ORDER
Sunil Ambwani, J.
1. Heard Sri R. N. Singh, Senior Advocate, assisted by Sri A. K. Goel for petitioner, and Sri Ravi Kant for respondent No. 2, Standing Counsel represents respondent No. 1.
2. Petitioner has challenged orders dated 8-8-2002 passed by Assistant Registrar, Firms Societies and Chits, Allahabad rejecting petitioner's representation; and the registration of respondent No. 2 firm dated 12-10-2001 on the basis of declaration in Form-VII dated 3-10-2001 and has prayed for a direction to Assistant Registrar Firms Societies and Chits, Allahabad not to give effect to the impugned registration dated 12-10-2001.
3. The facts giving rise to this case are that M/s. Kesarwani Zarda Bhandar, Village and Post/Sahson, Allahabad-respondent No. 2 was reconstituted by partnership deed executed on 4-4-1998 between 16 partners, in accordance with the provisions of the Indian Partnership Act, 1932 (hereinafter referred to as the 'Act'). Clauses 5, 22, 24, 25 and 26 of the Partnership deed relevant for the purpose of this case are quoted as below :
'5. That the duration of the partnership shall be at will and subject to the provisions of Indian Partnership Act, 1932.
22. That the parties to this deed may add and increase number of the partners and may also reduce the number of partners and may also modify/amend the existing terms and conditions and also modify their sharing ratio and may also add any other terms and conditions as they may consider necessary from time to time.
24. That none of the partners shall transfer his/her interest or share in the firm to any outsider but they may do so inter se between the partners and this firm.
25. That the retiring or outgoing partners shall be paid only the credit balance in his capital account if any in the terms within 6 months of his/her retirement or from the date he/she ceases to be a partner of the firm.
26. That in no event the partnership shall be dissolved but the same shall continue with the remaining partners or with any modification in the number of partners, but in no case any outsider will be inducted with the partners in the firm.'
4. One of the partners Sri Vishwanath Prasad Kesarwani died on 10-8-2001. Petitioner Subhash Chandra Kesarwani gave a notice under Section 43(1) of the Act by registered post on 11-9-2001 allegedly exercising his right of dissolution of firm on the ground that the partnership was at a will and that the firm stood dissolved on the death of Sri Vishwanath Prasad Kesarwani on 10-8-2001 in terms of Section 46 of the Act, and for applying properties of the firm for distributing debts and liabilities amongst the partners in the meantime since petitioner Subhash Chandra Kesarwani was not willing to continue in the firm, the remaining partners applied to the Registrar on 5-10-2001 and submitted a reconstitution deed dated 11-1-2001. Form-VII was registered on 12-10-2001. Petitioner Sri Subhash Chandra Kesarwani made an application to dissolve the firm enclosing a registered notice of dissolution dated 11-9-2001, Petitioner was informed on 27-10-2001 regarding registration of Form-VII on which he made a representation to the Registrar on 24-11-2001 for dissolution of the firm. The Registrar forwarded the notice to the partners of the firm for their reply.
5. A Writ Petition No. 9739 of 2002 was filed by Sri Subhash Chandra Kesarwani with the allegation that respondent No. 2 has applied for registration of firm to which the petitioner has filed objection, and that firm should not be registered as it has dissolved on the death of one of the partners. Without expressing any opinion in the matter, the writ petition was disposed of on 8-3-2002, with observation directing the Assistant Registrar Firms Societies and Chits, Allahabad to pass orders after considering petitioners objection by reasoned order. This order was passed on the allegation that Registrar has not yet granted registration to the firm. On receipt of the orders of the High Court, as above, the Registrar allowed the parties to submit their written statement. Sri Bhaironath Kesarwani submitted his representation on 17-7-2002 on behalf of firm and that Sri Subhash Chandra Kesarwani submitted his rejoinder reply on 5-8-2002 and 7-8-2002 through Sri Sanjay Agarwal holding his power of attorney. After hearing the parties, the Registrar found that petitioner made a wrong representation to this Court, that the firm was not registered until the date of decision of the Court dated 8-3-2002, and concealed the fact that the firm was in fact registered on 12-10-2001. He rejected the representation on the ground that Clause 26 of the partnership deed dated 4-4-1998 specifically provided that in no event the firm shall be dissolved and shall be continued with the remaining partners, or with any modification in the number of partners, with certain conditions but in no case any outsiders will be inducted in the firm. These provisions were not found to be in conflict with Section 42 of the Act. No new partner was added to the reconstituted firm. He further observed that as Registrar Firms and Societies he is authorised only to carry out registration of the firm and cannot decide any dispute, which can only be decided by the competent Court, and thus the fact whether Sri Subhash Chandra Kesarwani has been removed or retired can be considered only by the Civil Court.
