Hirubhai H. Patel v. The Registrar of Firms & Ors.

respondent No.1 (cid:19) Registrar of Firms for deleting the name of the petitioner as a partner of the Firm. That change was sought on the basis of Deed of Retirement dated 1st August 1987. The Registrar of Firms, it appears, acting on that notice deleted the name of the petitioner as partner of the respondent No.2 (cid:19) Firm on 29th June 1990. The petitioner therefore applied for rectification of the mistake. The respondent No.1 by the impugned order declined 3 WP2252/04 to rectify the mistake. It appears from the record that the Deed of Retirement dated 1st August 1987 was subject matter of challenge in the Civil Court. When that dispute reached the Supreme Court, the Supreme Court referred the dispute raised in the civil suit between the parties to Arbitrator. A retired learned Judge of this Court was appointed as Arbitrator. The learned Arbitrator made his award. One of the points decided by the learned Arbitrator was whether the Deed of Retirement dated 1st August 1987 which has the effect of retiring petitioner as a partner of the Firm was effective or not. The learned Arbitrator declared thus :- (cid:28) It is declared that Respondent No.1 Hirubhai Himabhai Patel had not retired as a partner of the firm of M/s V.H. Patel and Co. as from 1.8.1987 under the said Deed of Retirement or otherwise and continued to be a partner in the said firm of M/s V.H. Patel and Co. from and after 1.8.1987.(cid:29) 4 WP2252/04 2] The learned Arbitrator however declined to pass a decree of dissolution of the Firm. Arbitration Petition No.175 of 1999 was filed in this Court by the present petitioner principally challenging the finding of the learned Arbitrator declining to pass an award for dissolution of the Firm. That petition was decided by one of us (D.K. Deshmukh J.) by order dated 25th October 1999. The finding recorded by the learned Arbitrator on issue No.17 was set aside and issue No.17 was remitted back to the learned Arbitrator for fresh consideration. Issue No.17 related to the dissolution of the partnership Firm. In the order, a clear finding is recorded that the learned Arbitrator in the award has held that the Deed of Retirement dated 1st August 1987 is ineffective and that the petitioner continues to be a partner of the respondent No.2 (cid:19) Firm. That order was challenged in the Supreme Court in special leave petitions (civil) Nos.17010 to 17012 of 1999. They were decided by the Supreme Court by its order dated 18th April 2000. The Supreme Court declined to interfere 5 WP2252/04 with the order of the High Court. Thereafter, arbitration petition No.190 of 2000 was filed on behalf of the respondent No.2 (cid:19) Firm and its partners challenging some of the findings recorded by the learned Arbitrator. That petition was dismissed by the learned Single Judge of this Court by order dated 2nd November 2001. The learned Single Judge observed thus :- (cid:28) As observed by me earlier this is a classic case where the petitioners are seeking to frustrate the order passed by this Court in remitting the matter to the Arbitrator. It is an abuse of the process of the Court.(cid:29) Thus, the position on record remains that the petitioner continued to be a partner of the respondent No.2 (cid:19) Firm. After the petitioner came to know that his name has been deleted by the respondent No.1 (cid:19) Registrar of Firms, he applied to him for correction of the mistaken entry taken in 6 WP2252/04 the register under sub-section (1) of section 64 of the Indian Partnership Act. The Registrar of Firms, however, rejected that application. 3] The learned counsel appearing for petitioner submits that an entry of change in the composition of partnership firm can be recorded in the Register of Firms under section 63 of the Companies Act. He submits that in so far as application under section 63 of the Companies Act is concerned, an application has to be made by all the partners for recording the change. The learned counsel submits that it is the case of the petitioner that he never signed any application for deletion of his name from the Register of Firms. The learned counsel submits that when the petitioner came to know that a notice in Form (cid:24) E(cid:25) has been given for deletion of his name, he addressed a letter dated 5th January 1989 to the Registrar of Firms stating therein that he has come to know that notice in Form (cid:24) E(cid:25) has been given for deletion of his name and that the Registrar of Firms 7 WP2252/04 should not take that entry. The learned counsel submits that ignoring the fact that the notice in Form (cid:24) E(cid:25) is not signed by all the partners and ignoring the letter of the petitioner, the respondent No.1 took the entry and therefore now as it is clear from the award of the learned Arbitrator, the judgment of this Court and the Supreme