' MUHAMMAD ALI MAZHAR, J. --- This order will dispose of CMA No, 6631 of 2013 filed by the defendant Nos. 1 and 2 under Order 7, Rule 11, CPC.
2. The brief facts of the case are that the plaintiff is a partnership firm and has filed this suit through its copartner. It is alleged in the plaint that the defendant No, 2 has built up a project known as "Aashiana Building". It is further alleged that the plaintiffs are also engaged in the business of real estate and all co-partners of plaintiff firm had cordial relationship with the defendant No, 1 as such the defendant No, 1 proposed the plaintiff to enter into a partnership agreement for re-sale, booking and for subleases after making clearance of defendants company liability, hence, the plaintiff and defendant No, 1 entered into a partnership agreement on 30.4.2009. The plaintiff has filed this suit for declaration, specific performance and permanent injunction and in the prayer clause the declaration has been sought that the plaintiff and defendant Nos. 1 and 2 are under obligation to perform the terms of partnership agreement strictly in accordance with its terms and condition. They have also prayed for the permanent injunction against the defendants not to dispossess the plaintiff from Office No, M-9, Aashiana Building constructed at plot No, G-21, Block No, 9, Clifton Karachi.
3. The learned counsel for the defendant Nos. 1 and 2 argued that the plaintiff has failed to disclose any cause of action against the defendant No,
1. The suit is also barred under Sections 42, 54 and 56 of the Specific Relief Act. It was further avowed that the plaintiff is a partnership firm which is unregistered therefore, suit is barred under Section 69 of the Partnership Act, 1932. He further argued that the person who entered into so-called partnership agreement dated 30.4.2009 is neither a share-holder nor director of the defendant No,
1. In support of his arguments learned counsel for the defendant Nos. 1 and 2 has relied upon following case-law:---
(1) PLD 1968 Karachi 222 (Alavi Sons Ltd. v. Government of East Pakistan & others). Under Section 42 of the Specific Relief Act, 1877, it was only with regard to these matters that a person could come to the Court for declaratory relief. The phrase "legal character" has been used, in the sense of "status"; which is constituted by the attributes which the law attaches to a person in his individual and personal capacity and which, according to Holland, is referable to such legal conditions as (1) sex,
(2) minority, (3) 'patria potestas' and 'manus', (4) coverture, (5) celibacy, (6) mental defect, (7) bodily defect, (8) rank, caste and official position, (9) slavery, (10) profession, (11) civil death, (12) illegitimacy, (13) heresy, (14) foreign nationality, and (15) hostile nationality. According to Salmond, the ter, 'status' is usually confined to personal legal condition. Or, personal capacities and inca3acities, or compulsory as opposed to conventional personal conditions.
(2) PLD 1967 Dacca 190 (Burmah Eastern Ltd. v. Burrnah Eastern Employees' Union & others). The express "legal character" or "status" denotes a character or status conferred by law on an individual or a number of individuals, viewed as a unit of society and not shared by the generality of the community but only by individuals, placed in the same category of character. The character itself must be conferred by law on persons viewed from the standpoint of membership of the community. It is a 'status' or 'character' conferred by law. It is not a creature of contract but of law.
Indeed, in most cases one cannot contract out of the 'status' with which the law clothes one. For example, a minor cannot contract into majority nor can one, who has attained majority, under law, contract himself into minority.
(3) PLD 1968 Karachi 196 (Province of West Pakistan & another v. M/s. Asghar Ali Muhammad Ali & Co.). Prohibition contemplated by Section 69: express and mandatory. Suit by unregistered firm.
Court prevented from taking cognizance of such suit. Subsequent registration of firm during pendency of suit cannot validate the suit.
(4) 1996 CLC 1205 (Province of Sindh & others v. M/s. Royal Contractors). Section 69. Suit filed by unregistered firm. Maintainability. Plaintiff (firm) was not registered at the time of filing of suit.
Plaintiff (firm) at the time when it filed the suit thus lacked requisite competence under Section 69, Partnership Act, 1932 to have recourse to legal proceedings. Partnership firm must be registered I under Partnership Act, 1932, for the purpose of filing suit. Provision of Section 69 of the Act being mandatory in character, registration of firm was a condition precedent for exercising right to institute suit. Court would have no jurisdiction to proceed with trial when such condition had not fulfilled. Any suit instituted in contravention of Section 69 of the Act was not maintainable. Provision of Section 69 of the Act being mandatory in its terms, effect of its violation was that suit was at its very inception bad and Court must treat it as having not been filed. Subsequent registration of firm would not make the suit maintainable so as to enable the Court to try it from the date of registration.
