Holding

The suit for dissolution and accounts is not barred by Section 69(2A) because the firm remained a registered entity after reconstitution, and the plaintiff satisfied the statutory conditions.

Summary

The Supreme Court examined whether a suit for dissolution and accounts filed by a founding partner of M/s Paramount Builders was barred by Section 69(2A) of the Partnership Act, as amended by Maharashtra. The firm, originally registered in 1980, had admitted the widow of a deceased partner in 1986 without notifying the Registrar, leading the trial court to hold the suit non‑maintainable. The Division Bench reversed this, holding that the firm remained registered despite the reconstitution. The Supreme Court affirmed the Division Bench, ruling that induction of a new partner constitutes reconstitution, not dissolution, and does not require fresh registration; non‑compliance with notice provisions attracts only penalties, not loss of registration. Consequently, the plaintiff’s name was in the Register of Firms, satisfying Section 69(2A), and the suit was maintainable. The appeal was dismissed.

Issues considered

The induction of a new partner after a partner's death amounts to dissolution requiring fresh registration, thereby invoking Section 69(2A) and rendering the suit non‑maintainable.
Whether failure to inform the Registrar of changes in the partnership constitution invalidates the firm's registration.
Interpretation of reconstitution versus dissolution under the Partnership Act.
Whether Section 69(2A) applies when the suing partner's name is in the Register of Firms but the newly admitted partner's name is not.

Legislation cited

Indian Partnership Act, 1932s. 17(a), s. 31, s. 39, s. 4, s. 58, s. 59, s. 63, s. 69(2A), s. 69A

Subjects

Partnership ActSection 69(2A)Maharashtra amendmentregistration of firmsreconstitution vs dissolutionsuit maintainabilitypartner inductionpenalty under Section 69Aregister of firms

Judgment

SHARAD VASANT KOTAK AND ORS. A
v.
RAMNIKLAL MOHANLAL CHAWDA AND ANR.

DECEMBER 17, 1997

(SUHAS C. SEN AND K. VENKATASWAMI, JJ.] B

Partnership Act, 1932 :

Sections 4, 17(a), 31, 39, 58, 59, 63, 69-A and 69(2-A) (as amended
by State of Maharashtra Amendment introduced by Act 29 of 1984)-Suit for C
dissolution of finn--Maintainability-Conditions for filing a suit are that the
Jinn must be registered and the persons suing must be shown in Register of
Finns as partners-Partnership firm 01iginally registered-Reconstitution of
Jinn after death of a partner in which widow of deceased partner inducted as
partne1~Reconstitu(ed finn not registered-Suit filed by a founder partner of
that Jinn whose name. included in the Register of Fi171ls, for dissolution of the D
fimi-Held, suit maintainable.

Sections 58, 59 & 63 and 69-A (as in force in the State of
Maharashtra)-Registration of [inn-Does not cease on reconstitution of the
firm pursuant to induction of a new partner (widow of a deceased E
partner)-No fresh registration required-Howeve1; infonnation about chan-
ges made after reconstitution must be given-Failure to comply attracts penal-
ties under Section 69-A.

Sections 17(a), 31 & 32-lnduction of a new partner will amount to
reconstitution and not dissolution of the [inn-Dissolution and reconstitution F
are two different legal concepts.

lnte1pretation of deeds and documents-Substance and not mere words
used, is relevant.

A partnership firm with seven partners was registered. One of the G
partners died and in his place, his widow was admitted as a partner in the
firm and this was not brought to the notice of the Registrar of Firms. R-1
gave a notice of dissolution of the firm to the appellant and filed a suit for
dissolution of partnership firm. Subsequently R-1 sought amendment of
the plaint to the effect that subsequent changes and/or modificatil!ns in H
543
544 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.

A the original partnership deed and also in the subsequent deed were merely
in the nature of changes and/or modifications which did not affect registra-
. tion of the said firm, as 1re11uired under the Partnership Act, for entitling
a partner to institute a suit for relief against the other partners on
dissolution of the firms and alternatively, the other amendments sought
to challenge the vires of Section 69(2-A) of the Act as in force in the State
B of Maharashtra. These amendments were seriously opposed by the appel-
lants inter alia contending that the suit as filed was not maintainable and
hence amendments cannot be allowed. The Trial Judge accepted the con-
tentions of the appellant and dismissed the suit. On appeal before the
Division Bench by Respondent No.1, it not only restored the suit but also
C allowed the amendments. Hence this appeal.
Dismissing the appeal, this Court

HELD : 1. The suit in question is not hit by Section 69(2-A) of the
Partnership Act. On the induction of the second respondent, the existing
D firm was only reconstituted and, therefore, there was no necessity to get a
fresh registration. If by virtue of non-compliance of certain mandatory
provisions in not informing the Registrar of Firms about the change in the
constitution of the firm, certain penalties provided in the Act alone are
attracted, that will not lead to the conclusion that the registration of the
E firm ceased. This conclusion is based on a conjoint reading of Sections
58-63 and the forms prescribed thereunder. Further, this con~lusion does
not in any way mitigate the object of the Maharashtra Amendment intro-
duced by Act 29 of 1984. [570-G-H]

Wazid Ali Abid Ali v. CIT, [1988] Suppl. SCC 193 and Bharat
F Saivodaya Mills Co. Ltd. v. Mis Mohatta Brothers, AIR (1968) Guj. 178,
referred to.

2. In view of clause 11 of the second deed of partnership it cannot
be contended by the appellants that by reason of death of one of the
partners, the existing firm stood dissolved. By clauses 4 and 5 of the said
G deed relating to the commencement of the partnership and the accounting
year, minimal changes were introduced in the second deed of partnership.
in place of clauses 4 and 5 in the first partnership deed and in other
respects, namely, the name of the partnership firm, the address and
location of the firm, the business carried on and shares allotted among the
H partners and duration of the partnership, are identical. Having regard to ·

I
SHARAD VASANT KOTAK v. R.M. CHAWDA 545

the substance of the three deeds there was no indication that the old firm A
was dissolved. Thus the existing firm continued. [564-A-D]

Tyresoles (India) v. Commissioner of Income Tax, (1963) 49 ITR 515
and Commissio11er of Income Tax v. A.N. Figgies & Co., [1954) 5 SCR 171,
relied on.
B
3. The contention that the induction of new partner will result Jn
dissolution of the firm is not acceptable. Section 17(a) suggests only
reconstitution of the firm where a change occurs in the reconstitution of
the firm. Otherwise, the old firm remains the same. The dissolution and
reconstitution of a partnership are two different legal concepts. The dis-
solution put an end to the partnership, but reconstitution keeps it subsist-
c
ing, though in another form. [565-C]

