this Court in the case of Sandip Agarwal & Anr.-vs.Simplex Infrastructure Limited rendered in APOT No.74 of 2009 (2009 SCC Online Cal 676).Learned Counsel relied on the observations of the Learned Single Judge in that case, which were upheld by the Hon’ble Division Bench, to the following effect:“Having considered the submissions of the parties from a perusal of the plaint the facts wherein at this stage, are taken as true and correct, the letter of intent is the basis of the proceedings and loss and damage has been claimed on the basis of the contract.
This will appear from the account of actual investment, set out in Schedule K which includes production costs of 2 lac fly ash bricks.
Production of fly ash bricks was contemplated under the contract and the claim arises out of the contract.
Therefore, the suit is barred under Sec.
69(2) of the Indian Partnership Act, 1932 and the submissions including the cases cited by the plaintiff-respondent cannot be accepted.
The plea of statutory right taken by the plaintiff is not applicable in view of one of the elements of claim being Item No.5 of Schedule K.
Accordingly the instant suit is dismissed.” (5) Learned Counsel then relied on a decision of this Court in the case of Sunderlal and Sons-vs.-Yagendra Nath Singh, AIR1976Cal 471, wherein the learned Judge, inter alia, held that in view of the language of Sec.
69 of the IPA, a plaint filed by an unregistered firm to enforce a contractual right, would not be a plaint at all in the eye of law and all proceedings in connection therewith will be proceedings without jurisdiction.
Consequently, a decree obtained in such a suit will be a nullity.
Learned Counsel also relied on a Division Bench decision of this Court in the case of In the Matter of Abani Kanta Pal, AIR1986Cal 143, wherein it was held, inter alia, that if a plaint contravenes the provisions of sub-Secs.
(1) and (2) of Sec.
69 of the IPA, the same will be considered to be a void plaint.
(6) Mr.Mitra, learned Counsel for the plaintiffs submitted that Sec.
69(2) of the IPA does not apply to the facts and circumstances of the case.
The plaintiffs have instituted this suit in their individual capacities.
The plaintiffs are not seeking to enforce the contractual right of the firm.
Hence, Sec.
69(2) of the IPA is no bar to the maintainability of the suit.
(7) Learned Counsel relied on the averments made in paragraphs 1 and 9 of the plaint.
He also referred to the redistribution stockist agreement and submitted that in essence the agreement was between the plaintiffs as individuals and the defendant company and the plaintiffs are seeking to enforce their individual rights under the said agreement by way of the present suit.
(8) Learned Counsel referred to O.
XXX R.
1 of the CPC and submitted that it is only a permissive provision of law.
The partners of a firm, in addition to maintaining a suit in the name of the firm, can also sue in their own names.
(9) Mr.Mitra relied on a decision of a learned Single Judge of the Bombay High Court in the case of Mangilal Jagrupji Jain-vs.-Bharat Shankarlal Dhakad (HUF).(2012) 1 Mah LJ587 Reliance was placed on paragraph 7 of the judgment which reads as follows:“7.
In the present case, there is no serious dispute and basically in view of the averments made in the plaint that the alleged partnership firm was not registered on 29 December, 2007 when the agreement in question was executed, though the parties have signed the agreement/document in as partners of the firm.
The effect of nonregistration of such partnership firm just cannot be overlooked, but subject to the averments made in the plaint only.
It is very clear from the averments read with the documents annexed to the plaint that the Suit is filed for specific performance of the agreement in their individual capacity, against the Respondents and the Petitioner.
Therefore, at this stage, from the averments it is clear that they have not pleaded the specific performance of the agreement in the name of the firm.
The effect of such prayers and/or averments, the Court will consider during the trial.
But to say that such Rule 11(d) Civil Procedure Code as contended, in my view, is not correct.
The submission that the parties can have such oral partnership at any time and can be registered at subsequent stage though cannot be disputed, yet in the present facts and circumstances, that aspect just cannot be gone into by overlooking the averments made in the plaint and the documents on record, which nowhere deals with the aspect of the unregistered firm.
