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SATYEN VAIDYA, J. (ORAL) –

This Regular Second Appeal has been filed against the judgment and decree dated 20.6.2016, passed by the learned District Judge, Hamirpur in Civil Appeal No. 23 of 2014, whereby the judgment and decree dated 21.1.2014, passed by the learned Civil Judge (Sr. Division) Court No.1, in Civil Suit No. 91 of 2007 has been affirmed.

2. The defendant is in appeal against the decree of Rs. 2,48,975/- along with future interest at the rate of 9%, concurrently passed by both the courts. The parties, for the sake of convenience shall hereafter be referred to by the same status, as they held before the original Court.

3. The plaintiff claims the suit amount on the premise that it was carrying business of Karyana Goods and had supplied to the defendant goods worth Rs. 2,30,000/- on 24.4.2006. It was claimed that in order to discharge his liability, defendant had issued a cheque dated 24.4.2006 in the sum of Rs. 2,30,000/-, drawn at Punjab National Bank, in favour of the plaintiff but the said cheque was dishonoured on presentation. Plaintiff claimed to have again approached the defendant and the defendant had entered into an agreement dated 12.7.2006 with the plaintiff and promised to make the payment within one month, failing which, he had promised to pay double the amount. As per plaintiff, since the defendant did not fulfill his promise, plaintiff issued a notice to the defendant dated 13.10.2006, which was replied by the defendant by concocting the facts.

4. In the aforesaid backdrop, the plaintiff claimed a sum of Rs. 2,48,975/- as suit amount including principal amount of Rs. 2,30,000/- and interest at the rate of 9% from 12.7.2006 to 12.6.2007. The plaintiff claimed that the cause of action to file the suit had arisen on 24.4.2006, when the goods were allegedly supplied and cheque was issued, thereafter on 12.7.2006, when an agreement was executed between the plaintiff and the defendant and lastly on 13.10.2006, when the notice was served upon the defendant.

5. The defendant by way of written statement denied the allegations made in the plaint. Defendant submitted that he had issued a cheque for a sum of Rs. 30,000/- only and since he had paid the amount to the plaintiff in cash, the cheque had been rendered without legal liability. It was alleged that the plaintiff had forged the cheque and had made addition and alterations therein. As per defendant, the plaintiff had added the word and figures rupees two lacs in the original cheque of Rs. 30,000/- to make it a cheque in the sum of Rs.2,30,000/-. Defendant also denied his signatures on the cheque at the places, which purportedly acknowledged additions made in the cheque.

6. Thus, though the defendant admitted to have business dealing with the plaintiff but had denied the transaction in question to have taken place.

7. On the pleadings of the parties, the learned trial Court framed the following issues:-

“i) Whether the plaintiff is entitled for recovery of Rs. 2,48,975/- alongwith interest @ 9% per annum? OPP.

ii) Whether the defendant was under liability to the sum of Rs. 30,000/- and the same has been paid by cash, the cheque issued by the defendant was forged for consideration of Rs. 2,30,000/-? OPP.

iii) Relief.”

Issue No.1 was answered in affirmative and issue No.2 was answered in negative. The suit of the plaintiff was accordingly decreed, as noticed above.

8. The learned trial Court held that the defendant had failed to prove the addition and alteration in the cheque to have been made by the plaintiff unauthorizedly. It was also held that the defendant had acknowledged his liability vide agreement dated 12.7.2006. The fact that the defendant had not raised any objection against the alleged interpolation on the cheque by the plaintiff, also weighed with the learned trial Court to disbelieve the versions of the defendants as against the claim of the plaintiff.

9. The first appeal of defendant under Section 96 of the Code of Civil Procedure before the learned District Judge, Hamirpur, also stands dismissed vide impugned judgment and decree. The learned District Judge on appreciation of evidence has affirmed the findings and conclusions returned by the learned trial Court.

10. The instant appeal was admitted for hearing vide order dated 4.1.2017 on the following substantial questions of law:-

“i) Whether the suit of the respondent without placing on record the Registration Certificate and the documents showing Shri Ajay Kumar to be its registered partner was maintainable in view of the fact that admittedly the respondent was a Company?

ii) Whether the courts below ere right in dismissing the application under Section 45 of the Evidence Act filed on behalf of the appellant for seeking expert opinion regarding the affidavit and the agreement allegedly executed by the appellant with respect to his signatures upon the same?

iii) What is the effect of not framing any issue with respect to the registration of the respondent further that the suit was barred under Section 69 of the Partnership Act?

