P L D 1952 Baluchistan 27 (PLP)

The brief facts of the case are that the defendant‑appellant was a partner with one Abdul Hakim who has since died. A partnership‑deed was entered into by which the 'partners were to undertake certain military contracts. Ultimately the firm as such was dissolved and litigation took place for the settlement of accounts. The present suit arises out of the same circums tances and is a suit for money alleged to be owing to the respondents by the appellant in terms of the original partnership‑deed, both as capital and as profits accruing as a result of the contract undertaken. The judgment of the tower Appellate Court is assailed on two points only ; namely that section 69 of the Partnership Act bars a suit between the parties inter se and that in any case the suit is time‑barred, section 14 of the Limitation Act not applicable. I propose to deal separately with these two questions. Learned counsel for the appellant relies on subsection (1) of section 69 of the Partnership Act as being a bar to the suit. On the other hand, learned counsel for respondents places reliance on subsection 3 (a) of the same section. It is not in dispute that the firm in question was an unregistered firm and that prior to the institution of these proceedings it had been dissolved. I will now proceed to examine toe relevant portions of section 69 of the Partnership Act in relation to the two con tentions made before me. Section 69 (1) reads as follows :‑‑ "No suit to enforce a right arising from a contract or con ferred 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 or Firms as a partner in the firm." while section 69 (3) (a) is as follows :‑ "The provisions of subsections (l:) 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 realise the property of a dissolved firm." My attention has been drawn to various rulings on the interpretation of this important section of the Partnership Act and among these rulings the views expressed by Beaumont C. J. in S. H. Patel v. Husseinbhai Mahomed A I R 1937 Bom. 225, which is later followed by Grille J. in Chhotelal Nanakram Gujrathi v. Gopaldas Gulabdas Baniya. A I R 1940 Nag. 78, support the plea of learned counsel for the appellant. In examining the question at issue before me it is to some extent necessary to reiterate what is stated in the Bombay ruling referred to above. That case dealt with two partners of a firm which was ultimately dissolved and a suit was instituted by one partner against the other for credit in the sum of Rs. 600 which was paid by the defendant by way of income -tax against the actual assessment of Rs. 3,400 owing. In discussing the application of section 69 of the Partnership Act Beaumont C. J. stated as follows :‑ "It seems to me clear, therefore, that the Legislature con templated that the language of subsections (1) and (2) is wide enough to cover suits relating to a dissolved firm. Reading the section as a whole, in my opinion, subsection (1) covers a suit by a plaintiff suing in respect of a right vested in him or acquired by him as a partner in a firm, and that it is not essential that the firm should be actually in exist ence at the date When the suit was instituted." This ruling related therefore to the application of the first part of section 69 to an unregistered firm which has been dissolved; and since it was held that it was immaterial whether the firm was either dissolved or not dissolved at the time litigation was undertaken, the relevant section of the Partner ship Act would be applicable in either case. In this judgment it was ultimately held that section 69 had application and that the suit in question could not lie by virtue of the prohibition contained in this section. On the other hand, as I have stated above, learned counsel for the respondents argues that section 69 (3) (a) of the Partnership Act has application to this case. This subsection is divided into two parts ; the first is the right to sue for dissolution of a firm oar fox accounts of a dissolved firm ; while the second part relates to any right or power to realise the property of a dissolved firm. 'In support of this contention the most important ruling is that of a Special Bench of the Allahabad High Court reported in (Shibbr Ma v. Gulab Rai) A I R 1939 All.

735. In this ruling it was held that no dis ability should be attached to, any partner in regard to winding up of the accounts between the partners on dissolution though certain disabilities would result from the fact that a firm was unregistered. In assessing the intention of the Legislature in relation to the application of section 69 in general and bearing in mind the various rulings, to which my. attention has been drawn in relation to this section, I am inclined to think that the latter ruling preferred to immediately above in this judgment would not be applicable to the case before me, because the circum stances of that case were not the same as in the present case. In the Special Bench case the cause of action was one arising out of a suit for dissolution and consequential rendition of accounts. It was therefore held that since the proviso to section 69 permitted of the institution of a‑suit for dissolution of consequential relied therefrom should follow. In the case before me, however, there is not suit for dissolution. The suit in question is for a claim by one partner for a dissolved firm against the other. It therefore appears to aye that the bar contained in section 69 (1) of the Partnership Act must be operative in view of the fact that the firm was unregistered. I now come to the question of the applicability of section 14 of the Limitation Act. The Lower Court has permitted the time spent in previous litigation for purposes of assessing limitation in the present suit the Additional District Judge has based his reasoning mainly on the ground that, since the present case arose out of the same cause of action, and that the previous suit had been prosecuted with due diligence, the time so spent should be permitted. I am, however, unable to agree with the views, so expressed, for it is clear that the previous litigation between the parties‑though arising out of the same set of circumstances was a case complete in itself and was decided on merits. There is no argument before me that the previous proceedings had failed through defect of jurisdiction. It is, however, necessary for me to see whether the previous suit was not entertained .through some other cause of a like nature, that is in respect of a defect in juris diction. There can, to my mind, be no question of doubt on this aspect of the case for, as I have already stated above, the suit failed on its merits and not for want of jurisdiction or for any other cause of a like nature. Accordingly, I find that section 14 of the Limitation Act is applicable to these present proceedings and that the appeal must be accepted both on these grounds and on the ground that section 69 (1) of the Partnership Act is also a bar to the suit. Parties will bear their own costs. A. H. Appeal accepted.