The High Court of Kerala held that a suit for specific performance of an agreement by a partner to release rights in an unregistered partnership firm to another partner is maintainable. It is not barred by Section 69 of the Indian Partnership Act as the cause of action is independent. The appeal was dismissed.
The Appeal Suit was dismissed. No costs awarded.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE V.CHITAMBARESH &
THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN
MONDAY, THE 7TH DAY OF NOVEMBER 2016/16TH KARTHIKA, 1938
AS.No. 495 of 1997 ( )
AGAINST THE JUDGMENT IN OS 409/1994 of SUB COURT, THALASSERY DATED 20-12-1996
APPELLANT(S): DEFENDANTS:
BY ADV. SRI.K.MOHANA KANNAN
RESPONDENT(S): PLAINTIFF:
| ***** 1. |
KAIPRATH KUMARAN, S/O.CHATHU, AGED 64 YEARS, NO OCCUPATION, RESIDING AT PERUNTHATTIL DESOM, ERANCHOLI AMSOM, THALASSERY TALUK.(DIED) |
|---|---|
| ADDL. 2. | V.N.ROHINI, (62), RETIRED TEACHER, W/O.KAIPRATH KUMARAN (LATE) D/O.VELANDY KUMARAN MASTER (LATE) ROHINI MANDIRAM P.O. PERUNTHATTIL, TELLICHERRY - 670 107 |
| ADDL.3. | V.N.RANJINI (41) , TEACHER (DIVORCED) D/O.KAIPARATH KUMARAN (LATE) ROHINI MANDIRAM - 670 107. |
| ADDL.4. | DR.V.N.KUSUMAM (40) MARRIED D/O. DO. DO. DO. |
| ADDL.5. | V.N.SREELATHA (39) MARRIED D/O. DO. DO. DO. |
| ADDL.6. | V.N.ANITHA (36), MARRIED AYURVEDA DOCTOR, D/O. DO. DO. DO. |
AS.No.495/1997
: 2 :
ADDL. 7. V.N.ASHALATHA (33), MARRIED D/O. DO. DO. DO.
(ADDL. RESPONDENTS 2 TO 7 IMPLEADED AS THE LEGAL HEIRS OF THE DECEASED RESPONDENT VIDE ORDER DATED 23.11.2016 ON CMP.NO.5834/97)
R BY ADV. SRI.T.KRISHNAN UNNI (SR.) R, BY ADV. SRI.R.RAMADAS
THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 03-11-2016, THE COURT ON 7.11.2016 DELIVERED THE FOLLOWING:
V.CHITAMBARESH & ANIL K.NARENDRAN, JJ.
Chitambaresh, J.
Is an agreement to release the rights in an unregistered partnership firm by a partner in favour of another partner specifically enforceable ? Is such a suit for specific performance hit by Section 69(1) of the Indian Partnership Act, 1932 ?
plaintiff for a consideration of ` 1,50,000/-. The right of the first defendant in the partnership firm and the right of the first and second defendant over the shop building was agreed to be released. Only the plaintiff and the first defendant were the partners of
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2
the partnership firm which was not registered under the Indian Partnership Act, 1932 ['the Act' for short]. The period fixed till 31.3.1992 for payment of consideration was extended till 31.3.1993 by Ext.A1(a) endorsement on the reverse of Ext.A1 agreement in view of the financial constraints of the plaintiff. The defendants thereafter issued Ext.A2 letter dated 22.6.1994 to the plaintiff purporting to rescind the contract for release. The plaintiff thereupon issued Ext.A3 letter dated 30.6.1994 reiterating that he is ready and willing to perform his part of the contract in the payment of consideration. The letter accused the defendants of demanding a higher amount as consideration and not executing the release deed after accepting the sum of 1,50,000/-. This was followed by the suit for specific performance of Ext.A1 agreement for release and also for damages to the tune of 20,000/- on account of delay.