11. I have heard learned counsel for the parties and have also gone through the record carefully.

12. The frame of the suit reveals that it has been filed by M/s Ajay Kumar & Company through its partner Ajay Kumar. In the plaint, though it has been mentioned that the plaintiff is a registered company, however, Ajay Kumar is stated to be one of the partners of the firm, having authority to look after the management of the firm and to file the suit. Reliance has also been placed on a copy of authority letter in that behalf.

13. The defendant in his written statement has merely denied the averments to the above effect for want of knowledge.

14. Ajay Kumar through whom the suit has been filed by the plaintiff has appeared as a witness (PW-4). In his examination-in-chief, the said witness had categorically stated that his firm was working under the name of Ajay Kumar & Company. S/Sh. Sanjay Kumar, Surjit Kumar and Keshav Kumar were the partners of the firm besides PW-4 Ajay Kumar. He further deposed that the firm had authorized him vide letter Ext. PW-4/A.

15. The document Ext. PW-4/A is an authority letter, issued and signed by S/Sh. Sanjay Kumar, Surjit Kumar and Keshav Kumar as partners of M/s Ajay Kumar & Company, Main Bazar, Hamirpur. They had authorized Ajay Kumar S/o late Sanjay Kumar one of the partners of M/s Ajay Kumar & Company to defend them in cases pending in the Court at Hamirpur on behalf of M/s Ajay Kumar & Company and had acknowledged to own all acts, deeds and things done by Ajay Kumar & Company in that behalf.

16. The plaintiff had filed the suit for recovery of suit amount on the alleged failure of the defendant to pay the price of goods purchased by him from the plaintiff. Thus, the basis for cause of action to file the suit, as per the plaintiff, was the promise of the defendant to pay the amount of goods purchased by him. The plaintiff has further placed reliance on the breach of condition of agreement dated 12.7.2006 to form cause of action for filing the suit.

17. It will be apt to reproduce para-9 of the plaint as under:-

“That the cause of action arisen to the plaintiff on 24.4.2006 when the goods were purchased and cheque was issued by the defendant and again on 12.7.2006 when the agreement entered and lastly 13.10.2006 when the notice was served to the defendant.”

18. Section 69 (2) of the Indian Partnership Act, 1932 reads as under: -

“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”.

19. Thus, it stands proved beyond the shadow of doubt that the plaintiff was a partnership firm. The suit as filed by the plaintiff was also on account of breach of contract between the parties. Section 69 (2) of the Partnership Act prohibits the remedy of filing the suit by a partnership firm to enforce a right arising from a contract against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partner in the firm.

20. Admittedly, the plaintiff has not made even a whisper that the firm M/s Ajay Kumar & Company was a registered partnership firm and Ajay Kumar was its registered partner.

21. It is more than settled that the provisions of Section 69 (2) of Indian Partnership Act, 1932 bear mandatory character. The registration of a firm has been held to be a sine-qua-non for institution of suit falling within the mischief of Section 69 (2) of the Act (supra). The noncompliance has been held to be a jurisdictional defect. It has also been held that the objection as to noncompliance of Section 69 (2) of Indian Partnership Act can be taken even at the stage of execution. Reference in this behalf can be made to a judgment passed by this Court in Civil Suit No. 63 of 1993 titled as Vinod Kumar vs. State of H.P. 1994 (1) Shimla Law Cases 110.

22. Recently, in Sunkari Tirumala Rao and Ors. vs. Penki Aruna Kumari, 2025 SCC Online SC 125, the Hon’ble Supreme Court has reiterated the legal position as under:-

“8. It is evident from a reading of sub-sections (1) and (2) of Section 69 that it assumes a mandatory character. Section 69(1) prohibits a suit amongst the partners of an unregistered partnership firm, for the enforcement of a right either arising from a contract or conferred by the Act, unless the suit amongst the partners is in the nature of dissolution of the partnership firm and/or rendition of accounts. Section 69(2) prohibits the institution of a suit by an unregistered firm against third persons for the enforcement of a right arising from a contract. As a consequence, a suit filed by an unregistered partnership firm and all proceedings arising thereunder, which fall within the ambit of Section 69 would be without jurisdiction.

9. This Court in Seth Loonkaran Sethiya and Others v. Mr. Ivan E. John and Others reported in (1977) 1 SCC 379 had categorically held that Section 69 is mandatory in character and a suit instituted by a plaintiff in respect of a right which was vested in him by virtue of a contract and entered into in his capacity as a partner of a partnership firm, would be void, if such a firm was unregistered. The relevant observations are as under:-

“21. A bare glance at the section is enough to show that it is mandatory in character and its effect is to render a suit by a plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69 of the Partnership Act. In the instant case, Seth Sugan Chand had to admit in unmistakable terms that the firm “Sethiya & Co.” was not registered under the Indian Partnership Act. It cannot also be denied that the suit out of which the appeals have arisen was for enforcement of the agreement entered into by the plaintiff as partner of Sethiya & Co. which was an unregistered firm. That being so, the suit was undoubtedly a suit for the benefit and in the interest of the firm and consequently a suit on behalf of the firm. It is also to be borne in mind that it was never pleaded by the plaintiff, not even in the replication, that he was suing to recover the outstandings of a dissolved firm. Thus, the 5 suit was clearly hit by Section 69 of the Partnership Act and was not maintainable.”

