Jharkhand High Court
Rakesh Kumar Paswan vs Sanjeev Ranjan on 25 February, 2025
Author: Sanjay Kumar Dwivedi
Bench: Sanjay Kumar Dwivedi
IN THE HIGH COURT OF JHARKHAND, RANCHI
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C.M.P. No. 657 of 2023
—-
Rakesh Kumar Paswan, aged about 48, son of late Basudeo Ram Paswan,
resident of Village Hurhuru, Pandit Ji Road, PO and PS Hazaribagh District
Hazaribagh, Jharkhand ….. Petitioner/ Defendant
— Versus —
Sanjeev Ranjan, son of Saryu Paswan, resident of H.No.15/A, Near
Jaiprakash Udyan, P.O. and P.S. Adityapur, District Seraikella-Kharsawan,
Jharkhand ….. Opposite Party/ Plaintiff
—-
CORAM: HON’BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
—
For the Petitioner(s) : Mr. Kumar Harsh, Advocate
For the Opposite Party(s) : Mr. Navneet Toppo, Advocate
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5/25.02.2025 Heard learned counsel for the petitioner as well as the learned counsel
for the Opposite party.
2. This petition has been filed under Article 227 of the Constitution of India
for setting aside the order dated 15.02.2023 passed in Money Suit No.9 of 2016
by learned Civil Judge, Senior Division-I, Seraikella whereby the petition under
Order VII Rule 11(d) read with Section 151 of the CPC filed by the petitioner/
defendant has been rejected by the learned court.
3. Mr. Kumar Harsh, the learned counsel for the petitioner submits that the
petitioner is an unemployed person and belongs to scheduled caste category.
Indian Oil Group Company had floated an Advertisement Notice for
appointment of retail sellers for different places in Jharkhand. In clause-11 it
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has been disclosed that the persons belong to scheduled castes and scheduled
tribes will be given the facilities. The petitioner being eligible had applied for
Kanke Ranchi area and for the same has deposited the requisite fee and
thereafter, the Indian Oil Company Limited has communicated vide letter dated
29.06.2009 to the petitioner regarding proposal of retail out-let
dealership at Adityapur, district Seraikella -Kharsawan and the Letter of Intent
with respect to dealership granted to the petitioner in Kanke area dated
14.9.2004 was issued to the petitioner has been withdrawn with immediate
effect. It has been withdrawn on the ground that the company has not been
able to provide the land in that area. However, later on again the retail petrol
out-let dealership was provided to the petitioner and the petitioner was running
the retail petrol out-let dealership with its ease. However, the plaintiff/O.P.
approached the petitioner and offered for providing the working hand to run the
said retail petrol out-let as he was a local resident and his father was working
as Dy. Superintendent of Police in Hazaribagh. The Plaintiff/O.P has provided
some working hand to the petitioner and used to visit the retain out-let on day-
to-day basis and thereafter the plaintiff/O.P has ousted the petitioner and
grabbed the retail petrol out-let on which the petitioner has made application
before the Superintendent of Police, Seraikella-Kharsawan. The said fact was
also brought to the knowledge of the authorities of Indian Oil Corporation and
the company further requested the Deputy Commissioner, Seraikella-Kharsawan
for assistance of the petitioner as the petitioner was having difficulty in
operating the retail petrol out-let and one F.I.R was also registered as Adityapur
P.S. Case No.183 of 2013 against plaintiff/O.P. Final Form was submitted stating
that the allegations are found to be incorrect. He submits that for operation of
the said retail petrol out-let the petitioner and the opposite party/plaintiff have
entered into partnership agreement and the terms and conditions have been
decided and he submits that plaintiff/O.P has said to be invested a sum of
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Rs.35 lacs for operation of the said retail petrol out-let and in due course of
time, the loss was occurring and in view of that the said retail petrol out-let has
been closed. He submits that in this background, the plaintiff/O.P. has instituted
Money Suit No.9 of 2016 for recovery of money to the tune of Rs.35 lacs from
the defendant/petitioner. The said partnership firm was an unregistered firm
and in light of section 69 of the Indian Partnership Act, 1932 the suit is barred.