4. On the contrary, the learned counsel for the plaintiff argued that the application is misconceived.
The cause of action to the instant suit is very much established from the date of execution of partnership agreement dated 30.4.2009. He further argued that executant of partnership agreement namely Muhammad Amin was working in the capacity of General Manager in defendant's firm and vide resolution dated 8.3.2008 passed by Board of Directors of the defendant company was assigned to execute agreement/contract or partnership to acquire/generate finances in terms of clause-66 of Articles of Association. He further argued that the plaintiff is registered with Chamber of Commerce and other Government departments and such documentary evidence in respect of registration and statement of bank account under the same title, hence the suit is not barred under Section 69 of Partnership Act and the plaintiff despite being an unregistered partnership firm can maintain this suit. In support of his arguments learned counsel for the plaintiff has relied upon following case-law:---
(1) 2000 SCMR 1172 (Province of Punjab & others v. Malik Ibrahim & Sons and another). Suit for recovery. Competence. Non-registration of partnership. Effect. Plaintiff in the suit was partnership concern. Defendants in their written statement had not raised the issue as to lack of registration of plaintiffs partnership firm under Partnership Act, 1932. Plaintiffs were not obliged to submit a certificate of registration or to make any statement on such aspect notwithstanding an averment in an earlier Constitutional petition. Recovery suit filed in the name of firm was not incompetent for alleged lack of registration of firm as there was no occasion for plaintiffs to establish registration of the firm or to rebut the allegations of its non-registration.
(2) PLD 2003 Karachi 314 (Ardeshir Cowasjee & others v. K.B.C.A. & others). The plaintiff has neither stated that it is a registered partnership firm nor produced a certificate of registration of partnership. It is well-established that an unregistered partnership is not a legal entity and cannot sue in its own name. (See Section 69 of Partnership Act, 1932, 1994 PTD 194 and 1996 CLD 1205). It is, therefore, questionable whether suit No, 1793 of 1999 is maintainable in law. The plaintiff in Suit No, 1793/1999 shall file the amended plaint. In place of Peace Developers, the unregistered partnership, all the partners shall be substituted as plaintiffs so that the legal lacuna pertaining to the maintainability of the suit is removed.
(3) PLD 1966 S.C. 328 (Usman v. Haji Omer & others). Partnership Act (IX of 1932) Section 4 read with Section 69. Act does not provide any special mode for creation of partnership. Oral agreement.
Non-registration under Section 69 does not affect validity of partnership or bar suit for dissolution, accounts, or for realization of property of dissolved firm.
(4) [(2007) 15 Supreme Court Cases 58] (Purushottam and another v. Shivraj Fine Arts Litho Works and others). The contract by the unregistered firm referred to in Section 69(2) of the Partnership Act, 1932 must not only be one entered into by the firm with a third party defendant but must also be one entered into by the plaintiff firm in the course of the business dealings of the plaintiff firm. If the right sought to be enforced does not arise from a contract to which the unregistered firm is a party, or is not entered into in connection with the business of the unregistered firm with a third party, the bar of Section 69(2) will not apply. The contract was entered into with the respondent firm by P, the erstwhile proprietor of the concern. The partnership firm came into existence later.
The amount claimed in the suit was due to the proprietor P who carried on his proprietary business in the name and style of "Dinesh Paper Mart". Thus, though the partnership firm, which was unregistered, became entitled to enforce the contractual obligation of the defendant firm which it owed to P, the contract was not one entered into by the unregistered firm with a third party, nor was it one entered into by the unregistered firm with a third party, nor was it one entered into by the unregistered firm in the course of its business dealings with the defendants. The bar of Section 69(2) could not apply to the suit filed by the appellant-plaintiffs.
