2012 (11) TMI 572 - HC - Indian Laws

Suit filled by non registered Partnership firm - whether suit barred u/s 69 of Indian Partnership Act, 1932 - Whether partnership fir is in existence or not - petitioner claimed that a partnership agreement was entered into between the petitioner and respondents - respondents denied the existence of partnership firm / agreement - land development agreement - Held that - Considering the Deed of Partnership dated 11th August, 1986 as annexed by Plaintiffs it shows that Defendant No.1 has only 9 per cent share in the profits/losses of the Partnership Firm. The suit property is purchased by the Partnership Firm-Laxmi Developers under an agreement for sale dated 31st August, 1986. The Agreement for Sale is signed by the Plaintiff No.4 on behalf of the Firm. Titles of the said M/s. Laxmi Developers in respect of the captioned property are clear and marketable and free from reasonable doubts and encumbrances Apart from the fact that Plaintiff Nos. 2 and 3 have submitted that their signatures are neither fabricated nor forged, an independent professional i.e. the Chartered Accountant of the Partnership Firm has certified that all the Plaintiffs as well as Defendant Nos. 1, 2 and 3 had signed the Partnership Deed in his presence. Plaintiffs have made out a prima facie case for grant of interim relief in their favour - against the Defendants.

Summary

Issues Involved:
1. Jurisdiction of the Court due to non-registration of the Partnership Firm under Section 69 of the Indian Partnership Act, 1932.
2. Validity and existence of the Partnership Firm "Laxmi Developers."
3. Legality and binding nature of the Agreement dated 31st August 1986.
4. Legality and binding nature of the Joint Venture Agreements dated 1st July 2005 and 29th November 2011.
5. Entitlement to interim reliefs and injunctions.

Detailed Analysis:

1. Jurisdiction of the Court due to non-registration of the Partnership Firm under Section 69 of the Indian Partnership Act, 1932:
The primary issue was whether the suit is barred under Section 69 of the Indian Partnership Act, 1932 due to the non-registration of the Partnership Firm "Laxmi Developers." Section 69(1) and (2) of the Act were examined, which restrict suits by or on behalf of unregistered firms to enforce rights arising from contracts.

The Defendants argued that prayer clauses (b), (c), and (d) of the Plaint were barred under Section 69(2) as they sought to enforce rights arising from contracts. The Plaintiffs contended that the reliefs sought were based on already vested rights and common law rights, not on enforcing contractual rights.

2. Validity and existence of the Partnership Firm "Laxmi Developers":
The Plaintiffs provided evidence of the Partnership Deed executed on 11th August 1986, and an application for registration filed on 16th September 1986. They produced Income Tax Returns and a certificate from their Chartered Accountant confirming the existence of the Partnership Firm. Despite objections from the Defendants, the Court found sufficient evidence to establish the existence and continuity of the Partnership Firm.

3. Legality and binding nature of the Agreement dated 31st August 1986:
Prayer clause (b) sought a declaration that the Agreement dated 31st August 1986 was legal, valid, and binding, and that the suit property vested in the Partnership Firm. The Court held that this prayer was not for enforcing a contract but for declaring an already acquired right and title. The reference to the Agreement was merely historical to show how the rights were acquired. The Court found this prayer maintainable and not barred by Section 69.

4. Legality and binding nature of the Joint Venture Agreements dated 1st July 2005 and 29th November 2011:
Prayer clause (c) sought to declare the Joint Venture Agreements null and void. The Court noted that these agreements were entered into by Defendant No.1, claiming sole ownership of the suit property, without the involvement of the Partnership Firm or its Partners. The Plaintiffs were not parties to these agreements and sought to invalidate them based on their common law rights as owners. The Court found this prayer also maintainable and not barred by Section 69.

5. Entitlement to interim reliefs and injunctions:
The Plaintiffs sought interim reliefs to restrain the Defendants from selling, alienating, or encumbering the suit property. The Court found that the Plaintiffs had established a prima facie case and that the balance of convenience favored granting interim reliefs. The Defendants were directed to maintain the status quo regarding the suit property until the final disposal of the suit.

Conclusion:
The Court concluded that the reliefs sought by the Plaintiffs were not barred by Section 69 of the Indian Partnership Act, 1932, as they were based on already vested rights and common law rights, not on enforcing contractual rights. The Plaintiffs were granted interim reliefs, and the Defendants were directed to maintain the status quo regarding the suit property. The hearing of the suit was expedited, and the Defendants were directed to file their written statements within four weeks.