Through this Civil Revision Petition the petitioner prayed as under: "It is accordingly respectfully prayed that record of the Courts below may kindly be called for and after examining the same, judgment and decree dated 14.3.2020 and 19.11.2020 passed by Civil Judge-VI Quetta and Additional District Judge-WI Quetta respectively be set aside and the suit be dismissed, with any other relief in the interest of justice, equity and fair play."
2. Plaintiff/petitioner filed suit for "Declaration, Specific Performance of agreement dated 27.05.2008. Mense Profit, Possession through Partnership and Permanent Injunction" before the Civil Judge-VI. Quetta (trial Court) with the averments that the plaintiff' is owner of the property baring Khasra No. 1828/1310,1727/504, Mohal Sirki and Mouza Sirki, Tappa Saddar 2 Tehsil Quetta, Situated at Double Road measuring 5646 Sq:ft. On 27.05.2008 an agreement was signed with Defendant No. 1 to 3 for construction multistory building on partnership basis and give cheque on 17.05.2008 of Rs.
2 Million. The defendant on completion of construction work has rented the shop.
3. In rebuttal Defendant No. 1, 3 and 4 filed joint written statement, contested the suit by raising legal as well as factual objection. The trial Court framed issues. After hearing on Issue No. 2 regarding maintainability of suit in view of Section 69(1) of the Partnership Act, the trial Court rejected the suit under Order VII rule 11 CPC vide order and decree dated 14.03.2020. The plaintiff assailed the impugned order of trial Court preferred an appeal before the Additional District Judge-VII, Quetta (appellate Court) which was also dismissed vide order and decree dated 19.11.2020. Hence this petition with the prayer as mentioned above.
4. Learned counsel for the petitioner contended that the impugned orders and decrees of both the Courts below are contrary to law and facts. The Courts below have knocked out the petitioner on technical ground without affording opportunity for adducing evidence. The parties came to agreement individually dispute arise between the parties on the basis of agreement. There is no dispute regarding firm. Learned counsel for petitioner relied upon the following case laws: PLD 1962 (W.P) Karachi 603.
PLD 1961 (W.P) Karachi 265.
2015 YLR 2306
5. Learned counsel for respondents vehemently opposed the contention of petitioner stated that the impugned orders passed by fora-below are well reasoned and accordance with law. There is no dispute that the parties have signed the partnership agreement as per Section 69 of the Partnership Act, no suit can be filed by an unregistered partnership firm. The firm can be form by two or more persons. Learned counsel relied upon the following case laws: PLD 2016 SC 214 2015 CLC 1074.
6. Heard. Perused the record. The perusal of record reveals that both the Courts below have non- suited the petitioner on the ground that the partnership deed is not registered, which is mandatory requirement of Section 69 of the Partnership Act, 1932 (hereinafter referred "the Act"). Under Section 69 of the Act provide for registration of firm. The firm is defined in Section 4 of the Act, which reads as under:
4. Definition of Partnership partner firm and firm, name--"Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Persons who have entered into partnership with one an other are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name"
7. In Osborn's Concise Law Dictionary Seventy Edition by Roger Bird, the firm has been defined as under: Firm: Person who have entered into partnership with one another The name under which their business is carried on called the firm name Action may he brought by or against a firm in the name of the firm"
8. In Law Dictionary by Mia Asad Hakeem the firm is defined as under: Firm: Person who have entered into partnership with one another called a firm. Word firm is a short, collective name for the individual who constitute the partners and the name under which they trade in their firm name.
9. In Black Law Dictionary Ninth Edition, the firm has been defined as under: Firm: The title under which one or more persons conduct business jointly 2. The associate by which a person is united for business purpose. Traditionally these terms have been referred to a partnership as opposed to a company. But today at frequently refer to a company
10. A firm is creature of a contract and its right; liabilities depend upon the term thereof. The firm can sue and being sued. The member of the firm is collectively responsible.
11. Section 6 of the Act determines the mode of existence of partnership, which reads as under:
6. Mode of determining existence of partnership. In determining whether a group of persons is or is not a firm or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together.
Explanation 1. The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does, not of itself make such person's partners.
Explanation 2. The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not of itself make him a partner with the persons carrying on the business: and, in particular, the receipt of such share or payment--
(a) by a lender of money to persons engaged or about to engage in any business,
(b) by a servant or agent as remuneration.
