1977 (7) TMI 104 - SC - Companies Law

Saving and construction of enactments conferring power to wind up partnership association or company in certain cases

Summary

Issues:
1. Jurisdiction of the court to entertain a suit for dissolution of a partnership under Part X of the Companies Act, 1956.
2. Applicability of special provisions of the Companies Act, 1956, in the winding up of unregistered companies.
3. Interpretation of section 590 of the Companies Act, 1956, regarding the operation of the Indian Partnership Act in winding up affairs of a firm.

Analysis:

1. The case involved a dispute where the appellants and respondents were partners in a firm seeking dissolution and accounts. Initially, the appellants were plaintiffs, but later, the respondents were transposed as plaintiffs. The issue arose when the transposed defendants objected to the court's jurisdiction based on Part X of the Companies Act, 1956.

2. The appellants argued that since the partnership had more than seven members, it fell under the definition of an "unregistered company" as per section 582(b) of the Companies Act, 1956. They contended that the special provisions in Part X of the Act for winding up unregistered companies should apply, making the suit not maintainable under general partnership laws.

3. However, the court noted that section 590 of the Companies Act, 1956, saved the operation of the Indian Partnership Act in matters of winding up a firm. The court emphasized that the provisions of the Indian Partnership Act, including dissolution of partnership, remained applicable despite the existence of special provisions in the Companies Act for winding up unregistered companies.

4. The court highlighted that the relief sought for dissolution of the firm could not be claimed under Part X of the Companies Act, which primarily dealt with winding up procedures for unregistered companies. Section 590 specifically preserved the applicability of the Indian Partnership Act in such cases, ensuring that the general law governing partnership dissolution was not overridden by the specific provisions of the Companies Act.

5. The judgment referred to a decision by the Mysore High Court, emphasizing the importance of section 590 in preserving the operation of enactments related to the winding up of partnerships. The court dismissed the appeal, upholding the jurisdiction of the civil court to entertain suits for dissolution of partnerships, even if falling under the definition of unregistered companies as per the Companies Act, 1956.