He refers to the said clause and submits that the firm was an un-registered
partnership firm and the money suit against another partner is not maintainable
and to buttress his such argument he relied in the case of Sunkari Tirumala
Rao and Others V. Penki Aruna Kumari reported in 2025 SCC OnLine SC
125 and relied on paragraph nos.8,15,16 and 17 of the said judgment which
are as under:
“8. It is evident from a reading of sub-sections (1) and (2) of
Section 69 that it assumes a mandatory character. Section 69(1) prohibits
a suit amongst the partners of an unregistered partnership firm, for the
enforcement of a right either arising from a contract or conferred by the
Act, unless the suit amongst the partners is in the nature of dissolution of
the partnership firm and/or rendition of accounts. Section 69(2) prohibits
the institution of a suit by an unregistered firm against third persons for
the enforcement of a right arising from a contract. As a consequence, a
suit filed by an unregistered partnership firm and all proceedings arising
thereunder, which fall within the ambit of Section 69 would be without
jurisdiction.
15. It is a clear as a noon day that the present suit had not been
instituted by or on behalf of the firm against any third persons so as to fall
under the ambit of Section 69(2). The petitioners have also not filed the
instant suit for enforcing any statutory right conferred under any other
law or a common law right so as to exempt the application of Section 69.
Hence, the rigours of Section 69(1) would apply on such a suit and the
partnership firm being unregistered would prevent the petitioners from
filing a bare suit for recovery of money from the respondent.
16. It would have instead been appropriate for the petitioner to
have preferred a suit for dissolution of the partnership firm and rendition
of accounts, especially considering that the factum of non-registration of
the partnership firm would not have acted as bar in a suit for dissolution
in light of the exception carved out under Section 69(3). The defence that
the partnership business had not yet commenced and thus, such a suit for
dissolution could not have been preferred, would not be of any avail to
the petitioners, particularly for overcoming the jurisdictional bar under
Section 69(1). The High Court is right in taking the view that a suit of such
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nature could not be said to be maintainable in the absence of the
registration of the partnership firm.
17. In light of the aforesaid, we are of the view that no error
not to speak of any error of law could be said to have been committed
by the High Court in passing the impugned order.”
4. Relying on the above judgment, he submits that the learned trial court
has wrongly passed the impugned order saying that in the individual capacity,
the plaintiff/O.P has instituted the said money-suit. He submits in view of that
the impugned order may kindly be set aside.
5. Mr. Navneet Toppo, the learned counsel appearing on behalf of the sole
Opposite Party/plaintiff vehemently opposed the prayer and submits that the
suit is maintainable in view of the fact that in personal capacity the suit has
been instituted and in view of that there is no applicability of section 69 of the
Indian Partnership Act, 1932. He submits that in light of Order VII Rule 2 CPC
the money suit is maintainable. He submits that so far the filing of the F.I.R
against the defendant/petitioner is concerned the protest petition was filed by
the plaintiff/O.P which was dismissed and thereafter the plaintiff/ O.P. has filed
the revision which was allowed and in view of that he submits that however
the FIR has got no relevance with regard to the dispute herein. On this ground
he submits that there is no illegality in the impugned order and the learned
court has rightly passed the order.
6. In reply, Mr. Harsh the learned counsel for the petitioner/defendant
submits that against the revisional order with regard to criminal case the Cr.M.P.
No.2339 of 2023 was filed which was allowed and the entire criminal
proceeding has been quashed. He submits that based on the partnership firm,
the suit has been instituted and in view of that, the argument of the learned
counsel for the plaintiff/O.P is not tenable.
7. It is an admitted position that the money suit being Money Suit No.9 of
2016 was instituted by the plaintiff/O.P for recovery of Rs.35 lacs from the
plaintiff/defendant. In that suit, a petition under Order VII Rule 11(d) of CPC
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has been filed by the petitioner/defendant contending that in light of section 69
of the Indian Partnership Act, 1932, if the partnership firm is an unregistered
firm, the suit is not maintainable by one of the partners against another partner.
The learned court has rejected the said petition saying that in individual
capacity the suit was instituted. Deed of partnership dated 29.12.2011 is
brought on record by way of filing of the supplementary affidavit and
wherefrom it transpires that the petitioner and the O.P have entered into a
partnership deed. Clause-6 of the said deed speaks to provide 50-50 % share of
investment to both the partners. Clause-8 is with regard to investment of the
capital by both the sides, which speaks as under:
“8.That the parties hereto shall may contribute the capital
as per the share as mentioned above or as per their convenient
raise the capital and fund of the business and the same shall be
recorded in the Books and Accounts of the firm. The capital raise
or contributed by either party shall bear no interest. However,
second party has agreed to invest Rs.35 lacs to run the business.”