Court that retirement of the petitioner never took effect and that he continues to be the partner, the Registrar was under a duty to correct the entry in exercise of his powers under sub- section (1) of section 64 of the Indian Partnership Act. 4] We have heard the learned counsel appearing for respondents. An affidavit has also been filed on behalf of the respondent No.1 wherein he has stated that a notice in Form (cid:24) E(cid:25) dated 10th October 1987 was given to Registrar on 28th October 1987 and that notice was given under section 63 of the Indian partnership Act and he recorded the change on 29th June 1990. The Registrar, however does not say 8 WP2252/04 whether the notice in Form (cid:24) E(cid:25) was signed by all the partners or not. He also in his affidavit does not say anything about the protest lodged by the petitioner in 1989 in relation to Form (cid:24) E(cid:25) . The only submission made on behalf of the respondent Nos.3 to 6 is that though there is a finding recorded by the learned Arbitrator which has been confirmed by this Court and the Supreme Court, there is no decree passed in terms of the award because the issue of deletion has been remitted back to the learned Arbitrator and the proceedings are pending. 5] Perusal of the provisions of section 63 of the Indian Partnership Act shows that when a change occurs in the constitution of a registered partnership firm, in the sense, that a partner comes in or a partner retires, then a notice of change signed by all the partners is to be given to the Registrar of Firms and on receiving that notice, the Registrar of Firms makes entry amending the existing entry in the Register of Firms. In so far as the notice in the present case is concerned, in paragraph 3 of the affidavit of the Registrar of 9 WP2252/04 Firms, following statement is made :- (cid:28) 3. I say that thereafter the partners of the firm executed a retirement deed and Shri Hirubhai P. Patel (the Petitioner) retired on 01-08-1987. The notice in form E dated 10-10-1987 was given to Registrar on 28-10-1987 and the said change was recorded on 29-06-1990.(cid:29) In this affidavit, the Registrar of Firms does not say as to whether the notice as required by the provisions of section 63 was signed by all the partners. In our opinion, in the face of clear statement made by the petitioner in the petition that he had never signed the notice in Form (cid:24) E(cid:25) for deletion of his name from the Register of Firms, the Registrar in his affidavit should have made clear stating in this regard. What is further to be seen is that the petitioner had written a letter dated 5th January 1989 to the Registrar of Firms. In that letter, the petitioner stated thus :- 10 WP2252/04 (cid:28) I am partner in above firm since 1945. I have some dispute with existing partners of the above firm. We came to knowledge from reliable sources that the existing partners excluding myself have lodged forged retirement deed of partnership with form No.E with you. You are kindly requested to please do not register above change.(cid:29) This letter is referred to in the petition, copy of that letter is filed with the petition, therefore it was for the Registrar of Firms if he had not received that letter to say so in his affidavit. The Registrar of Firms does not say in his affidavit that he did not receive that letter. Therefore, we will have to assume that the letter was received by the Registrar of Firms in 1989. If that is so it is for the Registrar of Firms to explain why he has taken the entry on 29th June 1990 11 WP2252/04 ignoring that letter. No explanation is forthcoming from the respondent No.1 in this regard. Therefore, it can be said that the Registrar of Firms had taken the entry in the Register of Firms deleting the name of the petitioner by mistake. The fact that the entry was taken by mistake becomes clear from what is said by the learned Arbitrator in his award to which we have referred above. This part of the award has become final because that part of the award was challenged by the respondent Nos.3 to 6 and that petition has been dismissed by this Court and in the order passed in arbitration petition No. 175 of 1999 it has been categorically recorded that the learned Arbitrator has recorded a categorical finding that the Deed of Retirement dated 1st august 1987 is ineffective and the petitioner continues to be a partner of the respondent No.2 (cid:19) Firm. In our opinion therefore, as the entry deleting the name of the petitioner was taken by mistake by the Registrar of Firms, he ought to have corrected that mistake in exercise of his powers under sub-section (1) of section 64 of the Indian Partnership Act. So far as 12 WP2252/04 the submission made on behalf of the respondent Nos. 3 to 6 is concerned, in our opinion, the submission is not well founded in view of the observations of the