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Shiv Developers Through it’s Partner SunilBhai Somabhai Ajmeri v. Aksharay Developers & Ors.(2022)

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 13-Nov-2024

Introduction

  • This is a landmark judgment relating to Section 69 of the Indian Partnership Act, 1932.      
  • This judgment was delivered by a 2- judge bench comprising of Justice Dinesh Maheshwari and Justice Vikram Nath.   

Facts 

  • The appellant in this case is an unregistered firm, Shiv Developers comprising of two partners Mr. Sunilbhai Somabhai Ajmeri (who is administrator and has filed the suit on behalf of the firm) and Mr. Jignesh. 
  • Defendant no.1 in this case is a partnership firm by the name of “Aksharay Developers”. Defendant no. 2 to 4 have been joined as the partners of Defendant no. 1 firm. 
  • The composition of Defendant no. 1 firm itself is a matter of contention in this case. 
  • The chronology of facts is as follows:
26th November 2013  The Appellant and Respondent no 2 and 3 purchased a property. The share of the Appellant in the property was 60% and the share of other two partners was 20% each.
22nd April 2014

A new partnership firm “Aksharay Developers” was formed with four partners namely, Sunilbhai Ajmeri (also partner of appellant firm) and Respondent 2, 3 and 4.

A Memorandum of Understanding was entered into between the parties that partnership was formed for the purpose of project related to suit property and it was agreed that from the income accrued from the project a fixed sum shall be paid to Sunilbhai Ajmeri. 
23rd February 2015  According to the Appellant on this day Respondent no 2 and 3 constituted another firm by the name of “Aksharay Developers” without including Sunilbhai Ajmeri. 
24th February 2015 

The Respondent Nos. 2 and 3 got executed a sale deed, whereby 60% share of the appellant in the suit property was purchased by this firm “Aksharay Developers” from Sunilbhai Somabhai Ajmeri, acting on behalf of the appellant firm Shiv Developers.

It is the case of the appellant that he was unaware that Respondent no 2 and 3 got registered a partnership firm without any mention of himself.

Thus, it is alleged that Respondent no 2 and 3 obtained a suit property through well-hatched conspiracy.

Hence, suit filed by the appellant seeking perpetual injunction and declaration of sale deed dated 24th February as null and void. 

  • An application for rejection was filed on the ground that the plaintiff is an unregistered firm and hence suit is barred. 
  • The application for rejection of plaint was rejected by the Trial Court. 
  • The above was challenged in High Court by way of revision. The High Court allowed the revision application and set aside the order of the Trial Court. 
  • The judgment of the High Court was thereafter challenged in the Supreme Court.   

Issue Involved  

  • Whether the suit should be rejected by virtue of Section 69 (2) of the Indian Partnership Act, 1932 (IPA)? 

Observations 

  • The Court observed that the law regarding Section 69 (2) of IPA has been extrapolated in the case of Haldiram Bhujiawala and Anr v. Anand Kumar Deepak Kumar and Anr (2000) as follows: 
    • To attract the bar of Section 69 (2) of IPA: 
      • The contract must be the one entered into by the firm with the third party and must also be the one entered into by the firm in the course of it’s business dealings. 
      • The bar of Section 69 (2) is not attracted in cases for enforcement of a statutory right or a common law right. 
  • The Court referred to the judgment of Raptakos Brett & Co Ltd v. Ganesh Property (1998) wherein the Court held that Section 69 (2) cannot bar the enforcement by way of a suit by an unregistered firm in respect of a statutory right or a common law right. 
  • Applying the above law to the facts the Court held that: 
    • The sale of the share by the plaintiff firm to the defendant was not the one arising out of the business of the plaintiff firm (i.e. of building construction). 
    • The suit is one where the plaintiff is seeking common law remedies with the allegations of fraud and misrepresentation and also statutory rights of injunction and declaration in terms of provisions of Specific Relief Act, 1963 (SRA) and Transfer of Property Act, 1882 (TPA). 
  • Owing to the facts observed above the Court held that the bar under Section 69 (2) of IPA is not applicable in the present case.  
  • The Court held that the trial Court had correctly rejected the baseless application moved by the respondents. 

Conclusion 

  • The judgment discusses the situations when bar under Section 69 (2) of the IPA does not apply. 
  • The judgment conclusively holds that the bar under Section 69 (2) of IPA does not apply in following two situations: 
    • When the contract entered beyond the course of business of partnership firm. 
    • When the suit filed for enforcement of a statutory right or a common law right.