8. Clause-9 speaks of working partners and Clause-10 speaks as under:
“10.That the first partner has been allotted/awarded the
business of Retail Outlet at the above site at Adityapur, District
Seraikella Kharsawan, on individual capacity by the Indian Oil
Corporation Ltd., so, the first party to regularize the constitution of
the partnership undertake to obtain necessary permission from the
competent authority of the said Indian Oil Corporation Ltd. On due
course as would be required.
9. Clause-19 of the said partnership deed speaks as to how the said deed
will be acted upon which is as under:
“19.That save herein above provided, the partnership shall be
governed in all other respect under the provision of Indian
Partnership Act 1932 and Rules in force.”
10. In view of above, it is crystal clear that the petitioner and the Opposite
party have entered into the partnership deed and it has been decided that the
said partnership shall be governed in light of the provisions of Indian
Partnership Act, 1932. Section 69 of the Indian Partnership Act, 1932 speaks as
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under:
“Effect of non-registration (1) No suit to enforce a right arising
from a contract of or conferred by this Act shall be instituted in
any court by or on behalf of any person suing as a partner ma 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 third
party unless the firm is registered and the person suing are or have
been shown in the Register of firm as partners in the firm.
3. The provisions of sub section (1) and (2) shall apply also to a
claim of Set – off or other proceeding to enforce a right arising
from a contract, but shall not affect –
(a) the enforcement of any right to sue for the dissolution of a
firm or for accounts of a dissolved firm, or any right or power to
realize the property of a dissolved firm or
(b) the powers of an official assignee, receiver of Court under
the Presidency, towns insolvency Act 1909, or the Provincial
insolvency Act, 1920, to realise the property of an insolvent
partner.
(4) This section shall not apply-
(a) to firms or to partners in firms which have no place of
business in the territories to which this Act extends, or whose
places of business in the said territories are situated in areas to
which by notification under section 56, this chapter does not apply,
or
(b) to any suit or claim of set off not exceeding one hundred
rupees in value which in the presidency towns, is not of a kind
specified in section 19 of the Presidency shall cause Court Act,
1882 or outside the Presidency towns, is not of a kind specified in
the Second Schedule to the Provisional small cause Courts Act
1887. or to any proceeding or execution in other proceeding
incidental to or arising from any such suit or claim.”
11. It is evident from the reading of sub-section 1 and 2 of section 69 of
Indian Partnership Act, 1932 which assumes mandatory character. Section 69(1)
prohibits the suit amongst the partners of an unregistered partnership firm. For
the enforcement of a right either arising from a contract or conferred by the
Act, unless the suit amongst the partners is in the nature of dissolution of the
partnership firm and/or rendition of accounts. Section 69(2) prohibits the
institution of a suit by an unregistered firm against third persons for the
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enforcement of a right arising from a contract. In view of that a suit instituted
by an unregistered partnership firm and all proceedings arising thereunder,
which fall within the ambit of Section 69 would be without jurisdiction. In the
case of Sunkari Tirumala Rao and Others V. Penki Aruna Kumari
(supra) at paragraph nos.10 and 11, the Hon’ble Supreme Court has held as
under:
10. In yet another decision in Mukund Balkrishna Kulkarni v.
Kulkarni Powder Metallurgical Industries, (2004) 13 SCC 750, this
Court had the opportunity to consider the applicability of Section
69(1) having regard to the facts of that case. Therein, the
appellant had filed a suit for declaration that the respondent no. 1
was a partnership business in which both the appellant and the
respondent no. 2 had equal shares along with the prayer for
dissolution of the firm and rendition of accounts. It was opined
therein that the two embargoes which must co-exist for the
plaintiff to be non-suited under Section 69 (1) would be that:
i. The suit should be filed by a person “suing as a partner in
a firm” and;
ii. The suit must be to enforce a right arising from a
contract.
11. By applying the two embargoes to the facts of that
case, it was held that, first, the suit for declaration as regards the
existence of a partnership could neither be said to be made by a
person suing as a partner nor could be said to be a suit to enforce
a right arising from a contract. It was in fact a prayer to be
declared a partner in the firm and was therefore, not falling within
Section 69(1). Secondly, as regards the other prayer for dissolution
of the firm, the Court held that the appellant was in fact suing “as
a partner” and was also enforcing a right under a contract.