6. Counsel for petitioner submits that an application for registration of firm under Section 58(1) of the Act provides for a statement in prescribed form, accompanied by prescribed fees giving the required particulars in Sub-section (1) to be verified in Sub-section (2); and that procedure to be adopted by the Registrar when a dispute arises with regard to registration is regulated by Rule 7 of the Indian Partnership Rules, 1933, made in exercise of powers conferred under Section 71(2) of the Indian Partnership Act, 1932 and notified on April 22, 1973. Rule 7 of the aforesaid Rules is quoted as below :
'7. Procedure to be adopted by the Registrar when dispute arises.--The Registrar may in his discretion institute such inquiries or make such investigation in respect of any matter as may in his opinion be necessary for the proper performance of his duties and the administration of the Act, in particular when a dispute arises amongst the several partners of a firm, the Registrar may in his discretion call upon any of the partners or all of them to produce any original deed, document or such other evidence as he thinks fit in order to ascertain the rights of the respective parties.'
7. The Registrar, according to counsel for petitioner, on receipt of the objections, was required to cause an inquiry and to investigate after taking such evidence as he thinks fit, before he proceeds to register the firm. His discretion had to be exercised in accordance with the provision of the partnership deed dated 4-4-1998 and the provisions of the Act. He ignored the provisions of Section 72 providing for condition for giving public notice for dissolution of the registered firm, or for retirement or explusion of a partner to be given to the Registrar of Firms and then publication in the Official Gazette and at least in one newspaper circulated in the district. Section 72, according to him, has to be read along with Sections 30, 32, 33, 45, 63 and 69 of the Act. The registration is not a formality and that Registrar has to verity the contents declared in Form-VII. The petitioner had, vide his registered notice dated 11-7-2001 sought dissolution of the firm with effect from 10-8-2001 and that an incorrect declaration was furnished that the petitioner had notice of the reconstitution of firm. He has relied upon a judgment of this Court in A. C. Sabarwal v. Registrar of Companies, Kanpur, (1993) HVD (Alld) (2), 327 where it was held that while exercising powers under Section 234 of the Companies Act with regard to change of the Directors of the Firm filed with the Registrar in Form 32, the Registrar does not perform only a ministerial function. He may not have a adjudicatory power but he is required to examine the documents produced before him for registration apply his mind whether such document is defective or incomplete and if he finds it to be such, to direct the company to rectify the defect or to complete the documents and that when a return has been filed, on which the Registrar comes to the conclusion that the return is not supported by the requisite documents and that there are contesting claims, it is well within his right not to register the same. In the said case this court upheld the orders of the Registrar of Companies by which he refused to register the document on the ground that the minute books and the resolution of the company were not produced before him. The order, however, was subject to the result of the suit which had been filed by the rival parties, before the competent Civil Court.
