P L D 1972 Lahore 766 (PLP)

(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 persons suing are or have been shown in the Register of Firms as partners in the firm. (3) The provisions of subsections (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 realise the property of a dissolved firm, or (b) the powers of an official assignee, receiver or Court under the Insolvency (Karachi Division and Dacca) Act, 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 Pakistan, or whose places of business in Pakistan 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, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim." This section prohibits the institution of certain suits in respect of partnership firms which have not been registered under the Act. Subsection (1) lays down that a partner of the firm which is not registered will be unable to enforce his claim against the firm or any person alleged to be or to have been a partner in the firm. Subsection (2) prohibits the enforce ment of any right on behalf of unregistered firm against a third party. The provisions of these two subsections are confined to the enforcement of a right by a partner or by a firm, by means of a suit. Subsection (3) extends this principle to a claim or sit‑off or to "other proceedings to enforce the right arising from a contract". The effect of this extension is that no suit or other proceeding can be instituted nor a claim of set‑off can be made, to enforce a right arising from a contract by or on behalf of soy partner in a firm against the firm or any person alleged to be or to have been a partner in the firm, or by or on behalf of a firm against a third party, unless the firm is registered and the persons sitting are or have been shown in the register of firms as partners in the firm. The argument of the learned counsel for the respondent is that an application under section 34 of the Arbitration Act falls within tie scope of the expression "other proceeding to enforce the right arising from a contract" and such application would be barred by section 69 of the Partnership Act. He relies upon the Full Bench case of Ali Mohammad v. Mirza Mohammad Hussain Beg (P L D 1968 Lah. 712), where it was held that the words "other proceeding" in subsection (3) of section 69 will include an application under section 8 of the Arbitration Act anti will not be deemed to be ejusdem generis to the words "suit" or "a claim of set‑off". The learned counsel also relied upon Jamal Usman Kachi v. Firm Umar Haji Karim Shop (A I R 1943 Nag. 175), Sped Wahid Hussain v. Maharaikumar Mahmood Hasan Khan and others (A I R 1961 All. 409) and Jagdish Chandra Gupta v. Kajaria Traders (India) (A I R 1964 S C 1882) where the same view was taken that the words "other proceeding" were not ejusdem generic to the words "suit" or "claim for set‑off". An application under section 34 of the Arbitration Act may fall within the ambit of "other proceeding", but in my view such an application is not made "to enforce the right arising from a contract." An application under section 34 of the Arbitration Act is aimed at staying the proceedings of the suit only and not at instituting any proceeding for enforcement of a right. No doubt, the stay of proceedings of the suit is sought with a view to force the plaintiff to refer tine matter to arbitration, but by itself the order of stay of proceedings in the suit does not become a reference to arbitration. It may be that in certain cases, even in spits of an applicant under section 34, being willing and ready to do all things necessary to the proper conduct of the arbitration, some party may have to file proceedings under the Arbitration Act in the Court and such proceedings may be covered by the expression "other proceeding", but the possibility of such a contingent arising at a later stage cannot make an application under section 34, a proceeding as contemplated by section 69 of the Partnership Act. The case of All Mohammad v. Mirza Mohammad Hussain Beg is, therefore, clearly distinguishable. The objection of the learned counsel for the respondent is not legally tenable for another reason also. The rule about bar of suit, claim to set‑off or other proceeding to enforce the right arising from a contract ire section 69 is subject to certain exceptions given in the latter part of subsection (3) as also to subsection (4) of the above section. According to clause (a) of subsection (3), it is open to a partner to sue for the enforcement of any right for‑ (i) the dissolution of the firm; (ii) accounts of a dissolved firm; and (iii) any right or power to realise the property of a dissolved firm. The present suit is one for dissolution of partnership and rendition of accounts and it was conceded by the learned counsel for the petitioner that the suit itself was not barred by section 69 of the Partnership Act. This concession is correct in view of the dictum in Jhandumal v. Rulia Ram (A I R 1937 Lah. 633) that a prayer for "dissolution of partnership" through Court is a compendious mode of asking of four‑fold relief; (a) a declaration that the partnership stands dissolved from a certain date; (b) a declaration as to who the partners are and what are their proportionate shares; (c) a prayer that accounts be taken and the assets and liabilities of the partnership as on the date of dissolution be determined; and (d) a final decree be passed. It was held that these prayers are implicit in the prayer for dissolution made in a "suit for dissolution of partnership" and it is in this sense that the expression is used in section 69 of the Partnership Act. Even if it is assumed for the sake of argument, that ail application under section 34 is a proceeding to enforce a right within the meaning of subsection (3) of section 69, such an application in the circumstances of the present case, would be as competent, as the present suit itself because it will, at most amount to an enforcement of a right to sue "by filing other proceeding" for dissolution of a firm. According to the learned counsel for the respondent, however, the exception in subsection 3 (a) "is confined