Introduction 

• This is a landmark judgment relating to Section 69 of Indian Partnership Act, 1932.  
• This judgment was delivered by a double judge bench comprising of Justice RF Nariman and Justice Mohan M Shantanagoudar.  

Facts  

• Two partners filed a suit in 2003 against the third partner of an unregistered partnership firm. 
• The suit aimed to cancel a property sale made by the third partner without the consent of all partners, as required under the partnership deed. 
• The defendant raised an objection, arguing that the suit was barred under Section 69 of the Indian Partnership Act, 1932. which restricts unregistered firms and their partners from enforcing rights through the court.  
• The Trial Court held that the suit was barred by Section 69 because the claim arose from the partnership deed and not independent ownership. 
• The High Court overturned the trial court’s decision, stating that the plaintiffs were acting as co-owners and not as partners, making the suit maintainable. 
• Hence, the matter was before the Supreme Court.

Issues Involved

• Does the suit enforce a right arise from the partnership contract or Indian Partnership Act, 1932 (IPA)? 
• Is the bar under Section 69 of Indian Partnership Act, 1932, applicable to this case? 

Observations 

• The Court found that the plaint primarily relied on the partnership deed, specifically citing a clause prohibiting property transfers without the consent of all partners.  
• The Court concluded that the claim arose from the partnership agreement, not independent ownership rights. 
• The Court held that Section 69 applied, and hence the suit was barred. 

Conclusion 

The Court in this case reiterated the well-established principle enunciated in Section 69 of Indian Partnership Act, 1932 that no suit can be filed by a firm that is unregistered in the Court of law. 

[Original Judgment]