M/s.Jeevandas Laljee & Son v. State of Tamil Nadu

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 07.01.2008C O R A MTHE HONOURABLE Mr.JUSTICE P.JYOTHIMANIW.P.No.27385 of 2007 and M.P.Nos.1 to 3 of 2007 M/s.Jeevandas Laljee & Son,98/103, Govindappa Naicken Street,Chennai – 600 001.Rep. by its PartnerMr.Bhupan T.Asher. .. Petitioner -Vs-1. State of Tamil Nadu, Rep by the Secretary to Government, Commercial Tax Department, Secretariat, Fort St. George, Chennai – 600 009.2. The Registrar of Firms, North Beach Road, Chennai – 600 001.3. The Inspector General of Registration, Santhome High Road, Chennai – 600 028... Respondents Writ Petition filed under Article 226 of the Constitution ofIndia for the issuance of a Writ of Certiorarified Mandamuscalling for the records of the second respondent comprised in itsorder under Ref.Thi.Mu.No.4760/E4/07 dated 30.04.2007 as much asit is attached to the Form No.5 filed by the petitioner, refusingto take on record the notice under Form No.5 and the subsequentimpugned order of the third respondent dated 26.06.2007 underRef.L.Dis.No.21603/S1/07 and quash the same as arbitrary andillegal and contrary to the provisions of the Partnership Act andthe Madras Partnership (Registration of Firms), 1951 andconsequently direct the second respondent to forthwith take onrecord in notice dated 27.04.2007 filed by the petitioner in FormNo.5 in terms of Rule 4 and make the record of such notice inentry relating to the petitioner's firm in the Register of Firmsand file the same along with the statement relating to the firmfiled under Section 59 of the Partnership Act. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr.Satish ParasaranFor Respondents : Mr.L.S.M.Hasan Fizal Government Advocate- - - - O R D E RThis writ petition is filed challenging the order of thethird respondent the Inspector General of Registration, Chennaidated 26.06.2007, in which the third respondent has refused torecord the reconstitution of the registered partnership firm,which was filed in Form No.V bearing the signature of all theexisting partners of the reconstituted firm, on the basis thatForm No.V should also contain the signature of the partners whohave retired in order to avoid any litigation in future betweenthe partners.2. The partnership firm was originally constituted with 5partners namely Jamnadas Hansraj Asher, Bhupan T.Asher, MihirPratap Asher, Mrs.Vasant P Asher and Mr.Tricumsee Hansraj Asherand the said partnership firm was registered on the file of theRegistrar of Firms and District Registrar, Chennai\North withS.No.2328 of 1948. Subsequently two of the partners namely MihirPratap Asher and Mrs.Vasant P. Asher have submitted their lettersof retirement from the partnership firm on 06.08.2004. In thesecircumstances, the three remaining partners namely JamnadasHansraj Asher, Bhupan T.Asher and Tricumsee Hansraj Asher havereconstituted the firm in the same name and as per Section 63(1)of the Indian Partnership Act, 1932 have filed an application inForm No.V as prescribed under Rule 4 of the Rules made underMadras Partnership (Registration of Firms) Rules, 1951. The thirdrespondent has refused to enter the Form No.V in the Register onthe basis that the retired partners has not signed in the FormNo.V. 3. The learned counsel appearing for the petitioner wouldsubmit that as per Section 63 of the Indian Partnership Act, whenonce the change occurs in the constitution of a registeredpartnership firm, any incoming, continuing or outgoing partner orany other person authorised by them may intimate the same to theRegistrar in the prescribed form i.e. Form No.V as per Rule 4 ofthe Madras Partnership (Registration of Firms) Rules, 1951. Itis only in cases where there is dissolution of partnership firm,which is a registered firm, the partner who goes out of thepartnership firm or his authorised representative is expected tosign Form V. Further, the learned counsel appearing for the https://hcservices.ecourts.gov.in/hcservices/ petitioner would refer to Form No.V provided under Rule 4 of thesaid Rules. The said Form V consists of two parts, the firstpart relates to the change in the constitution of the partnershipfirm and the second part deals with the dissolution of the firm.When change occurs in the constitution of a registered firm onthe retirement of the partners in which case the signature of thepartners incoming, continuing or outgoing partner is required. Inthe present case the three partners are continuing as partners.Since Form No.V provides for signature of either the incoming,continuing or outgoing partner and it does not specificallystate that the outgoing partners should sign Form V, which isprescribed under Rule 4 of the said rules. Further Section 63(1)of the Act does not insist the signature of the outgoingpartners.4. On the other hand the learned Additional GovernmentPleader would submit that the purpose of passing of the impugnedorder is to avoid any litigation in further between the partners.Further according to him the impugned order is not illegal orirregular and it is passed only in the interest of the partnersand in order to avoid future litigation.5. Heard the learned counsel appearing for the petitionerand the learned Additional Government Pleader appearing for therespondents.6. It is well settled that as far as the partnership firm isconcerned, Registration of the firm is only optional