5. Heard the arguments. Counsel for the defendant Nos. 1 and 2 have filed application under Order 7, Rule 11, CPC mainly on two grounds that the suit is barred under Section 42 of the Specific Relief Act and secondly, the plaintiff is not a registered partnership firm, hence, the suit is barred under Section 69 of the Partnership Act. So far as the objection regarding the legal character and or locus standi is concerned, the plaintiff has prayed that the defendant Nos. 1 and 2 are under obligation to perform partnership agreement dated 30.4.2009 entered into between the plaintiff and the defendant No, 1 which shows that the plaintiff has invoked the jurisdiction of this Court for the specific performance of . The aforesaid agreement. It is for the plaintiff to prove the existence of contract and his willingness at all material times to fulfill his part of contract. Learned counsel for the defendants argued that no such declaration can be granted by this Court and he also referred to the case of Alavi Sons Ltd. And Burmah Easter Ltd. (supra) in which the learned Courts have dilated upon Section 42 of the Specific Relief Act and held that the phrase 'legal character' used is in the sense of status for which a person can come to the Court for, declaratory relief. The legal character or status denotes a character or status conferred by law. An individual or a number of individuals viewed a unit of society and not shared by generality of the community but only by individuals placed in the same category of character.
6. After examining the contents of the plaint and or the controversy involved, I am of the view that the plaintiff has approached this Court for the specific performance of the agreement dated 30.4.2009 and I feel no hesitation in my mind to hold that the suit is not barred under Section 42 or any other Section of the Specific Relief Act if the plaintiff has sought the declaration that the defendant Nos. 1 and 2 are under obligation to perform the terms of partnership agreement, even otherwise, this question in this particular case where various contentions have been raised against each other are mixed question of law and fact which require evidence. I am of the firm view that on this count, the plaint, is not liable to be rejected and the first objection is not sustainable.
7. Now I would like to take up most crucial point raised in the application that the suit is barred under Section 69 of the Partnership Act. It is clearly manifesting from the record that the, plaintiff in this case is a partnership firm which has sued the defendants through its co-partners. I have examined Section 69 of the Partnership Act, which provides that 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. Sub-section (2) of Section 69 of the Partnership Act further provides that no suit to enforce a right arising from a contact 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 shown in the Register of Firms as partners in the firm. Section 58 of the Partnership Act postulates a provision for application for registration through which registration of a firm may be effected at any time by sending by post or delivering to the Registrar of the area in which any place of business of the firm is situated. The same Section envisages further procedure and modalities to be fulfilled for the purposes of registration of a firm including the payment of prescribed fee. After complying with the above course of action, further procedure for registration is provided under Section 59 which mentions that when the Registrar is satisfied that the provisions of Section 58 have been duly complied with he shall record an entry of the statement in a register called Register of Firms and shall file statement. The Registration of a firm raises presumption that the parties shown as members of the firm registered as such are actually members of it and in the absence of evidence to the contrary no further proof is necessary. Section 68 deals with the rules of evidence and according to which any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or whose behalf such statement, intimation or notice was signed be conclusive proof of any fact therein stated. It is further provided that a certified copy of any entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein.
8. Neither in the plaint it is stated by the plaintiff that it is registered firm nor any registration certificate and or certified copy of an entry relating to the firm registration has been attached while instituting the plaint. Office has also failed to raise any objection regarding the non--production of registration certificate and or non-registration of plaintiff firm. It was the responsibility of the office to point out such type of major defects in the pleadings at an early stage and immediately upon presentation of the plaint, either the registration certificate should have been asked or an objection should have been raised to file the registration certificate. Office is directed to be careful in future.
9. Learned counsel for the defendant Nos. 1 and 2 referred to the cases of Province of West Pakistan v. M/s. Asghar Ali Muhammad Ali, & Co.) and Province of Sindh V. M/s. Royal Contractors). In both the cited cases, it was clearly held that in the case of unregistered partnership firm the Court may prevent from taking cognizance of the suit, even subsequent registration of the firm cannot validate the suit. Provision of Section 69 of the Partnership Act is mandatory in character and registration of firm is condition precedent for exercising right to institute the suit. The Court has no jurisdiction to proceed with the trial when such condition is not fulfilled. Provision of Section 69 is mandatory and effect of its violation is that the suit at its very inception bad and Court must treat it having not been filed.
