Allowed

M/S. Moolamoottil Finance and Kuries v. T.I.George and Another

Kerala HC9 Sept 2009CRP/354/2009

Case brief

AI extract

What is this about?

The court allowed the withdrawal of non-entainable suits filed by an unregistered firm, relying on Supreme Court precedents. Permission to file a fresh suit after registration was granted subject to payment of compensation to defendants.

What did the court decide?

Withdrawal of suits allowed with liberty to file fresh suits upon registration of the firm, subject to payment of Rs. 1500 each to the defendants as compensation.

M/S. Moolamoottil Finance and Kuries Vs… — Contract and Commercial Disputes | Kerala HC (2009)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN WEDNESDAY, THE 9TH SEPTEMBER 2009 / 18TH BHADRA 1931

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CRP.No. 354 of 2009() --------------------I.A.NO.1231/09 IN OS.339/2007 of MUNSIFF COURT,PATHANAMTHITTA

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REVN. PETITIONER: PETITIONER/PLAINTIFF

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M/S.MULAMOOTTIL FINANCE & KURIES, REP. BY MANAGING PARTNER, JACOB THOMAS, MULAMOOTTIL BUILDINGS, MARKET ROAD, KOZHENCHERRY.

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BY ADV. SRI.V.PHILIP MATHEWS

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RESPONDENTS: COUNTER PETITIONERS/DEFENDANTS

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T.I.GEROGE, THADATHIPARAMBIL HOUSE, PALLOM MURI, NATTAKAM VILLAGE, KOTTAYAM TALUK. 2. KUNJOONJAMMA GEORGE, DO. DO.

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ADV. SRI.JACOB P.ALEX FOR R1 & R2

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THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 09/09/2009 ALONG WITH CRP NO. 357 OF 2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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S.S. SATHEESACHANDRAN, J.

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- - - - - - - - - - - - - - - - - - - - - - - - - C.R.P.Nos.354 and 357 of 2009

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- - - - - - - - - - - - - - - - - - - - - - - - - Dated: 9^th September, 2009

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ORDER

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The common petitioner in both these revisions challenges the orders passed by the learned Munsiff, Pathanamthitta dismissing the applications moved for withdrawal of the suits, two in number, instituted against the respondent in the respective revision. Though separate orders are passed by the court below on the application for withdrawal in the respective suits and the defendants in the suits are different, as common question of law is involved, both these revisions, after being heard together are disposed under this common order.

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Facts are not in dispute. Suit was filed by a financing concern, the petitioner, for recovery of money from the defendants in the respective suits, O.S.No.339 of 2007 and O.S.No.453 of 2007. Petitioner/plaintiff laid the suits claiming to be a partnership firm, the registration of which was disputed by the defendants. That contention was, however, pressed into service only after the evidence was recorded and when the case came up for final hearing. Since the firm was not registered and as such the suits liable to fail in view of the bar under Section 69 of the Indian Partnership Act, 1932 (for short

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CRP Nos.354 & 357/09 - 2 -

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'the Act'), the plaintiff moved separate applications in the respective suits seeking permission to withdraw the suits with liberty to file fresh suits. The applications were opposed to by the defendants in the respective suits contending that the request for withdrawal with liberty to file fresh suit is not entertainable. The learned Munsiff, after hearing both sides, was not inclined to accept the case of the plaintiff that the prosecution of the suit by a nonregistered firm was a formal defect and holding that the noncompliance of the mandate for registration of the firm in the matter of suing a third party was fatal to the plaintiff firm, its applications, both of them, were dismissed. Propriety and correctness of those orders are challenged in these two revisions.

