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TMI Blog2001 (11) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit was affirmed on behalf of the said company. But the affidavit was not accepted by the learned counsel for the petitioner on the ground of delay. The matter appeared before the learned company judge on 22-5-2001, and on that date no one represented the company and the affidavit of the said company was not on record and the learned company judge passed an order admitting the company petition and also passed an order for insertion of advertisement. The said order was served on the company by the petitioner. Thereafter a further affidavit was filed by the said company praying for recalling of the order dated 22-5-2001, passed in this proceeding. 4. At the hearing of that prayer for recalling, the learned counsel for the company, apart from pointing out its defence to the claim of the petitioning creditor, also raised a preliminary objection on the maintainability of the company petition. Since the question of maintainability is a fundamental one, this Court heard both the company petition and the company application together. 5. The preliminary objection is that the winding up petition has been filed by Universal Lime Industries which is an unregistered partnership fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a prohibition on an unregistered firm filing a suit to enforce a right arising from a contract or conferred by the said Act. The firm has to be registered and the person suing has to be a registered partner. The suit to attract section 69 has to be one to enforce a right arising from a contract or a right conferred by the Act. Mr. Khanna has not been able to cite any judgment holding that section 69 would be applicable to winding up proceedings under the Companies Act. In the winding up petition primarily the court is required to adjudicate whether the respondent is commercially solvent or insolvent and is not to enforce any right arising from a contract. The proceedings are not a suit . No decree like a suit is passed. The petitioner in this case is only exercising a statutory right under the Companies Act. That right is not arising from a contract between the petitioner and the company. In my view, the provisions of section 69 have no applicability to proceedings under the Companies Act...." (p. 335) The learned judge, however, held at pages 335-36 of the report that for applicability of section 69, other proceedings have to be for enforcement of any right arising from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the lease deed but it was based on a right of the lessor to get possession under the law of the land. As such, the suit was held not barred, in view of the cause of action, namely, the right of the lessor to get possession under the law of the land. It was held that a suit on this right is outside the sweep of section 69(2). 12. The learned counsel also relied on an unreported judgment in the case of S.N. Bagla Co. v. Shree Hanuman Sugar Industries Ltd. delivered by Hon ble Justice Bhaskar Bhattacharya. In that case a suit was filed, inter alia, on the ground that the plaintiff firm advanced a sum of Rs. 2 lakhs to the defendant on the condition that the sum would be repaid by the plaintiff with the interest calculated at 18 per cent per annum. The further ground of the plaintiff is that they forwarded two cheques of Rs. 1 lakh each which were encashed by the defendant and the monies were appropriated for its benefit. As the defendant failed and neglected to pay the amount, the suit was filed claiming a sum of Rs. 20,32,900. The learned judge also noted that there is an alternative case made out by the plaintiff to the effect that the plaintiff did not want to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other hand, relied on a few decisions which now may be considered by this Court. The first of such judgment was delivered in the case of Dabholkar Enterprises v. Padma Alloy Castings (P.) Ltd. [1994] 15 CLA 299. In that judgment a learned judge of the Bombay High Court held that in a case where a petition was made by an unregistered partnership firm for the winding up of a company on the ground of the failure of the company to pay debts despite a statutory notice under section 434 such a proceeding is liable to be dismissed in view of the bar of section 69. The learned judge upon considering the facts of that case, held that unless partnership firm is a registered one on the date of filing of the petition, the alleged debt is not recoverable prima facie from the said company in view of the bar of section 69. 15. The learned counsel also relied on a decision of the Supreme Court in the case of Malabar Fisheries Co. v. CIT [1979] 120 ITR 49 1 . 16. The learned counsel relied on the said judgment for the purpose of showing that a partnership firm under the Partnership Act has no distinct legal entity apart from the partners constituting it. Therefore, a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partnership, it appears partnership is the relation which subsists between persons who have agreed to share the profits of a business carried on by all or any of them on behalf of all of them . In the instant case, admittedly only the unregistered partnership firm has been impleaded as the petitioner and not its partners. 19. In order to decide the controversy on the maintainability of a winding up petition, which has been filed by an unregistered partnership firm, the Court has to consider the import of section 69. As such for a proper appreciation of the dispute involved, it would be appropriate to set out section 69 as follows : " Section 69. Effect of non-registration. (1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm, unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. (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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been construed by the Supreme Court in the case of Jagdish Chandra v. Kajaria Traders (India) Ltd. AIR 1964 SC 1882. The said decision of the Supreme Court overturns the decision of the Bombay High Court in Kajaria Traders (India) Ltd. s case ( supra ), which was relied on by the learned counsel for the petitioner. 22. Overruling the decision of the Bombay High Court, the Hon ble Supreme Court held that the words other proceedings occurring in section 69(3) must be given their full meaning untrammelled by the words a claim of set off . After giving the said interpretation, the learned judges of the Supreme Court held that when a partner of an unregistered firm applies under section 8(2) of the Arbitration Act to enforce a right arising from a contract between the partners, the proceedings are barred under section 69(3). 23. Following the said Supreme Court judgment on the interpretation of other proceedings this Court finds that a winding up proceeding is also covered within the expression other proceedings mentioned in sub-section (3) of section 69. 24. The only contrary opinion has been expressed in the judgment of the Delhi High Court in Kalra Iron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and it is clear from the statutory notice that the goods which were supplied were manufactured and delivered by the petitioner to the company on the basis of the verbal order of the said company. 28. It is obvious that but for the said verbal order or agreement between the company and the petitioner, the goods would not have been supplied. Therefore, the right which the petitioner is seeking to enforce in this case is a right arising from a contract. There is no reason for this Court to give the said expression, namely, right arising from a contract occurring under section 69(3) any restricted meaning. It may be true that the specific remedy which was provided under the Companies Act, namely, the remedy of winding up is a statutory remedy and such a remedy might have been provided in public interest. But the right on the basis of which the said remedy is sought for in this case is arising out of contract. In this connection reference to be made to the observations of the Supreme Court in Haldiram Bhujiawala s case ( supra ). In paragraphs 23, 24 and 25 of the said judgment, the expression arising out of a contract has been discussed. While discussing the said express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st establish that the alleged debt against the company is a debt which is legally recoverable. The learned judge has further illustrated this point by saying that if a winding up petition is filed out of time and is barred by limitation, the alleged debt is not recoverable on the basis of such a time-barred petition. Similarly, in the instant case, the recovery of the debt on a petition filed by an unregistered partnership firm is barred in view of the provision under section 69. In the case of Dabholkar Enterprises ( supra ), the learned judge held that the case of the petitioner was directly arising out of an agreement of sale and purchase between the parties. The same is true in the case also. 29. Apart from that, in the instant case, the proceeding has been filed by the firm only and none of the partners has come forward. In the unreported judgment in the case of S.N. Bagla Co. ( supra ), apart from the firm, the partners were also made parties. Apart from that in the winding up petition there is no alternative prayer which was there in the case of S.N. Bagla Co. ( supra ). This Court also finds that in the case of Haldiram Bhujiawala ( supra ), there were two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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