8. Sri Ravi Kant, on the other hand, submits that Clause 26 of the partnership deed dated 4-4-1998, explicitly provided that in no event the partnership shall stand dissolved on the death or retirement of any partner which enables the partners to reconstitute the firm by adding or excluding the existing partners, with only restriction that no outsiders of the family could be brought in. On the death of Sri Vishwanath Prasad Kesarwani, petitioner declined to join the firm, which amounted to obstruction in carrying on partnership business with the remaining partners and thus the firm was reconstituted and a reconstituted deed was submitted for registration under Section 63 of the Act. According to Sri Ravi Kant the application for reconstitution of firm was made under Section 63, and not under Section 58 of the Act, for registration under Section 59 of the Act. The Registrar has only recorded changes in the reconstitution and that the dispute, if any, can only be decided by the Civil Court. He also submits that the Registrar does not decide a lis between the parties and does not have even a minimal trapping of a Court or a Tribunal. The Rules cannot go beyond the parent statute and that his powers are only administrative in nature as held while interpreting the powers of Hon'ble the Chief Justice under Section 11 of the Arbitration and Conciliation Act, 1996 in Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd., (2002) 2 SCC 388 : (AIR 2002 SC 778). The petitioner did not have any right to make a representation after the firm was registered and even assuming that the Registrar has quasi-judicial powers which he does not possess, he does not have a power to review its orders, unless it was expressly conferred by it, as held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, AIR 1970 SC 1273. In any case, according to him the conduct of the petitioner was unfair and dishonest. He wants to obstruct the functioning of the firm, and that the Registrar has merely opted only to continue the existing personality of the firm.
9. A partnership is essentially a contract between persons competent to contract, ignoring other relationship between persons, for profits of the business, carried by all. or any of them acting for all. Their relationship arises out of contract and not out of their status where no provision is made by contract between the partners, for the duration of their partnership. Section 7, of the Act provides that the partnership is 'partnership at will'. A new partner may be introduced into a firm with the consent of existing partners under Section 31 and that under Section 32 partner may retire with consent of all the partners, or in accordance with the express agreement by the partners, or where the partnership is at will, by giving notice in writing to all other partners of his intention to retire. A partner may be expelled under Section 33, save in the exercise in good faith of powers conferred by the contract between partners. Dissolution of firm means the dissolution of partnership between all the partners of a firm either in accordance with contract between partners, or with consent of all the partners under Sections 39 and 40 of the Act. Section 41 provides for compulsory dissolution by the adjudication of all the partners or of all the partners, but one as insolvent or by the happening of any event which makes it unlawful for the business of the firm to be carried on, or for the partners to carry it on in partnership. It can also be dissolved subject to contract, if the contract has been executed for a fixed term, by the expiry of that term or if constituted to came out one or more adventures or undertakings, by the completion thereof or by a death of a partner or by the adjudication of a partner as an insolvent. Section 43 provides that where the partnership is at Will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm, and that firm shall be dissolved from the date mentioned in the notice as the date of dissolution. The dissolution may also be made by the Court under Section 44 on the ground of events specified in the said section.
10. As noticed above, where no provision is made by contract between the parties, for the duration of their partnership or for determination of their partners, the partnership is partnership at Will, and the same can be dissolved by notice of dissolution. Section 42 providing for dissolution by death of a partner, is also subject to contract between the partners. In other cases the dissolution by agreement is with the consent of all the partners in accordance with contract between the partners or by compulsory dissolution under Section 41 or dissolution by Court under Section 44. In the present ease the terms of agreement between the partners in the partnership deed executed on 4-4-1998 did not provide for dissolution of the firm on the death of a partner. Paragraph 26 read with paragraphs 5, 22, 24. 25, provided that the partnership shall not be dissolved in any event but the same shall continue with remaining partners or with any modification but no outsider will be inducted that the number of partners could decrease and the existing partners could have modified the share, reduce any profit and loss and the terms and conditions. Expulsion did not bring the partnership to an end. The death of Sri Vishwanath Prasad Kesarwani, therefore, did not operate to dissolve the firm and that the firm could be continued with remaining partners or with any modification. The petitioner did not want to join partnership which intention he made clear by giving notice dated 11-9-2001. He could not have on his own dissolved the partnership firm, as he had agreed in the partnership agreement dated 4-4-1998 to continue the firm even in the event of death or retirement of a partner. The firm, therefore, was reconstituted by the remaining partners and that the application was thus filed under Section 63 and not under Section 58 which provides for application of registration of a firm. Section 63 provides for notice to the Registrar of a change in the constitution or dissolution of the firm, specifying the date thereof by filing a notice and the Registrar of Firms 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.