Emphasis added

23. The substantial questions of law No. 1 and 3, as noticed above, have their basis in the aforesaid factual and legal backdrop. However, this Court cannot assume the factum of non-registration of plaintiff firm only from the reason that the defendant had not raised the issue at any stage of the proceedings either before the learned trial Court or the first appellate Court and thus, had escaped the notice of said courts. Nonetheless, the non-compliance of Section 69 (2), if established, will go to the root of the controversy having effect on the jurisdiction of civil court to entertain the suit.

24. Noticeably, the defendant has filed application for amendment of written statement during the pendency of this appeal, which is pending adjudication as CMP No. 9138 of 2022. By way of this application, the defendant intends to raise the following objection: -

“That the plaintiff is neither registered under the companies act nor under the provision of Indian partnership Act and Sh. Ajay Kumar is not the registered owner partner of the plaintiff. The suit as such is barred under Section 69 of the Partnership Act as well as the provision of Companies Act and same is liable to be dismissed on this ground alone.”

25. The defendant has averred in the application for amendment that the plea sought to be raised by way of amendment is only clarificatory. It has also been alleged that the amendment is necessary for deciding the real matter in controversy between the parties.

26. In reply to the aforesaid application, the plaintiff has neither affirmed nor denied the factum of it being not registered under the Indian Partnership Act. What has been tried to be stated is that even an unregistered firm can maintain the suit on the basis of cause of action which has arisen on account of dishonor of cheque.

27. Thus, the fact whether the plaintiff is a registered firm or not has remained undetermined. In this background, the amendment as proposed by the defendant becomes necessary for adjudication of real matter in controversy. Though, the amendment has been sought by the defendant belatedly, however, keeping in view the necessity of such amendment for adjudication of real matter in controversy between the parties, in my considered view the same deserves to be allowed.

28. In Dinesh Goyal @ Pappu vs. Suman Agarwal (Bindal) & Others, 2024 SCC Online SC 2615, Hon’ble Supreme Court has emphasized the priority of compelling need for amendment as under:

“13. By way of the amendment, what is sought to be done is, to question the validity of the Will, on the basis of which, the defendant sought to have the suit dismissed, while also expanding the scope of adjudication of the suit to include movable property. It has to be then, demonstrated that – (a) determination of the genuineness of the Will is the necessary course of action in determining the issues inter se the parties; and (b) given the finding of the court below that the application was presented post the commencement of the trial, it could not have been, despite due diligence, presented prior to such commencement.

14. Be that as it may, the overarching Rule is that a liberal approach is to be adopted in consideration of such applications. [See also: Sanjeev Builders (supra); Rakesh Kumar Agarwal v. Rajmala Exports Pvt. Ltd.8; Usha Balasaheb Swami & Ors. v. Kiran Appaso Swami & Ors.9; B.K. Narayana Pillai v. Parmeswaran Pillai & Anr.10].

15. In our considered view, the two aspects required to be demonstrated in accordance with the statutory language in the present facts, do not stand on the same footing. The first issue will necessarily have to weigh over the second.”

29. Accordingly, CMP No. 9138 of 2022 is allowed and the defendant is allowed to amend the written statement.

30. Since, now a question of fact that goes to the root of the controversy remains to be determined, the judgments and decrees passed by both the courts below deserve to be set aside having been passed by ignoring an important jurisdictional fact.

31. In view of what has been held above the substantial question No. (ii) is rendered redundant.

32. In result, the judgment and decree dated 20.6.2016, passed by the learned District Judge, Hamirpur in Civil Appeal No. 23 of 2014, whereby the judgment and decree dated 21.1.2014, passed by the learned Civil Judge (Sr. Division) Court No.1, in Civil Suit No. 91 of 2007 has been affirmed are set aside. The matter is remanded back to learned trial Court for framing an issue on the basis of objection raised by the defendant as to maintainability of suit for noncompliance of Section 69 (2) of Indian Partnership Act, 1932 and to decide the suit afresh.

33. The appeal is accordingly disposed of. Pending applications, if any, also stand disposed of. Records be sent back forthwith.

34. Parties are directed to appear before learned trial court on 15.9.2025.

Order accordingly.

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