Tyreso/es (India) v. Commissioner of Income Tax, (1963) 49 ITR 515
and Commissio11er of I11cori1e Tax v. Pigat Cltampan & Co., AIR (1982) SC
1085, relied on. D
4. Rules 3, 4, 6 and 17 and Forms "A", "E", "G" and "H" show that
there is a definite distinction between the Certificate of Registration given
to the firm and any alterations to be entered in the Register of Firms. This
will suggest in no uncertain terms that the changes in the constitution of
the firm will not affect the registration once made. In other words, it is not E
required that every time a new partner is inducted, fresh registration has
to be applied and obtained. However, information about changes have to
be given. Failure to comply attracts penalties under Section 69-A of the

- Act. [566-D-E]

1 Maddi Sudarsanam v. Borogu Visltawanadham Brothers, AIR (1985)
AP 12; Girdhamial Kapur Chand v. Dev Raj Madan Gopal, [1964) 1 SCR
F

995, relied on.

Pratapchand Ramchand & Co. v. Jehangirji Boma11ji Chinoy, AIR
(1940) Born 257; Tapendra Clnmder Goopta v. Joge11dra Chw1der Goopta, G
AIR (1942) Cal 76; Durga Das Janak Raj v. Preete Shah Sallt Ram, AIR
(1959)Punj. 530 andKesrimal v.Da/ichand, AIR (1959) Ra,j.140, approved.

5. Section 69(3)(a) of the Central Act enables the partners of both
registered and unregistered firms to file a suit fo1· dissolution and/or H
546 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A accounts. By introducing sub-section (2-A) in Section 69, the Maharashtra
Legislature has placed certain restrictions to the extent that even the suit
for dissolution of a firm or for accounts, the suit can be filed only if the
firm is registered and the 'person' suing as a partner is shown in the
Register of Firms as a partner in the firm. In other words, a person, who
B is not shown in the Register of Firms by induction after registration even
though the firm is registered, cannot file a suit for dissolution or accounts.
This does not in any way mean that the registration given to the firm
earlier will cease. In this case, the firm was registered and there was only
a reconstitution of the firm and the first re~pondent, the plaintiff in this
case, is a person whose name is shown in the Register of Firms along with
c the names of the appellants and, therefore, there is compliance of Section
69(2-A). [569-E·F]

Madho Prasad v. Gauli Dutt Ganesh Lal, AIR (1939) Pat. 323; Minak-
. shiAchi v. P.S.M. Subramaniam Chettim; AIR (1957) Mad. 8; Gawi Shankar
D Shroff v. Central Hindustan Bank Ltd., AIR (1959) Cal 262; Nandlal Sohan-
lal v. Commissioner of Income Tax, AIR (1977) P & H 320, distinguished.

6. It is not possible to accept the argument that if the definition of
E Section 4 is applied to Section 69(2-A) then unless the names of all' the
partners find a place in the Register of Firms, the suit filed by the plaintiff
cannot be sustained. The facts that the firm was registered and the
plaintiff's name finds a place in the Register of Firms are not in dispute.
The name of the newly introducted partners, of course, does not find a place
in the Register of Firms. That means the person whose name does not find
F a place in the Register of Firms may incur certain disabilities and that will
not disable the plaintiff to press the snit against the firm, which was
registered against the persons whose names find a place in the Register of
-
Firms. It is not necessary to decide what the disabilities of the person,
whose name does not find a place in the Register of Firms. For the purpose
G of Section 69 (2A), the partnership firm will mean the firm as found in the
certificate of registration and the partners as found in the Register of' Firms
maintained as per rule in Form "G". The present suit being one for dissolu-
tion accounts by one of the partners, whose name admittedly finds place in
the Register of Firms along with the names of all the appellants, the re-
ttuirements of Section 69(2-A) are satisfied. Section 4 of the Act is also
H complied with for this limited propose. [570-C-F]
..
SHARAD VASANT KOTAK v. RM. CHAWDA [K. VENKATASWAMI,J.] 547

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8830 of A
1997.

From the Judgment and Order dated 15.7.97 of the Bombay High
Court in A.N. No. 509 of 1997.

R.F. Nariman, P.H. Parekh, Sameer Parekh and Ms. Sunita Sharma, B
for the Appellants.

Soli J. Sorabjee, Ramesh Singh, Parimal K. Shroff, Ms. Bina Gupta,
Ms. Rakhi Ray and Pritesh Kapur for the Respondents.

The Judgment of the Court was delivered by c
K. VENKATASWAMI, J. Leave granted.

This appeal by special leave has arisen under the following cir-
cumstances :-:
D
The appellants are the partners of a suit firm called 'M/s Paramount
Builders'. The partnership was entered into on 29.11.1979 with the follow-
ing individuals as partners :

S. No. Name of Pmt11e1~· Share
'E
1. Shri Sharad Vasant Kotak 15%

2. Shri Dilip Vasant Kotak 15%

3. Shri Anil Dhirendra Kotak 15%
• F
4. Smt. Hemkuver Vasant Kotak 15%

5. Smt. Lilavati D hirendra Kotak 15%

6. Shri Mohanlal Hinji Chawda 12112%
G
7. Shri Ramniklal Mohanlal Chawda 12112%

The said partnership firm was registered on 15.12.1980 under
Registration No. 158675 with the Registrar of Firms. On 6.5.1986, Shri
Mohanlal Hinji Chawda, a partner of the firm (Sr. No. 6 above) died and
in his place, his widow Smt. Jijiben Mohanlal Chawda was admitted as a H
548 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.

A partner in the firm. After the admission of the said Smt. Jijiben Mohanlal
Chawda, another deed of partnership was made consisting of the old six
partners and the newly admitted partner Smt. Jijiben Mohanlal Chawda.
As a matter of fact, the induction of the new partner was not brought to
the notice of the Registrar of Firms by forwarding the required particulars.
It is on record that still later on 3.11.1992 another partnership deed was
B brought into existence consisting of the same partners. It is also on record
that yet another partner Smt. Hemkuver B. Kotak (S.No. 4 above) died in
September, 1994. The fact of death of this partner also was not intimated
to the Registrar of Firms. While so, the 1st respondent gave a notice of
dissolution of the firm to the appellants and also filed a suit for the
C dissolution of the partnership firm bearing suit No. 5016/94 on 15.12.94 in
the High Court of Judicature at Bombay on the original side. Initially in
the plaint, the constitutional validity of Section 69(2A) of the Indian
Partnership Act (hereinafter called the "Act"), as amended by Maharashtra
Act, was not raised. The 1st respondent moved a Chamber Summon No.
D 301/97 seeking permission of the Court to carry out certain amendments
to the plaint. Briefly, the amendments sought were that subsequent changes
and/or modifications in the partnership deed of M/s. Paramount Builders
under the deed of partnership dated 20.10.1986 and also in the deed of
partrnership dated 3.11.1992 are merely in the nature of changes and/or
modifications which do not affect registration of the said firm of Mis
E Paramount Builders, as required under the Act, for entitling a partner to
institute a suit for reliefs against the partners on dissolution of firms and
alternatively, the other amendment sought was to challenge the vires of
Section 69(2A) of the Act as in force in the State of Maharashtra.