to a suit for dissolution of partnership and not to any other proceeding for such dissolution. According to him, the word "sue" in subsection (3) (a) means only a proceeding initiated by a plaint and not any other proceeding. Ht also relied upon, the following observations in the Full Bench judgment in the case of Ali Mohammad at page 726 of the report:‑ "We further find force in the contention of learned counsel for the petitioner that the argument 'that if the Legislature had by this provision intended to cover all sorts of proceedings to be hip by section 69, the proper place for the words 'other proceedings', should have been in juxtaposition to the word `suit' in subsections (1) and (2) of section 69 and not as they appear in subsection (3) closely allied to the words 'claim of set‑off' is not available for the reason that if "other proceeding" had been incorporated along with the word "suit" in juxtaposition in subsections (1) and (2), as suggested, the repeated insertion of the two exemptions for cases envisaged in clauses (a) and (b) of subsection (3), namely, suits for dissolution of a partnership or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm or the powers of official assignees under the Insolvency Act, would have made the reading and application of the section not only cumbersome but also unintelligible." I am of the view that the word "sue" cannot be interpreted so narrowly. This term is wide enough not only to include a proceeding started by the filing of a plaint, but other proceeding also. The ordinary dictionary meaning of the word "sue" in the Concise Oxford Dictionary is as follows:‑ "Prosecute (person) in law‑court and treat (person), entreat (person), make entreaty or application to person or law court, (for redress or favour)." In The Province of Bombay v, Khushaidas (A I R 1950 S C 222), it was held that the word "sue" means the "enforcement of a claim of civil right by means of legal proceedings;" and "any remedy that can be taken to vindicate a legal right." Interpreting the expression "the Federal Government may sue and be sued in the name of Pakistan in Article 136 of the Constitution of 1956" a Division Bench of the High Court of West Pakistan in the case of Mohammad Ibrahim v. The Government of Pakistan and others (P L D 1960 Lah. 1073) held:-- "We would, therefore, interpret Article 136 as a statement of the liability of the Government for being proceeded against. This Article uses the simple words "sue" and "the sued" without any qualification. These words, it is conceded by the learned counsel for respondents Nos. 2 to 4 would not apply only to suits but to other proceedings also, for instances, proceedings under the Guardians and Wards Act, under the Companies Act, under the Arbitration Act and so on." In the above case, an objection was raised to the com petence of the High Court to issue a writ of mandamus against the Government and it was held on the basis of Article 136 of the Constitution of 1956 that the words "sue" and "to be sued" were wide enough to include a petition for issuance of a writ of mandamus. Later on, the view that mandamus can issue to the Government was approved by the Supreme Court in Pakistan v. Mohammad A. Hayat (P L D 1962 S C 28). Similar view was taken by a Division Bench of this Court in Messrs Associated Cement Co. Limited, Bombay v. The Pakistan (P L D 1972 Lah. 201) in regard to the interpretation of the word "sue" used in section 83 of the Civil Procedure Code which prohibits an alien enemy from suing in any Court in Pakistan. An analysis of the several provisions of section 69 would also lead to the conclusion that the word "sue" has riot been used by the Legislature in a restricted sense of proceedings initiated in the form of a suit. Subsections (1) and (2) laid down that no suit fox the purposes specified in those subsections could be filed by or on behalf of a partner or by an unregistered firm. The principle of these subsections have been D extended by subsection (3) to the other proceeding also and then follow certain exceptions to the rule. The juxtaposition in which the extension of rule laid down in subsections (1) and (2), to other proceedings and the exceptions to the rule are placed in subsection (3) shows that the exceptions are not confined only to suits, but also to other proceeding. In subsections (1) and (2), the Legislature has used the word "suit" but a different terminology has been used in sub section (3) apparently to cope with the extension of principle laid down in subsections (1) and (2). If the object of the Legislature was to accept only the enforcement of any right by a suit, inter alia, for dissolution of the firm, the word "suit", could have been used in subsection (3) also, instead of providing "but does not affect (a) the enforcement of any right to sue for the dissolution of a firm . . ." The exception could have clarified that the rule shall not affect a suit to enforce any right for dissolution of a firm . . . ." There is no reason why the Legislature should confine the exception only to a suit when obviously the object was to except from the rule, the enforcement of any right to dissolve the firm or for accounts of a dissolved firm or any right or power to realise the property of a dissolved firm, irrespective of, the manner in which these rights could be enforced. Therein, can, therefore, be no doubt that clause (a) is not only an exception to enforcement of right by suit, but also to such enforcement by other proceeding. The preliminary objection has, therefore, no force. As I have already held that dissolution of partnership and rendition of account were covered by clause 24 of the partnership agreement, the learned Additional District Judge has acted illegally and with material irregularity in the exercise of his jurisdiction by taking a different vie v and by ignoring that in any case dispute about accounting is a business dispute, The Revision petition is accepted, the order of the learned Additional District Judge is set aside and the order of the learned trial Court is restored. K. B. A. Petition accepted.