andaccordingly the registration of a firm do not confer any legalstatus to the partnership firm. It is equally same in respect ofregistration of the partnership deed also. It is not in disputethat originally the partnership firm consisted of five partnersand subsequently on 6.08.04 two of the five partners retired fromthe partnership firm and there is no dissolution of thepartnership firm as it is seen in Form No.V filed by thepetitioner and it is seen that after retirement of two of thepartners from the partnership firm, the remaining three partnersreconstituted the firm and they all signed Form No.V andintimated the same to the Registrar for registering the changeeffected in the reconstitution of the firm. 7. Section 63 (1) of the Indian Partnership Act reads asfollows: "Section 63 Recording of changes in and dissolution of afirm.--(1) When a change occurs in the constitution of aregistered firm any incoming, continuing or outgoingpartner, and when a registered firm is dissolved anyperson who was a partner immediately before the https://hcservices.ecourts.gov.in/hcservices/ dissolution, or the agent of any such partner or personspecially authorised in this behalf, may give notice tothe Registrar of such change or dissolution, specifyingthe date thereof; and the Registrar shall make a recordof the notice in the entry relating to the firm in theRegister of Firms, and shall file the notice alongwiththe statement relating to the firm filed under section59."Thus Section 63(1) consists of two parts. The first part ofSection 63 relates to the retirement of some of the partnerswhich results in reconstitution of the partnership firm andsecondly in cases where retirement of partners results indissolution of the partnership firm. It is made very clear inthe said section that after retirement of some of the partners,if the partnership firm is reconstituted and it is continuingthen the same has to be intimated by the incoming partners,continuing partners or outgoing partners or by any person who isspecially authorised by them to the Registrar. It is only incases where there is dissolution of partnership firm which arisesout of retirement of the partners then the retired partners haveto sign the Form No.V. 8. Form No.V prescribed under Rule 4 of the MadrasPartnership (Registration of Firms) Rules, 1951 is reproduced asunder:"Rule 4. Form of intimation and notices underSections 61, 62 and 63-- Intimation and notices underSections 61, 62, 63(1) and 63(2) of the Act shallrespectively be in Forms III, IV, V and VI annexed tothese rules, with such variations as circumstances mayrequire."FORM V(see Rule 4)Notice of the change in the constitution of the Firm or of thedissolution of the FirmFiling fee--Rs.1Presented or forwarded to the Registrar of Firms for filing by--Under Section 63(1) of the Indian Partnership Act, 1932, noticeis hereby given that-- https://hcservices.ecourts.gov.in/hcservices/ (1) The constitution of the firm*________has been altered asfollows:----------------------------------------------------------------- Name and full address of the IName and full address of the incoming partner and date I outgoing partner and date of his joining the firm I of his ceasing to be partner -----------------------------------------------------------------II-----------------------------------------------------------------Station---Date---Signature of the incoming, continuing or outgoing partner or his special authorised agent.(2) The firm*__________ has been dissolved with effect fromthe___Station---Date---Signature of the person who was a partner immediately before the dissolution or of his specially authorised agent.-----------------------------------------------------------------N.B.-- Strike out item (1) or (2) not required*Here enter the name of firm.A reference to Form No.V makes it very clear that it contains twoparagraphs. The first para related to first portion of theSection 63(1) wherein the partnership firm is reconstituted onthe retirement of the partners in which case the incoming,continuing or outgoing partner have to sign. In the second parawhen the firm is dissolved it is stated that signature of thepersons who was a partner immediately before the dissolution isrequired. It is also stated in Form V that the para (1) or (2)which is not applicable has to be struck out. 9. In these circumstances, the stand taken by the thirdrespondent that to avoid any future litigation between thepartners, signature of the outgoing partners is required has nolegal basis at all. It is not for the third respondent to decideabout the legal dispute between the partners as the disputes willbe decided as per the partnership deed and it is not the concernof the third respondent at all. https://hcservices.ecourts.gov.in/hcservices/

10. In view of the same, the impugned order is totallywithout jurisdiction and hence it is liable to be set aside andaccordingly set aside. Consequently, the connected M.Ps. areclosed. No costs. KkSd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1. The Secretary to Government, Commercial Tax Department, Secretariat, Fort St. George, Chennai – 600 009.2. The Registrar of Firms, North Beach Road, Chennai – 600 001.3. The Inspector General of Registration, Santhome High Road, Chennai – 600 028.+ 1 cc to Mr. Satish Parasaran, Advocate SR No. 1191W.P.No.27385 of 2007 and M.P.Nos.1 to 3 of 2007RS(CO)SR/11.1.2008