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Krishnan Neelakantan And Ors. vs Krishnan Kochukannan


Authored By- Gauhar Alam

Keywords- Partnership firm, Non-registration, Non-entry, Dissolution of a firm, Suit


Name of the Case-Krishnan Neelakantan And Ors. vs Krishnan Kochukannan

Equivalent Citation: AIR 1967 Ker 96

Parties Involved Krishnan Neelakantan- Appellants; Krishnan Kochukannan- Respondent

Bench- T. Raghavan justice

Court-Kerela High Court


Abstract

This case analysis is related to section 69 of the Indian Partnership Act, 1932 which deals with the effects of the non- registration of a partnership firm.


Introduction

Section 69 of the Indian Partnership Act, 1932 provides that in case of non-registration of a partnership firm and the non-entry of the name of a partner in the register of the firm, the firm or any of its partner is not entitled to institute any suit against any other partnership firm or any third person for the enforcement of any right under a contract or any right conferred by the Partnership Act, 1932 itself.


But this rule is not absolute and is subjected to the following exceptions-

1. Dissolution of a Firm- The provisions of section 69 shall not apply to the enforcement of any right to sue for the dissolution of a firm, or accounts of the dissolved firm; or for the right or power to realize the property of a Dissolved firm.


Background of the case

This case was decided by the Kerala High Court on June 29, 1966, and is considered a landmark case in the field of the partnership law.


Facts

In the present case, the Appellants started a chitty as a partnership but the partnership firm was not registered. The respondent was one of the subscribers to the chitty, he bid and received the prize money. The respondent executed a bond in favor of the appellants to secure the payments of future subscriptions. By a special resolution dated October 10, 1957, the partnership firm was dissolved by the appellants. A suit was brought by the appellants against the respondents for the execution of the bond in which the responded pleaded that the suit is not maintainable as the firm is not registered.


Issues

The main issue for the consideration of the court in the present case was whether an unregistered partnership firm can file a suit against another firm or person after its dissolution?


Judgment

Hon’ble Justice T Raghavan heard the arguments of both the appellant as well as the respondent.


The respondent drew the attention of the court to one of the judgments of the Madras High Court in Shanmugha Mudaliar v. Rathina Mudaliar[1] wherein it was observed that disability for unregistered firm provided under section 69 only applies when the firm is in subsistence, it does not apply when the firm is dissolved.

Law does not impose any disability on unregistered partnerships acquiring property or dealing with third parties.


The hon’ble Kerela High Court decided in favor of the appellant and held that as the partnership firm is dissolved the case comes under the exceptions provided under section 69 of the act, and observed as under-


The partnership is the result of an agreement among the partners, and it can be terminated also by agreement of the partners. To such a case of dissolution by agreement of the partner's Section, 42 will not apply; and the decision of the Travancore-Cochin High Court can apply only to a case falling within Section 42. To the case before me, since the dissolution was by special resolution and not by Section 42, the Travancore-Cochin decision will not apply.


Concept highlighted

The concept highlighted in this judgment is, when an unregistered firm is dissolved, then it gets the right to institute suit like a registered firm in matters relating to the realization of property.

[1]AIR 1948 Mad 187


References-

· Section 69 in the Indian Partnership Act, 1932

· https://indiankanoon.org/doc/1487593/