F The amendment sought was seriously opposed by the appellants inter
alia contending that the suit as filed was not maintainable and, therefore,
the amendment cannot be allowed. In other words, according to . the
appellants on and from 20.10.1986 when a new partnership deed was made,
the registration already given to the firm ceased to have validity and the
partnership as at present must be deemed to be an unregistered one and,
G therefore, the suit was hit by Section 69(2A). It was also contended that
without impleading State of Maharashtra and Union of India, the vires of
Section 69(2A) in the Partnership Act cannot be challenged. The learned
trial Judge accepting the objections raised by the appellants found that
Section 69(2A) of the Act creates a bar on the threshold of the filing of
H the suit for the relief covered in the suit and the very suit filed by the
SHARAD VASANT KOTAK v. R.M. CHA WDA i.K. VENKATASWAMJ,J.] 549

plaintiff was incompetent. That being the position, the application for A
amendment could not be permitted. Consequently, the application was
rejected.

Aggrieved by the rejection of the amendment appliGation, the first
respondent preferred an appeal to the Division Bench of the High Court
in Appeal No. 509/97. B

The appellate court was of the view that the registration of the firm
continues to be in force notwithstanding any reconstitution of the firm and
even when dissolution takes place, the registration of the firm continues.
The Division Bench further held that Section 69(2A) requires the registra-
tion of a firm and it does not require a fresh registration each time a
c
reconstitution or dissolution of the continuing firm takes place. After
finding that the suit filed by the first respondent was not hit by Section
69(2A), the Division Bench held as follows :-

"The proposed amendment consists of two parts. The first part is D
only a factual aspect which has been sought to be introduced in
order to demonstrate that the bar under Section 69(2A) is not
attracted. There is no reason as to why such an amendment should
not be granted. The second part of the amendment pertains to the
constitutional challenge of the validity of Section 69(2A). As we
have already taken a view that Section 69(2A) is not attracted, the E
question of challenge does not survive and, therefore, it is not
necessary to grant the amendment containing constitutional chal-
lenge."

Ultimately the appellate court allowed the appeal and permitted the
F
amendment only regarding the factual· portions and not regarding the
constitutional validity of Section 69(2A).

Aggrieved by the judgment of the Division Bench, the appellants
have preferred this appeal by special leave.
G
. In this appeal, the following substantial question of law arises for our
consideration :-

''Whether on the facts of this case the suit for dissolution and
account of partnership is hit by Sec. 69(2A) of the Act as amended
in the State of Maharashtra''. H
550 SUPREME COURT REPORTS 11997] SUPP. 6S.C.R.

A For answering the question, it is necessary to set out the relevant
provisions of the Act as amended in the State of Maharashtra, which are
given below :-

"4. Definition of "partnership". "Partnership" is the relation
between persons who have agreed to share the profits of a business
B carried on by all or any of them acting for all.

"Partner" "firm" and "firm-name"

Persons who have entered into partnership with one another
are called individually, "partners" and collectively "a firn°i", and the
c name under which their business is carried on is called the "firm-
name".

17. Rights and duties of partners after a change in the firms.
Subject to contract between the partners -
D (a) where a change occurs in the constitution of a firm, the
mutual rights and duties of the partners in the reconstituted firm
remain the same as they were immediately before the change, as
far as may be;

E (b) ............................................................................................ ;

(c) ···························································'································

CHAPTER V
F
Incoming and outgoing partners

31. Introduction of a partner. (1) Subject to contract between the
partners and to the provisions of Section 30, no person shall be
introduced as a partner into a firm without the consent of all the
G existing partners.

(2) ~ubject to the provisions of Section 80, a person who is
introduced as a partner into a firm does not thereby become liable
for any act of the firm done before he became a partner.

H
SHARAD Y ASANT KOTAK v. R.M. CHAWDA [K. YENKATASWAMI,J.] 551

CHAPTER VI A
Dissolution of a firm

39. Dissolution of a firm. The dissolution of a partnership between
all the partners of a firm is called "dissolution of the firm''.

B

CHAPTER VII
Registration of Firms

58. Application for registration. (1) [Subject to the provisions of
sub-section (lA), the registration of a firm] effected by sending by
c
post or delivering to the Registrar of the area in which any place
of business of the firm is situated or proposed to be situated, a
statement in the prescribed form and accompanied by the
prescribed fee [and a true copy of the deed of partnership]
stating :- D

(a) the firm-name,

[(aa) the nature of business of the firm;]

(b) the place or principal place of business of the firm, E
(c) the names of any other places where the firm carries on
business,

(d) the date when each partner joined the firm,
F
( e) the names in full and permanent addresses of the
partners, and

(f) the duration of the firm.

The statement shall be signed by all the partners, or by their
G
agents specially authorised in this behalf.

[(IA) The statement under sub-section (1) shall be sent or
delivered to the Registrar within a period of one year from the
date of constitution of the firm : H
552 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A Provided that in the case of any firm carrying on business on
or before the date of commencement of the Indian Partnership
(Maharashtra Amendment) Act, 1984, such statement shall be sent
or delivered to the Registrar within a period of one year from such
date).

B (2) Each person signing the statement shall also verify it in the
manner prescribed.

(3) .:.............. :.................................................................................... .

(4) ..................................................................................................... .
c
59. Registration [(1)) When the Registrar is satisfied that the
provisions of section 58 have been duly complied with, he shall
record an entry of the statement in a register called the Register
of Firms, and shall file the statement. [On the date such entry is
·recorded and such statement is filed, the firm shall be deemed to
D
be registered.)