(c) by the widow or child of a deceased partner, as annuity, on
(d) by a previous owner or part owner of the business, as consideration for the sale of the goodwill or share thereof does not of itself make the receiver a partner with the persons carrying on the business.
12. Right to participate in profit of a business is a test of partnership. It is necessary to take together all relevant facts to determine the real character of the agreement. In Chimanram Motilal vs. Jayantilal Chhaganlal (AIR 1939 Bomb 410) it has been observed as under: "3. The question whether a transaction amounts to a partnership or not is often a difficult one Under Section 4 of the Partnership Act, 'partnership' is defined as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. I think the words "acting for all" were inserted to emphasize that partners are agents, and not merely principals. Then Section 6 provides that in determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, a shown by all relevant facts taken together. It is quite clear that you may have a partnership in a single transaction, and it is also clear that sharing profits and contributing to losses are indications of a partnership, but by themselves they are not enough to constitute a partnership. One essential element of partnership, as is shown in the definition, is that there should be agency. One partner can always bind another partner in any matter which falls within the scope of the partnership business, subject to any limitation under Section 20 of the Act, and if the relationship constituted between parties in respect of a particular matter does not expressly or by necessary implication involve the right of one party to pledge the other as an agent, then there is no partnership."
13. In case of Essa EH Jaffar v Nishat Ltd PLD 1962 (W.P) Karachi 603, the partnership has been defined as under: Section 6 of the Partnership Act prescribes the mode of determining the existence of partnership and says that in determining whether a person is or is not partner in a firm regard shall be had to the real relation between the parties as shown by all relevant facts taken together. Under Explanation (1) the sharing of profits or of gross returns arising from property by person holding a joint or common interest in that property does not of itself make such person's partners. Under explanation (1) the receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not of itself make him a partner with the persons carrying on the business, and in particular, the receipt of such share or payment by a lender of money to persons engaged or about to engage in any business.
14. The partnership is an association of person carrying on partnership and in the law firm name is compendious method of describing the partner.
Partnership can be seen from the Section 4, 5 of the partnership Act. The first question is that though a firm may possess some attributes of a personality. It is only collective name of its member. The partnership has no individual existence who have agreed to jointly owned property and do business to share profit. The firm possesses a distinct personality from the person constituting.
15. The respondent has not produced any document for which it appears that the parties have created a firm, on which name and style Mere signing an agreement of partnership without forming a firm cannot disentitle the petitioner to file suit. Sub-section (2) of Section 6 of the Act reads as under:
(2) On application made by all the parties who have signed any document relating to a firm filed under this Chapter, the Registrar may rectify any mistake in such document or in the record or note thereof made in the Register of Firms.
16. In the above referred rule, the word "firm" is used, not agreement between individual capacities.
In this regard reliance is placed on the case of Bashir Ahmad Khan versus North-West Frontier Province 1989 CLC 1671, whereby it has been observed as under:
13. A perusal of Exh. DW1/2 itself would reveal that it lacks the decisive characteristic features of a partnership as required by Section 4 of the Partnership Act which reads as follows: "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name."
14. A plain reading of the foregoing provision would show that to constitute a partnership there must be a business an agreement to share the profits of that business and the business must be carried on by all or any of the partners acting for all. In other words, the essential element to constitute a partnership is the existence of a business carried on by the partners with an agreement to share the profits thereof.
15. In this context of the matter. I have no hesitation in holding that it is only when a firm is set up by persons who enter into a partnership with the intention of carrying on a business in order to share the profitx thereof and a partnership deed is duly executed by the partners that a firm, before embarking upon a course of litigation by way of filing a suit in a Court of law, is required to get itself registered. But if a firm lacks any of the foregoing constituents it shall not fall within the mischief of Section 69 of the Partnership Act and mere nomenclature of ostensibly giving an impression of a "firm name" shall not debar it to file a suit without complying with the requirements of Section 69 ibid."
In view of above facts and circumstances of the case, the revision is accepted. The orders and decrees dated 14.03.2020 and 19.11.2020, respectively passed by the Civil Judge-VI, Quetta and Additional District Judge VII, Quetta, are set aside. The case is remanded to the trial Court with direction to decide the case on merits.