Supreme Court in its judgment in the case of Satish Kumar and others v/s Surinder Kumar and others, reported in AIR 1970 SC 833. What is said by Justice Hegde in his concurring judgment in paragraph 22 of that judgment, in our opinion, is a clear answer to the submission made on behalf of the respondent Nos.3 to 6. Paragraph 22 of that judgment reads as under :- (cid:28) 22. I agree. But I would like to add few words. Arbitration proceedings, broadly speaking may be divided into two stages. The first stage commences with arbitration agreement and ends with the making of the award. And the second stage relates to the enforcement of the award. Paragraph 7 of the First Schedule to the Arbitration act lays down that (cid:24) the award shall be final and binding on the parties 13 WP2252/04 and persons claiming under them respectively(cid:25) . Therefore it is not possible to agree with the full Bench decisions of the Patna High Court and that of the Punjab and Haryana High Court that a award which is not made a decree of the Court has no existence in law. The learned Judges who decided those cases appear to have proceeded on the basis that an award which cannot be enforced is not a valid award and the same does not create any rights in the property which is the subject matter of the award. This in my opinion is not a a correct approach. The award does create rights in that property but those rights cannot be enforced until the award is made a decree of the Court. It is one thing to say that a right is not created, it is an entirely different thing to say that the right created cannot be enforced without further steps. For the purpose of section 17(1)(b) of the Registration Act, 14 WP2252/04 all that we have to see is whether the award in question purport or operate to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property. If it does, it is compulsorily registrable. In the aforementioned Full Bench decisions sufficient attention has not been given to section 17 of the Registration Act. The focus was entirely on the provisions of the Arbitration Act and there again on the enforcement of the award and not in the making of the award. A document may validly create rights but those rights may not be enforceable for various reasons. Section 17 does not concern itself with the enforcement of rights. That section is attracted as son as its requirements are satisfied. There is no gainsaying the fact that the award 15 WP2252/04 with which we are concerned in this case, at any rate, purported to create rights in immovable property of the value of rupees more than one hundred. Hence it is compulsorily registrable.(cid:29) In our opinion, looking at the matter from any point of view, firstly the respondent No.1 should not have taken the entry deleting the name of the petitioner in the absence of any application made by the petitioner alongwith other partners, in any case that entry should not have been taken when the petitioner had specifically raised his objection to the deletion. In our opinion, the Registrar of Firms should have, when he was supplied with copies of all the orders passed by various Court holding that the petitioner continues to be a partner of the respondent No.2 (cid:19) Firm, corrected his record accordingly. In the result therefore, the petition succeeds and is allowed. Rule in the petition is made absolute in terms of prayer clauses (a) and (b). No order as to costs. 16 WP2252/04 The learned counsel appearing for petitioner states that because an amount of Rs. 7,00,000/- is payable by the petitioner to the respondent No.2, the petitioner was directed by this Court to deposit the amount of Rs.7,00,000/- to the credit of this petition. He further states that if the respondent No.2 (cid:19) Firm wants to withdraw the amount, he has no objection to the amount being withdrawn. The learned counsel appearing for respondent No.2 however, says that he is wiling to withdraw the amount without prejudice to his rights and contentions. Obviously, such a request cannot be accepted because the amount is payable under the award, there is no question of petitioner paying the amount to the respondents if the respondents do not accept the award. In these circumstances therefore, the petitioner is permitted to withdraw the amount that the petitioner had deposited to the credit of this petition with accrual if any. 6] At this stage, a request is made by the 17 WP2252/04 learned counsel appearing for respondent Nos.3 to 6 to stay the operation of this order for a period of eight weeks from today. The request is granted. The Registrar of Firms is directed to take entry pursuant to this order after a period of eight weeks from today. Parties to act on the copy of this order duly authenticated by the Associate / Private Secretary of this Court. Certified copy expedited. ( JUSTICE D.K. DESHMUKH ) ( JUSTICE ANOOP V. MOHTA )