[(2) The firm, which is registered, shall use the brackets and
word "(Registered)" immediately after its name.[

63. Recording of changes in and dissolution of a firm. (1) When a
E
change occurs in the constitution of a registered firm, (every)
incoming, continuing or outgoing partner, and when a registered
firm is dissolved, (every) person who was a partner immediately
before the dissolution, or the agent of (every) such partner or
person specially authorised in this (shall, within a period of 90 days
F from the date of such change or dissolution, give notice to the
Registrar of such change or dissolution, specifying the date there-
of;) and the Registrar shall make a record of the notice in the entry
relating to the firm in the Registrar of Firms and shall file the
notice along with statement relating to the firm filed under section
59.
G
[(IA) Where a change occurs in the constitution of a registered
firm, all persons, who after such change are partners of the firm,
shall jointly send an intimation of such change duly signed by them,
to the Registrar, within a period of 90 days from the date of
H ' occurrence of such change and the Registrar shall deal with it in
SHARADVASANTKOTAKv. R.M. CHAWDA[K. VENKATASWAMl,J.) 553
the manner provided by section 61.) A'

(2) .................................................... ..

69. Effect of non-registration. (1) No suit to enforce a right
arising from a contract or conferred by this Act shall be instituted
in any Court by or on behalf of any person suing a partner in a B
firm against the firm on 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 : '
c
[Provided that the requirement of registration of firm under
this sub-section shall not apply to the suits or proceedings in-
stituted by the heirs or legal representatives of the deceased
partner of a firm for accounts of the firm or to realise the property
of the firm.)
D
(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 ~egistered and the persons suing are or
have been shown in the Register of Firms as partners in the firm.
E
(2A) No suit to enforce any right 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 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 have been a partner in the F
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 :

Provided that the requirement of registration of firm under this
sub-section shall not apply to the suits or proceedings instituted
by the heirs or legal representatives of the deceased partner of a G
firm for accounts of a dissolved firm or to realise the property of
a dissolved firm.]

(3) ............................... .'...................................................................... .
H
554 SUPREME COURT REPORTS 11997) SUPP. 6 S.C.R.

A [69A. Penalty of contravention of sections 60, 61, 62 or 63. If any
statement, intimation or notice under sections 60, 61, 62 or 63 in
respect of any registered firm is not sent or given lo the Registrar,
within the period specified in that section, the Registrar, may, after
_giving notice to the partners of the firm and after giving them a
reasonable opportunity of being heard, refuse to make the suitable
B amendments in the records relating to the firm, until the partners
of the firm pay such penalty, not cx.:ccding ten rupees per day, as
the Registrar may determine in respect of the period between the
date of expiry of the period specified in sections 60, 61, 62 or as
the caM; may be, 63 and the date of making the amendments in
c the entries relating to the firm. J

Rule 3. Forms of Statements. -- The Statements required to be
sent or delivered to the Registrar under sections 58 and 60 of the
Act shall, respectively, be in Forms "A" and "B" and be verified in
the manner as laid down in the footnotes to the respective Forms.
D
'Rule 4. Forms of intimation and nolice. -- Intimations and notices
which arc required to be given under sections 61, 62 and 63 of the
Act shall, respectively, be given in Forms "C", "D", "E" and "F" and
be verified in the manner set forth in the footnotes to the respective
Forms.
E
Rules 6. Form of Register. -- The Register shall be maintained in
Marathi in Form "G" and a separate page shall be devoted to each
firm. The pages, after the entries are made, shall be bound in
proper permanent registers in the order of the consecutive number
allotted to each firm on registration. Every entry in Register shall
F be signed by the Registrar.

Rule 17. Certificate of Registration. -- Where a firm is registered
under section 59 of the Act, the Registrar shall issue a certificate
in Form 'H'.

G Form 'A'
Application for Registration of Firms
(See rule 3)

We, the undersigned, being partners, hereby apply for registra-
H tion as a firm and for that purpose supply the following particulars
SHARADVASANTKOTAK v. R.M. CHAWDA[K VENKATASWAMU.[ . 555

pursuant to section 58 of the Indian Partnership Act, 1932 : -- A

(a) Firm Name

(b) Nature of business of the firm Place

( c) Principal place of business of the firm Taluka District B
( d) Names of any other places where the
firm carries on business in the above name.

(e) Names in full and permanent address
(residential) of all the partners. c
(f) Date on which each partner joined the firm.

(g) Duration of the firm. In case there is any
provision made by contract for the duration
of the partnership or for the determination of D
the partnership, please state the provisions
briefly. If no such provision is made, words
"AT WILL" may be stated.

Note l. - For the registration of each Firm a separate applica-
E
- .
tion is necessary. Accordingly the applicants should apply in this
application only particulars of the Firm in respect of which the
application is made. This applies to the case of the same persons
carrying on business in partnership under different Firm names.

Note 2. - Against items ( c) and ( d), the exact location of the
place should be given.
F

Note 3. - This application must be signed by all partners or
their agents specially authorized in this behalf on solemn affirma-
tion before a Magistrate or other officer duly empowered to
administer Oaths. G
Note 4. - Making a false, untrue, or incomplete statement is
punishable under section 70 of the Indian Partnership Act, 1932.

(h) In case there are any minors admitted to the benefits of
partnerships :- H
556 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A Name & Name & Date of Date when
Address of Address of admission to he/she will attain
Minor Guardian benefits majority
(1) (2) (3) (4)

B

We are sending the prescribed registration fee by cash/money order.
We the abovenamed, solemnly affirm that what is stated in paragraphs is
true to our own knowledge and that what is stated in the remaining
C paragraphs is stated on information and belief, and I/We believe the same
to be true.

We also declared on solemn affirmation that up to the date of
submission of this application there has not been any change whatever in
any of the particulars aforesaid.
D
Solemnly affirmed at

Dated this ................................. day of... ....................................... ..
(1)
(2)
E (3)
(4)
(5)
Name and Signatures

Certified that the persons who have signed the application have
F signed in my presence and have solemnly affirmed that the particulars
furnished therein are true.

Name of Attesting Witness

Designation
G
Address

And Seal, if available

Before me
H (Price Re. 1)
SHARADVASANTKOTAKv. R.M. CHAWDA iK VENKATASWAMl,J.] 557

FORM 'E' A

INDIAN PARTNERSHIP ACT, 1932

Notice of change of Constitution or Dissolution of Firm
•
(See rule 4) B
FIRM REGN. NO. and DATE

Firm Name ............................................................................................... .

Regi.~tered Address ................................................................................ .
c
Partners in the above named firm

We, being agents of a partner in the abovementioned firm persons
specially authorised by a partner iri the above mentioned firm to
give notice in this behalf hereby give notice that
D
(a) the constitution of the firm has changed as follows :

(1) Mr./Messrs ...................... of .................................. has/have joined
the firm as new partner/partners on

(2) Mr./Messrs ...................... of .................. .. has/have retired as E
partner/partners of the firm with effect
froin ............................................................ .