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3
value of the building. Ext.A1 agreement happened to be executed on the insistence of the plaintiff when the first defendant could not attend the shop on account of his ailment and hospitalisation. The defendants pointed out that Ext.A1 agreement has already been rescinded by Ext.A2 letter and that the same cannot be specifically enforced. Exts.B1 to B7 documents were relied on to show that the first defendant was in and out of the medical college hospital for quite a long time disabling participation in business. The claim for damages put forth by the plaintiff for the delay in the execution of the release deed was refuted asserting that the suit is misconceived. The trial court though negatived the claim for damages of 20,000/- has decreed the suit for specific performance of Ext.A1 agreement for release. The defendants have been directed to execute the release deed on the plaintiff paying a sum of 1,50,000/- with interest at the rate of 12% per annum till payment. It is reported that a sum of `.1,92,500/- has since been deposited by the plaintiff on 15.1.1997 even before he received copy of
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the Appeal Suit on 4.9.1997.
5
AS.No.495/1997
behalf of the appellants/defendants and Mr.T.Krishnan Unni, Senior Advocate on behalf of the respondent/plaintiff.
“From perusal of the plaint averments and reliefs claimed therein, it is clear that the suit for share in the business of partnership firm has arisen from a contract of partnership. Plaintiff has claimed money from the defendant/revisionist as his share in the partnership business. Further, in view of the status of the plaintiff as partner, he has claimed right to participate in the said partnership business. Thus, obviously, the suit of the plaintiff is for enforcement of a right arising out of the contract of partnership and not independent of it. Plaintiff has no where pleaded that the firm is already dissolved. Thus the suit of the plaintiff is not covered by any of the exceptions provided in Section 69 of the Act.” (emphasis supplied)
The above was a case where a partner sued for the enforcement of a right in an unregistered partnership
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6
firm which is not maintainable unless the firm has been dissolved as per Section 69(3)(a) of the Act.
“We respectfully agree that the words 'suing as a partner' must be given their due meaning. When there is an agreement between the partners by which some right is created which is capable of enforcement independently and without resort to general accounts of the unregistered partnership, it furnishes an entirely different cause of action and the plaintiff cannot be described as 'suing as a partner'. It is not every suit that is barred but only a suit brought 'as a partner'. The section must be construed strictly and the bar of the section cannot be carried further than what the words import.” (emphasis supplied)
The above was a case wherein a suit for specific performance to convey the share of a partner in favour of another partner in an unregistered partnership firm is found to be maintainable in law.
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of the partnership firm has an impact on the claim for specific performance of the nature:
“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 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 of Firms as a partner in the firm. (emphasis supplied)
The plaintiff is not suing as a partner in the firm and is on the other hand enforcing a right independently and without resort to the general accounts of the unregistered partnership firm. The execution of Ext.A1 agreement for release furnishes an entirely different cause of action and the plaintiff only compels the defendants to execute a release deed as agreed. The suit for specific performance is not hit by Section 69 (1) of the Act no matter that the parties are still partners of the unregistered firm. There is nothing to prevent the parties from agreeing to divide up part of the partnership property and exclude it henceforth from
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the scope of the partnership.
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release is inadequate due to the subsequent escalation in price or that it works hardship on the defendants. We are not satisfied that the court below has exercised its discretion under Section 20 of the Specific Relief Act, 1963 in decreeing specific performance in an arbitrary or perverse manner.
The Appeal Suit is dismissed. No costs.
Sd/V.CHITAMBARESH, Judge.
Sd/ANIL K.NARENDRAN, Judge.
nj/04.11.2016
//TRUE COPY//
P.S. TO JUDGE.
3 issues framed by the court
Whether an agreement by partners to release rights in an unregistered partnership firm is specifically enforceable.
Whether such a suit is barred by Section 69(1) of the Indian Partnership Act, 1932.
Whether the dissolution of the partnership firm due to death affects the right to specific performance of the agreement.
Colour shows how this judgement treated each authority
Ashish Verma v. Neeraj Vyas and othersDistinguished¶40
AIR 2012 MP 9 · Who else cites this
Shriram Shaligram v. Laxmibai and othersFollowed¶46
AIR 1951 Nagpur 143 · Who else cites this
2 provisions across 2 enactments
Kaiparath Achuthan
C.V. Swarnakumari
V.N. Rohini
V.N. Ranjini
DR. V.N. Kusumam
V.N. Sreelatha
V. Chitambaresh
Anil K. Narendra
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