The intention oand/or the subject of reference of firm’s name and what should be the consequence of filing of the suit in their individual capacity also cannot be gone into at this stage merely on the basis of reply/submission so made by the learned Counsel for the Petitioner.
All these facets need detailed enquiry and evidence.
It is unregistered till this date in view of the disputes between the parties.
The submission revolving around Section 69 (2) of the Indian Partnership Act cannot be the foundation to reject the plaint, in the present stage.” (10) I have considered the respective contentions of the parties.
(11) It is an undisputed fact that Sanjay & Co.is an unregistered firm or at least was an unregistered firm as on the date of the institution of the suit.
This has been categorically admitted by Mr.Mitra, learned Counsel for the plaintiffs.
(12) Sec.
69 (2) of the IPA reads as follows:“69 (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.” (13) The short question that falls for determination in this application is whether or not the plaintiffs are suing as partners of the firm to enforce a contractual right of the firm.
If the suit has been instituted on behalf of the firm, it is clearly barred under Sec.
69 (2) of the IPA.
Otherwise, the present application must fail.
(14) The redistribution stockist agreement dated 9 June, 2003 was entered into between the defendant and ‘M/S.Sanjay & Co., a partnership firm with its office at P3, Hari Mohan Ghosh Road, Calcutta700024 duly represented by its partners (1) Mr.Sanjay Singh aged about 32 years and (2) Mr.Dhananjay Singh aged about 26 years residing at D166 Trenching Ground Road, Kolkata 700024.’ Thus, it seems clear to me that the agreement was entered into by and between the defendant and the firm and not between the defendant and the partners of the firm in their individual capacities.
(15) The aforesaid opinion of mine also finds support from the averments made in the plaint itself.
The material averments in the plaint relevant for the present purpose are extracted hereinbelow:‘(1) The plaintiff Nos.1 and 2 are partners of a firm in the name, Sanjay & Co.The said partnership firm was constituted sometime in or about 10 March, 2003.
……….
(8) Pursuant to preliminary discussions held between the representatives of the defendant and the plaintiffs, the latter were informed that for the purpose of commencement of distributorship agency, a partnership firm had to be constituted as the defendant was not keen to grant any distributorship agency in the name of one single individual or a company.
The plaintiff Nos.1 and 2 are brotheRs.With a view to obtain such distributorship agency of the defendant, the plaintiff Nos.1 and 2 on 10th March, 2003 constituted a partnership firm under the name and style of Sanjay & Company with the sole purpose of acting as redistribution stockiest of the defendant in respect of various consumer products of the defendant.
(9) Immediately after formation of the partnership firm, the plaintiffs made necessary application for being appointed as redistribution stockist for detergent and by a letter dated 11th March, 2003, the plaintiffs’ firm Sanjay & Company (hereinafter referred to as the ‘partnership firm’) was appointed as redistribution stockist for a period of six months which was to continue till 11th September, 2003 until and unless relationship was regularized by a formal agreement (emphasis is mine).The appointment of redistribution stockiest was in respect of detergent products of the defendant only inasmuch as the application was also in respect of ‘DETS’, an abbreviation for detergents.
……….
(14) The plaintiffs in the name of the said partnership firm continued to act as redistribution stockist of the defendant in respect of detergent products.
……… (45J.In the premises aforesaid, by reason of the wrongful termination of the contract and/or wrongful and illegal act of the defendant, as mentioned above, the plaintiffs have suffered loss and damages……” (16) Thus, it is clear from the averments in the plaint that the said firm was constituted by Sanjay and Dhananjay for the purpose of obtaining distributorship agency of the defendant and to carry on business as the defendant’s redistribution stockist through the instrumentality of the firm.
In paragraph 9 of the plaint it is averred that the plaintiffs firm Sanjay & Co.was appointed as redistribution stockist.
There is absolutely no doubt in my mind that the agreement was between the defendant and the said firm.
(17) From the cause title also it is clear that the plaintiffs have instituted the suit qua partners of the said firm.
In other words, the plaintiffs are seeking to enforce an alleged right arising out of or relating to or in connection with the redistribution stockist agreement entered into by and between the defendant and the firm.
Hence, the bar of Sec.