(b) the said firm has been dissolved on ............................................. .

I/We ................... the abovenamed ....................... solemnly affirm F
that what is slated in paragraphs .................... is true to my/our own
knowledge, and that what is stated in the remaining para-
graphs .............. is stated on information and belief, and I/We belief
the same to be true.
G
I/We declare on solemn affirmation that up to the date of
submission of this application there has not been any change in
any of the particulars previously intimated save and except the
change notified above.

Solemnly affirmed at : H
,
558 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A Dated this ............... day of ............. 19 ......... .

Name and Signatures -
(1)
(2)
(3)
B
Certified that the pt:,rson who has signed this notice has signed
it in my presence and he has solemnly affirmed that the particulars
furnished therein are true.

In the case of person not conversant with the English language,
c the contents of the above particulars have been explained to him
in a language familiar to him and he has affirmed the truth thereof.

Signature.

Note 1. - Please strike out item (a) or (b) whichever is not
D applicable.

Note 2. - Please give dates according to the English Calendar.

Note 3. - In case there is only one person left then the firm should
be ..:onsidered as dissolved and the form should be filkd in accord-
E ingly.

Note 4. - This notice must be signed by every partner or his agent
specially authorised in this behalf on solemn affirmation before a
Magistrate or other Officer duly empowered to administer Oaths.

F (Price Re. 1)

FORM 'G'

(See rule 6)
G Register of firms

Firm No ................. .
,

H Name: ......................................................................................................... .
SHARAD VASANT KOTAKP. R.M. CHAWDA[K. VENKATASWAMU.] 559

Business: A

Number of Date of Nature of Remarks·
Entry Entry Entry

B

c
FORM 'H'
(See rule. 17)

Certificate of Registration
D
(National Emblem)

The Indian Partnership Act, 1932
(Act No. IX of 1932)

Registration No ........................... . E
It is certified that a firm by name ................ with its head office
at .................... has this day been duly registered under the Indian
Partnership Act, 1932 (Act No. IX of 1932).

Given under my hand this F
day of ................ 19 ... .

Registrar/Assistant Registrar of Firms
Bombay, Fune, Nagpur, Aurangabad.

G

Before proceeding further. we remind ourselves that we are
concerned with a suit filed hy a partner for <lissolution and accounts. No
third party rights or liabilities are involved in the present ;;uit file<l by
respondent no. 1. H
560 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.

A Undoubtedly counsel on both sides addressed arguments covering
larger questions. But we propose to confine ourseives strictfy to the facts
of the case and decide the controversy without touching upon the larger
issues or connected issues arising out of the pleadings because the
maintainability of the suit is the sole issue based on Section 69(2A) of the
Act.
B
Section 69(2A) (extracted above) requires two conditions before a
partner can sue for dissolution of a firm and for accounts :

l. The firm must be registered.
c
2. The person suing is or has been shown in the register of firm as
partner in the firm.

It is not in dispute that the partnership, as entered into under a deed
dated 28.11.1979, was duly registered and a certificate of registration was
D granted. It is al'io an admitted fact that the plaintiff, first respondent herein,
was one of the founder partner under the deed dated 28.11.1979 and his
name did find a place in the register of firm as a partner and there is
nothing to show that at any point of time, his name has been removed from
the register of lirm. We have seen that on the death of one of the partners,
E his widow was inducted into the partnership and a deed was entered into
on 20.10.1986, repealing almost all the clauses in the partnership deed
dated 28.11.1979 except for consequential changes necessitated by the
induction of new partner in the place of deceased partner.

It is the contention of learned senior counsel, Mr. Nariman, that
F when the new partner was inducted under the partnership deed dated
20.10.1986 in the place of the deceased partner, the firm registered under
the partnership deed dated 28.11.1979 ceases to be on the records of
register of firm and, therefore, the registration already given will not ensure
to the benefit of the partnership entered on 20.10.1986. If that be so,
G according to Mr. Nariman, learned senior counsel, the conditions impos;;:d
by Section 69(2A) arc not satisfied and, therefore, the suit as filed W<•.s not
maintainable.

In support of his argument, he placed strong reliance on the
expression 'partnership' as defined in Section 4 of the Act. It is the
H contention of Mr. Nariman that bearing in mind the definition in Section
SHARADVASANTKOTAKv. R.M.CHAWDAIK VENKATASWAMJ,.l.J 561

4 of the Act, the partners including second respondent will collectively be A
a firm and that firm is not registered inasmuch as the name of the second
respondent docs not fin.d a place in the Register of Registrar of Firms.
Therefore, the learned S.ingle Judge was right in holding that the suit was
not maintainable at the threshold. According to the learned senior counsel,
the mere fact that the plaintifPs name find a place in the Register of B
Registrar of Firms is not sufficient to maintain the suit when admittedly
one of the partner's name (second respondent's name) was not shown in
the Register of Re;,oistrar of Firms. He also contended that a comparison
of language employed in Sections 31 and 32 of the Act, will show that
whenever a partner is inducted into an existing firm, the old firm ceases to
exist and an altogether new firm comes into existence from the date of
c
induction of the new partner and that new firm must get fresh registration.
In support of this proposition, he placed reliance on Madho Prasad and
Othm· v. Gowi Dutt Ganesh Lal, AIR (1939) Patna 323; Meenakshi Achi
and Another v. P.S.M. S11brama11ian Chettiar and Others, AIR 1957 Madras
8 and Gouri Sankar Sherojf and Others v. Ce11tral Hi11d11stan Bank Ltd. and D
Others, AIR 1959 Calcutta 262. He also submitted that the partners entered
into another deed on 3.11.1992 and they have expressly treated the firm as
reconstituted one. In other words, according to the learned. senior counsel,
the deed dated 20.10.86 in the absence of such expressi"\ri: (reconstituted
firm) the understanding was the old firm, ceases to be in existence and a E
new lirm was brought into existence. For this, he also placed reliance on
clauses 4 and 5 regarding 'Commencement' and 'Accounting Year'. He also
placed reliance on a passage from Lindley on the Law of Partnership, 15th
Edition, page 374 :
F
"Each partner is, it is true, the agent of the firm; but as before
pointed out, the firm is not distinguishable from the persons from
time to time composing it; and when a new member is admitted
be becomes one of the firm for the future, but not as from the
past, and his present connection with the firm is no evidence that
he ever expressly or impli::dly authorised what may have been done G
prior to his admission. This is wholly consistent with the fact that
after the admission of a new member, a new partnership is con-
stituted, and thus special circumstances are required to be shown
before the debts and liabilities of the old partnership are treated
as having been undertaken by the new partnership." H
562 SUPREME COURT REPORTS I L997] SUPP. 6 S.C.R.

