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SHARAD VASANT KOTAK V. RAMNIKLAL MOHANLAL CHAWDA(1998) 2 SCC 171

SHARAD VASANT KOTAK V. RAMNIKLAL MOHANLAL CHAWDA(1998) 2 SCC 171

FACTS

  • The case involves a partnership firm named 'M/s Paramount Builders'.This partnership was initially formed on 29-11-1979 with seven individuals as partners.The firm was registered on 15-12-1980.
  • In 1986, one partner died, and his widow was admitted as a partner without informing the Registrar of Firms.
  • Another partnership deed was made in 1992, but the death of a partner in 1994 was also not intimated to the Registrar.
  • The 1st respondent filed a suit for dissolution of the firm, initially without challenging the constitutional validity of Section 69(2-A) of the Indian Partnership Act.
  • The appellants opposed amendments to the plaint that sought to challenge the constitutional validity of Section 69(2-A) and argued that the suit was not maintainable.
  • The trial judge found the suit incompetent due to Section 69(2-A), and the amendment application was rejected.
  • The 1st respondent appealed, arguing that the suit was not hit by Section 69(2-A).
  • The appellate court held that the suit was not affected by Section 69(2-A) and allowed amendments to the factual aspects of the plaint but not regarding the constitutional challenge.
  • The appellants appealed to the Supreme Court.

ISSUE

  • Whether the suit for dissolution and account of partnership is affected by Section 69(2-A) of the Indian Partnership Act.
  • Whether the partnership firm's registration ceased due to changes in its constitution.

JUDGEMENT

  • The Supreme Court held that the suit was not affected by Section 69(2-A) and affirmed the appellate court's decision.

LEGAL ANALYSIS

  • The court examined the language and requirements of Section 69(2-A), which mandates that a suit for dissolution or accounts of a partnership firm can only be instituted if the firm is registered, and the person suing is listed in the Register of Firms as a partner.
  • The court emphasised that compliance with these requirements is necessary for the maintainability of such suits.
  • The court differentiated between dissolution and reconstitution of a partnership firm, highlighting that changes in the firm's constitution do not necessarily lead to dissolution.
  • Court observed that reconstitution of the firm does not automatically invalidate its registration.Non-compliance with requirements for informing the Registrar of Firms about changes may attract penalties, but it does not result in deregistration.
  • The court rejected the argument that induction of a new partner invalidated the firm's registration, holding that the partnership remained registered despite changes in its composition.

 

COMMENTARIES RATIO

 

  • The court, construing the provision of the state amendment and on an overall critical analysis of the same in conjunction with the central act held that no fresh registration was required and that the suit would not entail a dismissal merely because the name of the new partner was not on record of the registrar of Firms.