11. Rule 7 of the U.P. Partnership Rules, 1933 requires the Registrar to institute such inquiries or make such investigation in his discretion in respect of any matter which in his opinion be necessary for the proper performance of his duties, and the administration of the Act in particular when the dispute arises amongst the several partners of the firm and is called upon any of the partners to produce any original deed or document, to ascertain rights of the respective parties. This power has been given to ascertain rights of the parties who appear to be in dispute. It has been given only to find out whether there is any dispute between the parties and not to adjudicate the same, He may in his discretion, after instituting an inquiry in order to properly perform his duties and the administration of the Act call upon any of the partners to produce such documents which he may think fit. In the absence of this power he may not be able to ascertain bona fides of the dispute. Where however, after ascertaining or taking of such evidence as he thinks fit, he finds that a bona fide dispute arises, he has to leave the matter to be decided by the competent Court and refuse to register the firm. Where, however, he does not find any bona fide dispute between parties after going through the objection and such deed or document which he may require to be produced, he may proceed to act in accordance with the provisions of the Act. In A. C. Sabarwal (1993 (2) HVD 327) (All), (supra) while considering the analogous powers of the Registrar under Section 234 of the Companies Act, 1956, and the Regulation 17 of the Companies Regulations, 1956 made under Section 609 of the Act, the Division Bench of this Court found that the Registrar could ask for any information or explanation which is necessary but that information or explanation shall be in respect of any matter to which such document purports, within its ambit and no more. If in seeking such information or explanation some thing is filed or given by the company or its officers which is not relevant then that by itself will not make the order bad so long the Registrar does not use those irrelevant materials. It is within the ambit of the Registrar's power to consider the information given to him by the Company or its officers and utilise minutes as per record of the company produced for the purpose of registration of the documents. Where return has been filed and he comes to the conclusion that the return is not supported by the documents of the company and finds contesting claims, it will be well within his right not to register the same. In taking into account the documents he will be guided by the provisions of the Act, to provide for proper maintenance of the record. In the present case where any dispute arise between the parties with regard to registration of the firm or registration of the reconstituted firm, the Registrar has to be prima facie satisfied that the application is complete in providing the requisite information, and is verified in the prescribed manner. He also has power to find out whether the contract is valid and conforms to the provisions of the Act; and for this purpose he may call the parties to produce the original deed or document or such other evidence which he may think fit. Where he finds prima facie that statement required to be made in the prescribed form and accompanied by prescribed fee has not been so made, or that any of the requisite information has not been given or that the statement has not been duly verified or further that, the partnership does not conform to the provisions or is violative of any provisions of the Act, or that there is a bona fide dispute between the parties, he may refuse to register the firm.
12. In the present case the death of one of the partners and refusal of petitioner to continue in the partnership required reconstitution of the firm. In view of Clause 26 of the partnership dated 4-4-1998, the death of the partner did not dissolve the firm and thus did not require fresh registration it only required a notice to the Registrar to register the reconstituted deed. The firm was not dissolved by the partners, and that the partnership business continued. The petitioner may have a right as a outgoing partner to be paid only the agreed balance in his capital account in the firm to be received by him within six months from the date he ceased to be partner of the firm in accordance with Clause 21 of the partnership deed dated 4-4-1998, but he did not have a right to contend that the firm be dissolved and that the remaining partners be not permitted to continue the business under the same firm name. The order, therefore, registering reconstituted firm on 12-10-2001 does not suffer from any error of law.
13. There is no averment in the writ petition that petitioner wanted to continue as a partner with the firm or that he wanted to subscribe to the contract and was not allowed to do so. His objection that the firm was dissolved and intention not to continue in the reconstituted firm was clear from the beginning and thus it cannot be said that the remaining partners played fraud upon him or that registration of reconstituted firm was brought about ex parte without giving him any notice or opportunity. The prima facie satisfaction of the Registrar with regard to registration of the reconstituted firm does not suffer from any legal error. He acted within the scope of his powers in accepting the notice and recording the changes of the notice of the reconstituted firm in accordance with partnership deed dated 4-4-1998.
14. It is made clear that in this writ petition the Court has only examined the powers of the Registrar, and whether he has acted within his powers to register the reconstituted firm, and the objections made by petitioner. The observations and findings in this order are only for the purposes of upholding the order of the Registrar, and are without prejudice to the rights of the parties to challenge the same, in case a suit is brought in the competent Court by any of the parties to the writ petition.
15. The writ petition is accordingly dismissed.