A Contending contrary and supporting the judgment of the Division
Bench, Mr. Soli J. Sorabjee, learned Senior Counsel, submitted that there
is a well-recognised distinction between the legal concept of dissolution
and reconstitution or a firm. In the case of an incoming or an outgoing
partner in an existing firm, there is only a reconstitution of the firm and in
B all other respects, the existing firm continues with old and new partners.
A look at Chapter V of the Act, according to him, will fortify the above
contention. In other words, Chapter V deals with "Incoming and Outgoing
partners" while Chapter VI separately deals with "Dissolution of a Firm''.
The two are totally different concepts and cannot in law be equated with
C each other. According lo the learned Senior Counsel, the rules framed by
Maharashtra Government in 1989 and the forms prescribed under the rules
in particular Forms E, G and H clearly support the said contention. It is
_jlso his contention that even when there is a dissolution of a firm, it does
· not cease to be registered firm but for the purposes of Partnership Act it
D continues to be registered. In other words, according to the learned Senior
Coun~e!; ·the registration of a firm is valid till it is cancelled in a manner
known lo law. Non-compliance of Sections 61, 62 and 63, as amended in
Maharashtra; if at all, will attract the penalties prescribed under Section
69A and nothing more and it is incorrect to contend that non-compliance
E of the said provisions will result in deregistration of the firm. As the
consequence of deregistration is a drastic one, it is impermissible to hold
that_ non-compliance with Sections 63(1) and 63(1A) would lead to
deregistration of a firm in the absence of express and clear lei,>islative
provision to that effect. He further contended that merely because another
F partnership deed was made on 20.10.1986, it cannot be said that there was
...
a dissolution of the old firm and consequential formation of a new firm
under the latter deed. According to the learned Senior Counsel, it is the
substance of the matter that is relevant to be looked into and not the
phraseology employed by the parties. In other words, the test is whether
...
G after the execution of the deed dated 20.10.1986, for all intents and pur-
poses, the firm as reconstituted was a different unit or remained the same
unit in spite of change iri its constitution. Looked at from this angle, the
unit remained the same as it originally was in spite of change in its
constitution and the contention to the contrary, according to the learned
H Senior Counsel, was not correct. To support this, he pointed out the
· SHARADVASANTKOTAKv. R.M. CHAWDA IK. VENKATASWAMl,J.J 563

similarities between the two deeds. The alleged dissimilarities as found in A
Clauses 4 and 5 of the Document dated 20.10.1986 are really not dis-
similarities but consequential and incidental changes.

In support of .his contentions, he placed reliance on the following
judgments of this Court and other High Court~ :
B
Commissioner of Income-Tax, West Bengal v. A. W. Figgies & Co. and Others,
(1954] 5 SCR 171; Mis. Wazid Ali Abid Ali v. C.J.T Lucknow, (1988] Supp.
SCC 193; Tyresoles (India) Calrntta v. Commissimier of Income-Tax, Coim-
batore, [1963] Vol. 49 ITR 515; Finn Girdhar Mal Kapur Chand v. Finn Dev
Raj Madan Gopal, [1964] l SCR 995; Pratapchand Ramchaml & Co. v. C
Jehangi1ji Bomanji Chinoy, AIR (1940) Bombay 257; Tapendra Clumder
Goopta v. Jogendra Clmnder Goopta and Others, AIR 29 (1942) Calcutta

.. ~
76; Messrs. Durga Das Janak Raj v. Messrs. Preete Shah Sam Ram, AIR
1959 Punjab 530; Bharat Smvodaya Mills Co. Ltd. Ahmedabad v. Ms.
Mohatta Brothers a Finn, AIR (1969) Gujarat 178 and Ke.1·1i111al and
Another v. Daliclwnd and Others, AIR (1959) Rajasthan 140. D
In reply to the contention of Mr. Nariman that the purpose for which
Section 69(2A) was introduced by Maharashtra legislature will be the last
if the view projected by him is not accepted, Mr. Sorabjee submitted that
f~ilure to comply With the mandatory provisions in Sections 61, 62 or 63 E
may attract the penalties provided under Section 69 A of the Act but not
the deregistration of the firm. In support of this, he placed reliance on a
judgment of the Andhra Pradesh High Court in Maddi S11da1wna111 and
Othe1:1· v. Botogu Viswanadlwm Brothers, AIR 1955 Amlhra 12.

At the outset, we would like to deal with the substance of the F
Partnership Deeds in this case. As noticed earlier, the first Deed of
Partnership was entered into on 29.11.79 and that partnership firm was
registered on 15.12.80. One of the partners (Shri Mohanlal Hinji Chawda)
died on 6.5.86 and in his place, his widow was inducted. The second Deed
of Partnership was drawn on 20.10.86. By reason of the second Deed of G
Partnership, can it be said that the existing firm dissolved or ceased. It is
relevant here to note that in both the deeds ii was expressly made that the
death, insolvency or retirement of any partner shall not dissolve the
partnership firm. On the other hand, the partner .shall be entitled to carry
on the partnership business on the terms and conditions mutually agreed H
•
564 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.

A upon by the said partners (vide Clause 11). Therefore, it cannot be
contended by the appellants that by reason of death of one of the partners,
the existing firm stands dissolved. Can it then be said that by reason of
inducting the widow of the deceased partner the existing registered firm
ceased and totally a new partnership firm came into existence. According
B to the appellants, by reason of Clauses 4 and 5 in the second Deed of
Partnership, it must be deemed that the old partnership ceased and entirely
a new partnership firm was found under the second Deed. We are unable
to agree with the contention of the learned senior counsel for the
appellants on this aspect. Clauses 4 and 5 relate to commencement of the
C partnership and accounting year. These are mini1pal changes introduced in
the second Deed of Partnership by reason of the introduction of a new
partner in place of Clauses 4 and 5 in the first Partnership Deed and in
other respects, namely, the name of the partnership firm, the address and
location of the firm, the business carried on and shares allotted among the
partners and duration of the partnership, are identical. Moreover a careful
D reading of clauses 5 of and 6 of the second partnership deed will give an
impression that the partners have agreed lo continue the existing firm. The
profits or losses for the period prior to and up to the death of deceased
partner is dealt with and provided. There is no indication that the old firm
was dissolved. Likewise, reliance placed on the recitals in the third Deed
E of Partnership drawn on 3.11.92 will not come to the help of the appellants.
Learned counsel for the appellants placed reliance on the term used in tlie
third Partnership Deed reconstituted in the Preamble portion. We are of
the opinion that this does not make any substantial diffen,nce when we
look into the substance of the three deeds. In this connection, the learned
counsel for the respondents has rightly placed reliance on the following
F
observations made in Tyresoles (India), Calcutta (supra).

