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TMI Blog2000 (2) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... wala and Shiv Kishan Agarwal, on the ground that the 1st plaintiff was a partnership not registered with the Registrar of Firms on the date of suit i.e. on 10-12-91 and that the subsequent registration of the firm on 29-5-92 would not cure the initial defect. 3. The suit was filed by the plaintiff (1) for permanent Injunction restraining the defendants-appellants, their partners, servants etc. .from infringing the trade-mark No. 285062 and from using the trademark/ name 'HALDIRAM BHUJIAWALA' or any identical name/mark deceptively similar thereto (2) for damages in a sum of ₹ 6 lakhs and (3) for destruction of the material etc. 4. As we are dealing with a matter arising under Order 7, Rule 11, CPC, it will be necessary to refer to the plaint allegations. One Ganga Ram alias Haldiram, carried on business in the name Haldiram Bhujia Wala, since 1941. In 1965, he constituted a partnership with his two sons Moolchand, Shiva Krishnan and his daughter-in-law Kamla Devi, (wife of another son R. L. Aggarwal) to carry on business under the same name. In December 1972, the said firm applied for registration before the Registrar of Trade Marks for registration of the name H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndants opened a shop at Arya Samaj Road, Karol Bagh, New Delhi. The cause of action for the suit is the fact that defendants acted: in violation of the common law and contractual rights of the plaintiff. On these grounds, defendants are to be restrained by permanent injunction from using the trade mark and a sum of ₹ 6 lakhs is payable as damages. 5. The defendants, as already stated, have filed the application under Order 7, Rule 11, CPC pleading Section 69(2) of the Partnership Act, 1932 as a bar to maintainability of the suit. The learned single Judge dismissed the application after referring to M/s. Virendra Dresses Delhi v. Varinder Garments AIR 1982 Delhi 482 and Bestochem Formalities v. Dinesh Ayurvedic Agencies RFA (OS) 17/99 dated 12-7-99 rendered by a Division Bench of the Delhi High Court on the ground that the right to injunct the defendants in respect of the plaintiffs' Trade Mark was based on principles applicable to a passing off action and the said right was a common law right and did not arise under any contract. The learned Judge also relied upon a judgment of this Court in Raptakos Brett Co. Ltd. v. Gariesh Property AIR 1998 SC 3085. The appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f whom are Joined in a firm (i.e. 1st plaintiff) and the fourth son is the second plaintiff. The plaintiffs were not parties to the deed of dissolution. The defendants too were not parties to the dissolution deed though their mother was. Hence, the bar under Section 69(2) did not apply. 8. The points that arise for consideration are: (i) Whether Section 69(2) bars a suit by a. firm not registered on the date of suit where permanent injunction and damages are claimed in respect of a trade mark as a statutory right or by invoking Common Law principles applicable to a passing-off action? (ii) Whether the words 'arising from a contract' in Section 69(2) refer only to a situation where an unregistered firm is enforcing a right arising from a contract entered into by the firm with the defendant during the course of Its business or whether the bar under Section 69(2) can be extended to any contract referred to in the plaint unconnected with the defendant, as the source of title to the suit property ? Point 1: 9. The question whether Section 69(2) is a bar to a suit filed by an unregistered firm even if a statutory right is being enforced or even If only a Common Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no relevance in interpreting the words arising from a contract in Section 69(2) of the Partnership Act. 11. Likewise, if the reliefs of permanent! injunction or damages are being claimed on the basis of a registered trade mark and its infringement, the suit is to be treated as one based on a statutory right under the Trade Marks Act and is, in our view, not barred by Section 69(2). 12. For the aforesaid reasons, in both these situations, the unregistered partnership in the case before us cannot be said to be enforcing any right arising from a contract . Point 1 is therefore decided in favour of the plaintiffs-respondents. Point No. 2: 13. Question however arises as to what is the scope of the words 'enforcing a right arising under the contract' used in Section 69(2) ? Learned senior counsel for the appellants repeatedly drew our attention to the allegation in the plaint at various places that it was only under the deed of dissolution dated 16-11-1974 that Moolchand, - the father of the partners of the 1st plaintiff firm and the 2nd plaintiff- became proprietor of the trade mark for the whole of India (except West Bengal). That right devolved on the plaintiffs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the firm with the defendant or with somebody else who is not a defendant, nor to whether it is a contract entered into with the defendant in business or unconnected with business. Hence, in our view, it is permissible to look into the Report even for purpose of construing Section 69(2). 17. We may state that it was on the basis of the Report of the Special Committee that the Partnership Act, 1932 was later passed by the Legislature. The Committee consisted of Sir Brojendra Lal Mitter, Sir Dinshah F. Mulla, Sir Alladi Krishnaswamy Iyer and Mr. Arthur Eggar. Para 16 of the Report states that the Bill seeks to overcome this class of difficulty by making registration optional and by creating inducements to register which will only bear upon firms in a substantial and fairly permanent way of business'. Paras 17, 18 and 19 of the Report are important. (See Mulla, Partnership Act, 1st Ed. 1934, p. 167 at Pp. 176-177). Para 17 reads: 17. The outlines of the scheme are briefly as follows. The English precedent in so far as it makes registration compulsory and imposes a penalty for non-registration has not been followed, as it Is considered that this step would be too drastic for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 8 creating disabilities in the way of the firm in default is adopted. Section 8 of the above English Act is relevant and it speaks of: the rights of that defaulter under or arising out of any contract made or entered into by or on behalf of such defaulter in relation to the business in respect to the carrying on of which particulars were required to be furnished (See Halsbury Statutes, 3rd Ed. Vol. 37, p. 867). The above provision clearly signifies that the right that is sought to be enforced by the unregistered firm and which is barred must be a right arising out of a contract with a third party - defendant in respect of the firm's business transactions. 20. Business Names Act, 1985 has replaced the above Act of 1916 and Section 4 of the new Act refers to the Civil Remedies for breach of Section 4 . It provides for dismissal of the action to enforce a right arising out of a contract made in the course of a business if the firm is not registered, (see Halsbury, Statutes, 4th Ed, Vol. 48 at p, 101). 21. The above Report and provisions of the English Acts, in our view, make it. clear that the purpose behind Section 69(2) was to impose a disab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomers-defendants and the idea is to protect those in commerce who deal with such a partnership firm in business. Such third parties who deal with the partners ought to be enabled to know what the names of the partners of the firm are before they deal with them in business. 26. Further Section 69(2) is not attracted to any and every contract referred to in the plaint as the source of title to an asset owned by the firm. If the plaint referred to such a contract it could only be as a historical fact. For example, if the plaint filed by the unregistered firm refers to the source of the firm's title to a motor car and states that the plaintiff has purchased and received a Motor Car from a foreign buyer under a contract and that the defendant has unauthorisedly removed it from the plaintiff firm's possession, - it is clear that the relief for possession against defendant in the suit does not arise from any contract with defendant entered into in the course of plaintiff firms' business with defendants but is based on the alleged unauthorised removal of the vehicle from the plaintiff firm's custody by the defendant. In such a situation, the fact that the unregistered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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