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I heard the counsel on both sides. Learned counsel for the petitioner relied on Raptakos Brett & Co. Ltd. v. Ganesh Property [ (1998) 7 S.C.C. 184] and M/s.Haldiram Bhujiawala v. M/s.Anand Kumar Deepak Kumar (AIR 2000 S.C. 1287) to contend that the suit against a third party by a nonregistered firm in respect of a cause of action arising from a breach of a contract which is barred under Section 69(2) of the Act at the most would render the suit as not entertainable from the inception and, so much so, the

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CRP Nos.354 & 357/09 - 3 -

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plaint is liable to be rejected under Order 7 Rule 11 C.P.C. and not dismissal of such suits. Where such a defect is noticed after the institution of the suit, it is submitted by the learned counsel, that the plaintiff is at liberty to seek for withdrawal of the suit with liberty to institute a fresh suit. Learned counsel appearing for the respondents, however, sought to sustain the orders passed by the court below dismissing the suit turning down the request of the plaintiff for withdrawal and liberty to file fresh suit, contending the defect in view of the nonregistration of the plaintiff firm was not formal, but, fatal to the suit claim. I do not find any merit in the submission of the learned counsel for the respondents. Where the suit is not entertainable in view of the nonregistration of the plaintiff firm, from its inception the suit was not entertainable, which means the suit which was received on file was stillborn even if it was prosecuted and evidence let in in the case by the parties. Such a suit is liable to be rejected in view of the bar of the statute interdicting its entertainability, under Order 7 Rule 11 C.P.C. The apex court considering this aspect in

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M/s.Haldiram Bhujiawala v. M/s.Anand Kumar Deepak Kumar

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(AIR 2000 S.C. 1287) has observed that in a case where the firm is not registered on date of suit and the suit is to enforce a right arising

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CRP Nos.354 & 357/09 - 4 -

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out of a contract with a third party in the course of its business, then “it will be open to the plaintiff to seek withdrawal of the plaint with leave and file a fresh suit after registration of the firm subject of course to the law of limitation and subject to the provisions of the Limitation Act.” The apex court has further observed that in such a case exemption of time under Section 14 of the Limitation Act will be available to the plaintiff since the suit has failed because of the defect of nonregistration which falls within the words “other cause of like nature” in Section 14 of the Limitation Act. Such being the present position of law, it is futile to contend that the defect was not formal, but, fatal as held by the court below under the impugned orders in the present cases. It is also submitted by the learned counsel for the petitioner that pursuant to the passing of the impugned orders, now the petitioner firm has been registered and, as such any fresh suit by the petitioner in respect of the claim raised in the previous suit is fully entertainable under law. Having regard to the facts and the circumstances involved and the submissions made, I find the impugned orders are liable to be set aside and the applications moved by the petitioners allowed, but, of course, subject to terms compensating the injury likely to be suffered by the respondents in

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CRP Nos.354 & 357/09 - 5 -

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the respective revisions, the defendants in the respective suits. In spite of the defendants contending in their written statement the petitioner firm was unregistered, the suit claim was prosecuted and it was only after recording of evidence and when the case was came up for final hearing, the applications were moved in the respective suits by the plaintiff for its withdrawal seeking liberty to institute a fresh suit. That being so, such withdrawal and liberty to file fresh suit can be granted only compensating the defendants who had been compelled to defend the suit claims wasting their energy and money. So much so, in reversal of the orders impugned in the revision, the applications moved by the petitioner for withdrawal with liberty to file fresh suit on the same cause of action will stand allowed subject to payment of cost of Rs.1500/- each to the defendants, both of them together in O.S.No.339 of 2007, and also similar sum to the defendants, both of them together, in O.S.No.453 of 2007, within a period of four weeks from the date of this order. Compensation ordered to the defendants in the respective suits, as indicated above, shall be given to the counsel appearing for the respondents in the two revisions within the time stipulated and a memo filed before this court evidencing such payment on or before 5^th October, 2009. In default of

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CRP Nos.354 & 357/09 - 6 -

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payment of cost as directed above within the time stipulated, both the revisions are stand dismissed without any further orders. Revisions are disposed as indicated above.

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Post for report on 12.10.2009.

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S.S. SATHEESACHANDRAN, JUDGE

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srd

M/S. Moolamoottil Finance and Kuries v. T.I.George and Another

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M/S. Moolamoottil Finance and Kuries v. T.I.George and Another

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