69(2) of IPA is clearly attracted.
(18) I am unable to accept the contention of learned Counsel for the plaintiffs that the plaintiffs are suing in their individual capacities for enforcing their individual rights under the contract with the defendant.
The firm was constituted by the plaintiffs only because the defendant was unwilling to appoint the plaintiffs as redistribution stockist in their individual capacities.
The suit as framed does not support the contention of learned Counsel that the plaintiffs are seeking to enforce their individual rights under the contract, assuming for the sake of argument that they have any such individual right.
(19) The decision of the Bombay High Court, relied upon by learned Counsel for the plaintiffs was delivered in the special facts and circumstances of that case.
The learned Judge in that case found from the averments in the plaint that the partners of the unregistered firm had filed the suit for specific performance of an agreement in their individual capacity.
In my respectful opinion, no proposition of law was laid down in the said judgment.
The learned Judge found that there were certain facets of the case which needed detailed enquiry and evidence and hence, the learned Judge opined that it would be improper to non-suit the plaintiffs on a demurrer application.
(20) In this connection one may note the decision of the Hon’ble Apex Court in the case of Loonkaran Sethia-vs.-Mr.Ivan E.
John, AIR1977SC336 wherein at paragraph 21 of the judgment the Hon’ble Apex Court observed that a bare glance at Sec.
69 of the IPA would show that it is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void.
A partner of an un-registered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Sec.
69 of IPA.
In that case, the Hon’ble Apex Court found that the suit was for enforcement of an agreement entered into by the plaintiff as partner of a firm which was not registered.
The Apex Court held that the suit was undoubtedly a suit for the benefit and in the interest of the firm and consequently a suit on behalf of the firm.
Consequently, the suit was hit by Sec.
69 of the IPA.
As regards this decision and the decisions in Sunderlal and Sons (supra) and In the Matter of Abani Kanta Pal (supra).learned Counsel for the plaintiffs submitted that there is no quarrel with the proposition of law laid down in the said decisions.
However, the said decisions would not apply to the facts and circumstances of the present case because the suit has not been filed on behalf of the firm but by the plaintiffs in their individual capacities.
(21) I have absolutely no doubt in my mind that the plaintiffs have initiated the present suit qua partners of an unregistered firm for enforcement of a right under a contract entered into by and between the defendant and the unregistered firm represented by the plaintiffs.
The suit is for the benefit of and on behalf of the firm.
Hence, the suit is clearly barred by Sec.
69(2) of the IPA.
A suit that is ex facie barred by law should be nipped in the bud.
(22) I am conscious that the plaintiff cannot be driven from the judgment seat merely on the basis of speculation.
Rejection of the plaint at the threshold entails serious consequences for the plaintiff.
This power, therefore, has to be exercised in exceptional circumstances and with utmost caution.
The Court has to be absolutely sure that on a meaningful reading of the plaint either it does not disclose a cause of action or the suit appears from the statements made in the plaint to be barred by a provision of law.
In the present case, I am of the firm view that the suit is barred by Sec.
69(2) of the IPA.
(23) As observed by the Hon’ble Apex Court in the case of Sopan Sukhdeo Sable-vs.-Assistant Charity Commissioner, (2004) 3 SCC137 O.
7 R.
11 of the CPC provides for an independent remedy available to the defendant to challenge the maintainability of the suit irrespective of his right to contest the same on merits.
The law does not contemplate any particular stage when the objection can be raised and also does not speak about the filing of a written statement.
Instead, the word ‘shall’ is used, implying thereby that it casts a duty on the Court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities mentioned in the Clauses of Rule 11 of Order 7 even without intervention of the defendant.
In any event, rejection of the plaint under R.
11 does not preclude the plaintiffs from presenting a fresh plaint in terms of R.
13, if they are otherwise entitled to do so in law.
(24) Accordingly, this application succeeds.
The plaint of CS131of 2010 stands rejected.
However, there will be no order as to costs.
(25) G.A.1944 of 2017 and G.A.2211 of 2017 along with C.S.131 of 2010 are accordingly disposed of.
(26) Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities.
(Arijit Banerjee, J.)