"In our opinion, the test of the pudding is in the eating and the
true scope of the instrument can readily be ascertained from what
actually happened instead of merely depending upon expressions
G which the parties might have under some mistaken notion loosely
used."

Likewi~e, this Court in A.W. Figgies & Co. and Ors. (supra) at page
177 observed on a construction of two documents of partnership as
H follows:-
•
SHARADVASANTKOTAKv. RM.CHAWDA(K. VENKATASWAMLJ.] 565

"To all intents and purposes the firm as reconstituted was not a A
different unit but it remained the same unit in spite of the change
in its constitution."

We are, therefore, of the view that the existing firm continued.

The contention of the learned counsel for the appellants that the B
induction of the new partner will result in dissolution of the firm is not also
acceptable. Reliance placed on the language of Sections 31 and 32 of the
Act to support the said contention will be of no avail if we look into Section
17 of the Act. Section 17( a) of the Act (extracted above) suggests only
reconstitution of the firm where a change occurs in the constitution of the C
firm. Otherwise, the old firm remains the same. Here we can usefully quote
the passages from the judgments of this Court and other High Courts.

In Tyres oles (India), Calcutta (supra) a Division Bench of the Madras
,. High Court observed thus :
' D
"The dissolution and reconstitution of a partnership are two dif-
ferent legal concepts. The dissolution puts an end to the partner-
ship, but reconstitution keeps it subsisting, though in another form.
A dissolution followed by some of the erstwhile partners taking
over the assets and liabilities of the dissolved partnership and E
forming themselves into a partnership is not reconstitution of the
original partnership. The partnership formed after the dissolution
is a new partnership and not a continuation of the old partnership,
for it would be a contradiction in terms to say that what ceased to
exist was continued. A reconstitution of a firm of partnership F
necessarily implies that the firm never became extinct. What it
denotes is a structural alteration of the membership of the firm,
by addition or reduction of members, and an incidental redistribu-
tion of the shares of the partners."
•
To the same effect, this Court in Commissioner of Income-tax, West G
Bengal-III v. M/s. Pigat C/1ampa11 & Co., AIR (1982) SC 1085 observed as
follows :

"The principle is well settled that it is on examination of relevant
documents and relevant facts and circumstances that the Court has H
566 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A to be satisfied in each case as to whether there has been a
succession or a mere change in the constitution of the partnership.
It cannot be disputed that 'dissolution' and 're-constitution' are
two distinct legal concepts, for, a dissolution brings the partnership
lo an end while a reconstitution means the continuation of the
B partnership under altered circumstances but in our view in law
there would be no difliculty in a dissolution of a firm being followed
by the constitution of a new firm by some of the erstwhile partners
who may take over the assets and liabilities of the dissolved firm."

c the firstThePartnership
next question is whether Lhe registration given to the firm under
Deed ceases when a new partner was introduced into
the firm. For this, we refer lo Sections 58, 59 and 63, the relevant portions
have already been extracted. Rules 3, 4, 6 and 17 have also been extracted.
The forms prescribed in this connection have also been extracted. A close
perusal of these provisions with Forms "A", "E", "G" and "H" will show that
'D there is a definite distinction between the Certificate of Registration given
to the firm and any alterations to be entered in the Register of Finns. This
will suggest in no uncertain terms that the changes in the constitution of
the firm will not affect the registration once made. In other words, it is not
required that every time a new partner is inducted, fresh registration has
E to be applied and obtained. However, information about changes have to
be given. Failure to comply attracts penalties under Section 69A of the Act.
In this context, the judgment in Maddi Sudm:rnnam (supra) can be usefully
cited. It was held that :-

F "The second 'condition laid down in Section 69(2) is also satisfied.
The persons now suing i.e. the present partners are shown in the
Register of Firms as partners of the firm, though the same Register
shows two other partners, one of whom died and than other retired.

G
It may be that the fact of retirement of one of the partners and
the death of another should have been notified to the Registrar
under Section 63(1) as the said events effected change in the
constitution of the firm. But the default made by the firm is not,
-
in not so notifying, of any relevance in considering the question of
the maintainability of the suit under Section 69(2). There is the
essential distinction between the constitution of a firm and its
H dissolution. Non-compliance with the provisions of S. 63(1) may
SHARAD VASANTKOTAK v. R.M. CHAWDA [K VENKATASWAMI,J.] 567

have other consequences, but under S. 69(2) only two conditions should A
be complied with by a firm to enforce a right arising from a contract
and those two conditions are complied with in the present case.

The above view is supported by the decisions of this Court and
various other High Courts. In Fi1111 Girdhar Mal Kapur Chand (supra), this
Court held that "once there was registration under the Indian Partnership B
Act that registration, in our opinion, continues to operate as registration
under that Act and continues to be effective - in other words, valid
registration in the eye of law as administered in India so long as the
registration is not cancelled in accordance with law."
c·
In Pratapchand Ramclzand & Co. (supra), the Bombay High Court
observed as follows :

- "Dealing in particular with S.63(1), that sub-section among other
things provides that when a registered furn is dissolved any person
who was a partner immediately before the dissolution, or the agent
of any such partner or person specially authorized in this behalf,
may give notice to the Registrar of such change or dissolution,
D

specifying the date thereof, and the Registrar shall make a record
of the notice in the entry relating to the firm in the Register of
Firms, and shall file the notice along with the statement relating E
to the firm filed under S.59. Pausing there, that Section evidently
contemplates in the case of a dissolution of a firm by death that
notwithstanding the death the firm should still be treated for the
purpose of the Act as still registered. Mr. Davar has argued that
by reason of the death and the dissolution of the firm the firm F
ceased to be registered, and in his argument he went so far as to
say that the firm ought to have been registered again. No doubt it
would have been logical having regard to S.42 if the Act had so

- provided. But in fact it has not. The Act does contemplate not-
withstanding dissolution by death that so far as registration is G
concerned the firm is to be deemed still to be registered, and it
empowers any person who was a partner immediately before the
dissolution to give notice o0f the change and requires the Registrar
to record that notice in the entry relating to the registration of the
firm and to file it aJo.1g with the original statement which had been H
568 SUPREME COURT REPORTS [1997) SUPP. 6 S.C.R.