10. Learned counsel for the plaintiff referred to the case of Province of Punjab & others v. Malik Ibrahim & Sons in which the Hon'ble Supreme Court held that the defendants in their written statement has not raised the issue as to lack of registration hence, plaintiffs were not obliged to submit certificate of registration. The facts of this case are distinguishable as it pertains to the full- fledged trial of the case and not the case in which at very initial stage the application under Order 7, Rule 11, CPC was filed. He then referred to the case of Ardeshir Cowasjee (supra) in which this Court in a consolidated judgment rendered in C.P. And H.C.A. No, 347/2000 though affirmed that unregistered partnership is not a legal entity and cannot sue in its own name and while remanding matter for decision afresh by the Trial Court after recording evidence, granted permission to file amended plaint. The facts of the above case are also distinguishable as the above suit was decreed on the statement of KBCA which judgment and decree was challenged by Sheri in HCA on the ground that the same had been obtained by fraud and collusion with KBCA. In the case in hand neither application was filed by the plaintiff for impleading all the partners nor any application for amendment in the plaint. The Court cannot permit the plaintiff to cure and alleviate the legal defects on its own motion when vested right is created in favour of the defendant and or the suit is barred by any express provision of law. The next case is Usman v. Haji Omer & others in which the hon'ble Supreme Court held that non-registration under Section 69 does not affect validity of partnership or bar suit for dissolution of accounts or for realization of property of dissolved firm. This was the case in which the issue was involved between the partners of a dissolved firm, which has no germane with the facts and circumstances of this case. The last case was from Indian Supreme Court (Purushottam and another v. Shivraj Fine Arts Litho Works & others), in which the learned Court first endorsed Section 69 of the Partnership Act and then held that if the right sought to be enforced does not arise from a contract to which the unregistered firm is a party, or is not entered into in connection with the business of the unregistered firm with a third party, the bar of Section 69(2) will not apply. The facts of this case are also distinguishable in which the initial agreement was with the proprietor of a firm and the partnership came into existence later.
11. The prohibition laid down under Section 69 of the Partnership Act is expressed, explicit and mandatory which cannot be dispensed with by the Court even with the consent of parties or failure to plead or to argue the point at the outset. Section 69 of the Partnership Act contains most vital clause. The Act does not in so many words make registration of firm compulsory nor does it imposes penalties, but this Section forbid the bringing of certain suits in respect of partnership which have not been registered under the Act. I am of the view that the Court has no discretion and the rules stated in the above Section are mandatory. The Section couched in language and the legislature's intent makes it clear that non-adherence to the provision would debar a Court from entertaining a suit instituted without compliance of the provision as to prior registration as laid down in the Section. The language of this Section as it stands today is imperative and cannot be discounternanced and must therefore be strictly interpreted.
12. On 24.6.2013 learned counsel for the plaintiff filed a copy of written request allegedly sent to the Registrar Firms on 29.4.2008 alongwith from "A" (application for registration of firm) and argued that the application for registration of plaintiff was filed in the year 2008, but he failed to file any registration certificate. As a fallback, the learned counsel referred to Section 58 of the Partnership Act and argued that the registration of firm may be effected at any time by delivering a statement on the prescribed form to the Registrar. According to him, mere sending an application for registration is suffice to grant registration which is in my view a misconceived argument. Section 58 in simple terms 'prescribes a procedure for making application which is controlled and regulated by Section 59. This Section in fact relates to the procedures of registration which I have already discussed. At the time of reserving the order, one week's time was granted on the request of learned counsel for the plaintiff enabling him to produce the registration certificate if any, alongwith copy of paid challan. Despite lapse of considerable time, the learned counsel for the plaintiff has failed to put in an appearance or comply with the directions 'which shows that the plaintiff has nothing to file and the plaintiff is admittedly an unregistered partnership firm, which is not a juristic person and cannot maintain the suit in its own name.
13. The result of this case shows that the disability of an unregistered firm to sue is of crippling nature. The ,disability' inflicted by Section 69 is so compulsive and comprehensive that there is no escape from it. This works out as an indirect compulsion for registration. The English law compels registration at the pain of penalty; Section 69 compels it at the pain of disability to sue. Thus it becomes necessary for the survival of a firm that it should be registered. Ref: Law of Partnership, Seventh Edition, 2009, Satyajeet Desai. In the case of Loonkaram Sethia v. Ivan E. John, (1977)1 SCC 379: AIR 1977 SC 336: (1977) 1 SCR 853, the Court held that 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 cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69. Ref: Law of Partnership, Principles, Practice & Taxation, Third Edition authored by Avtar Singh.
14. As a result of above discussion, I am of the firm viewpoint that the suit is barred under Section 69 of the Partnership Act. Consequently, the plaint is rejected under Order 7, Rule 11, C.P.C. The interim orders dated 15.5.2013 are also recalled. Plaint refused.