However, the same was saved due to the operation of the
exception under Section 69(3) which permits the filing of a suit for
dissolution of the firm and rendition of accounts irrespective of the
non registration of the partnership firm. Therefore, the suit was
held to be maintainable. The relevant observations are as under:
“9. The sub-section contains embargos which must coexist
before a plaintiff can be non-suited under that subsection. The two
embargos relevant for this case are : (1) that the suit should be
filed by person “suing as a partner in a firm” and (2) that the suit
must be to enforce a right arising from a contract. The submission
of the respondents which was accepted by the High Court was that
the prayer of the appellant, namely, for a declaration of the
existence of the partnership and the share between the parties
was a suit to enforce a right under a contract against the firm. A
prayer for such declaration could not be said to be made by person-7- C.M.P. No. 657 of 2023
suing as a partner. It was a prayer to be a partner and is therefore
not debarred under the provisions of Section 69(1). Furthermore,
what was in fact being prayed for by the appellant was a
declaration of the existence of a contract between the parties.
That could not be said to be a suit to enforce a right arising from a
contract. The second prayer of the appellant was not to continue
as a partner of the firm but to dissolve the firm. To that extent the
appellant was suing “as a partner”. This he was entitled to do
under Section 69(3)(a) which insofar as it is relevant, reads as
follows:
“69.(3) The provisions of sub-sections (1)…shall not affect–
(a) the enforcement of any right to sue for the dissolution of a firm
or for accounts of a dissolved firm, or any right or power to realize
the property of a dissolved firm;”
10. The right of partner to ask the dissolution of a firm is a
right the enforcement of which is otherwise forbidden under
Section 69 (1). It is because of the exception under sub-section (3)
of Section 69 that a person suing as a partner can enforce a right
under the contract for dissolution of the firm and accounts. The
claim for a half share in the firm’s assets would be a necessary
corollary to a prayer for dissolution. Without the prayer for
specified shares in the firm’s assets and business, the relief that
may be granted in a suit for dissolution would be ineffective. In the
circumstances of the case, we allow the appeal and set aside the
decision of the High Court and affirm the decision of the first
appellate court. There will be no order as to costs.”
12. From the pleadings of the plaint, it is crystal clear that it is an
admitted position that from paragraph no.31 of the plaint, for working hand to
run the business of retail out-let, the plaintiff has approached the
defendant/petitioner to invest in the aforesaid business. In paragraph no.5
there is clear admission about the terms and partnership deed in clause-6 and
share of investment of the plaintiff and defendant was 50-50 % and it was
stated that investment of Rs.35 lacs has been made by the plaintiff. In
paragraph 9, the huge loss has been accepted in the plaint and in paragraph
11, again the business was started, has been stated. In para15 further
admission of partnership firm is there. Thus, it is crystal clear that in the
capacity of one of the partners of the unregistered partnership firm, the suit
was instituted. The plaintiff/O.P has also not instituted the suit for enforcing any
statutory right conferred under other law for common law right so as to exempt
-8- C.M.P. No. 657 of 2023
the application of section 69 of the said Act. Hence the rigors of section 69(1)
of the said Act would apply on such a suit and partnership being unregistered
would prevent the plaintiff/O.P. from filing the bare suit for recovery of money
from the defendant/petitioner.
13. In view of the above, the remedy would have of the plaintiff/O.P to
prefer a suit for dissolution of the partnership and rendition of accounts,
especially considering that the factum of non-registration of the partnership
firm would not have acted as bar in a suit for dissolution in light of the
exception carved out under Section 69(3) of the said Act.
14. In view of the above facts, reasons and analysis, the Court finds that the
impugned order is not in accordance with law.
15. As such, the impugned order dated 15.02.2023 passed in Money Suit
No.9 of 2016 by learned Civil Judge, Senior Division-I, Seraikella is set-aside.
16. Consequently, the suit itself was not maintainable and the provision of
Order-VII Rule 11(d) has been rightly invoked by the petitioner and,
accordingly, the said plaint is rejected, as it is barred by law.
17. C.M.P. No.657 of 2023 is allowed in the above terms and disposed of.
18. However, this order will not prejudice the right of the plaintiff/O.P. to find
out his remedy available under the law.
( Sanjay Kumar Dwivedi, J.)
SI/,
A.F.R.
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