A filed. The next Section requiring notice is S.69(2). That is in these
terms:

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
B
have been shown in the register of firms as partners in the firm.

Applying that sub-section to the present case the firm was
registered and in my opinion continued to be registered at the date
of the institution of this suit on 26th' October 1939. There is no
c time limit fixed in any of the Ss.60 to 63 as to when notice of
alterations or changes should be given. Mr. Davar argued that the
word "when" with which each of those Sections begins involves an
obligation upon the person proposing to give notice of the change
to give it immediately upon the change occurring. The Sections do
D not say so. The position therefore, is this : The firm was registered
at the time of the institution of the suit. The firm then consisted
of Chhogamal Dhanaji and Chunilal Idanji, two of the original
partners whose names were shown on the register at the date of
registration and were shown on the register at the date of the
E institution of the suit. The fact that the firm was registered at the
date of the institution of the suit and that ihc names of the person
suing (the firm being a compendious name for the persons suing)
were shown in the register at the date of the institution of the suit
appears to me to be a compliance with S.69(2) of the Act.

F It would seem that the Legislature introduced the words with
which that sub-section concludes, viz. "and the persons suing are
or have been shown in the Register of Firm as partners in the firm
advisedly. If additional partners had come into the firm as partners

G
since the date of registration and their names had not been entered
on the register in accordance with notice of a change in the
constitution of the firm given to the Registrar, it may well be that
-
the firm as then constituted could not sue, because although it was
a registered firm some of the persons then suing would not be
shown in the Re1,rister of Firms as partners in the firm at the date
H of the suit. That is not this case. The partners who are suing were

•
SHARADVASANTKOTAKv. RM.CHAWDA(K. VENKATASWAMI,J.] 569

shown in the register originally and are still shown, and the firm A
according to my construction of the Act remained registered
notwithstanding the death of one of the original partners."

The above view of the Bombay High Court was followed and applied
by the Calcutta High Court in Jogendra Chunder Goopta (supra), Punjab
B
High Court in M/s. Durga Das Janak Raj (supra) and the Rajasthan High
Court in Kesrimal & Anr. (supra).

In our opinion, the view taken by the Bombay High Court and
followed by the other High Courts is the right view.
c
Learned counsel for the appellants placed strong reliance on the
Objects and Reasons for the amendments introduced in the Maharashtra
Act. According to the learned counsel, if his contention is not accepted,
the object with which Section 69(2A) was introduced will be lost. We do
not think so. In this context, we wish to point out that Section 69(3)( a) of D
the Central Act enables the partners of both registered and unregistered
firms to file a suit for dissolution and/or accounts. That being the position
by introducing sub-section (2A) in Section 69, the Maharashtra Legislature
has placed certain restrictions to the extent that even the suit for
dissolution of a furn or for accounts, the suit can be filed only if the firm E
is registered and the 'person' suing as a partner is shown in the Register
of Firms as a partner in the firm .. In other words, a person, who is not
shown in the Register of Firms by induction after registration even though
the firm is registered, cannot file a suit for dissolution or accounts. This
does not in any way mean that the registration given to the firm earlier will
cease. In this case, the firm was registered and there was only a F
reconstitution of the firm and the first respondent, the plaintiff in this case,
is a person whose name is shown in the Register of Firms along with the
names of the appellants and, therefore, there is compliance of Section
69(2A). The contention to the contrary by the learned counsel for the
appellants cannot be ac;:;epted. G

The decisions cited by the learned counsel for the appellants are
distinguishable. In Madho Prasad and Others v. Gouri Dutt Ganesh Lal
(supra), the principal question that arose for consideration was whether an
incoming partner can be made liable for debts contracted by a firm before H
570 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A he joined it. In Gouri Sankar Sheroff and Othe1:v v. Central Hindustan Bank
Ltd. and Othe1~· (supra), again a creditor's right to proceed against assets
of partnership firm and not a suit by partners for accounts. In Meenakshi
Achi and Another v. P.S.M. Subramanian Chettiar and Othe1:f (supra), again
it was a case concerning the liability of partner for obligations incurred
B before his introduction. Mis. Nan dial Solrnnlal, lullwzdur v. The
Commissioner of Income-Tax, Patiala, AIR (1977) Punjab & Haryana 320
also is not helpful to the appellants.

We are also not impressed by the arguments of the learned counsel
for the appellants that if the definition of Section 4 is applied to Section
C 69(2A) then unless the names of all the partners find a place in the Register
of Firm, the suit filed by the Plaintiff cannot be sustained. The fact that the
firm was registered and Plaintiffs name finds a place in the Register of
Firms are not in dispute. The name of the newly introduced partner, of
course, does not find a place in the Register of Firms. That means the
D person whose name docs not find a place in the Register of Firms may
incur certain disabilities and that will not disable the Plaintiff to press the
suit against the firm, which was registered against the persons whose names
find a place in the Register of Firms. We are not called upon to ~ecide
what are the disabilities of the person, whose name does not find a place
E in the Register of Firms. For the purpose of Section 69(2A), the
partnership firm will mean the firm as found in the certificate of
registration and the partners as found in the register of firms maintained
as per rule in Form 'G'. The present suit being one for dissolution and
accounts by one of the partners, whose name admittedly finds place in the
Register of Firms alongwith the names of all the appellants, the
F
requirements of Section 69(2A) are satisfied. Section 4 of the Act is also
complied with for this limited purpose.

Oilr conclusion is that on the induction of the second respondent,
the existing firm was only reconstituted on the facts of this case and,
G therefore, there is no necessity to get a fresh registration. If by virtue of
non-compliance of certain mandatory provisions in not informing the
Registrar of Firms about the change in the constitution of the firm, certain
penalties provided in the Act alone are attracted and that will not lead to
the conclusion that the registration of the firm ceased. This conclusion is
H based on a conjoint reading of Sections 58-63 and the Forms prescribed
SHARAD VASANT KOTAK v. RM. CHAWDA [K. VENKATASWAMi,1.] 571
thereunder. Further, this conclusion does not in any way militate the object A
of the Maharashtra Amendment introduced by Act 29 of 84.

In the result, we hold that the suit in question is not hit by Section
69(2A) of the Act and, therefore, -the Division Bench is right in allowing
the Appeal. Consequently, the Appeal is dismissed. However, there will be
no order as to costs. B

R.K.S. Appeal dismissed.