Summary
The Supreme Court agreed with the First Appellate Court that the plaintiff firm's registration was proved, so Section 69(2) of the Partnership Act did not bar the suit. It nevertheless dismissed the money suit as time-barred: the defendant's reply was not an acknowledgment of the debt, the suit rested on individual bills rather than a running account, and time spent on a winding-up petition could not extend limitation for a recovery suit.
Issues
- Whether the plaintiff proved its registration as a partnership firm so as to escape the bar under Section 69(2) of the Indian Partnership Act, 1932.
- Whether the suit for recovery of money on unpaid bills was barred by limitation.
- Whether the defendant's reply and payment of certain admitted bills amounted to an acknowledgment of the debt or made the claim one on a running account.
- Whether time spent prosecuting a winding-up petition before the Company Court could be excluded, or limitation extended by that Court's order, for the later recovery suit.
Provisions considered
- Section 69(2), Indian Partnership Act, 1932The Trial Court dismissed the suit under this bar for want of proof of registration. The Supreme Court held that Exhibit-8, the Registrar of Firms' memorandum showing the registration number and a registration date of 14.05.2010, together with the certified Form-VIII admitted in appeal, proved the registration. (¶¶ 2, 4, 5, 6)
- Order XLI Rule 27(1), Code of Civil Procedure, 1908The Court approved the First Appellate Court's admission of the certified Form-VIII as additional evidence, because it corroborated Exhibit-8 and would help the court pronounce judgment. (¶¶ 4, 5)
- Section 14, Limitation Act, 1963The Court held that time spent on a winding-up proceeding does not affect limitation for a separate suit for recovery of money. For the two bills dated 30.01.2006, even the date of the Company Petition (10.02.2009) fell outside limitation, so the question whether Section 14 applied was academic. (¶¶ 11, 13, 14, 16)
Held
- The plaintiff's registration as a partnership firm was proved by Exhibit-8, the Registrar of Firms' memorandum recording its registration number, and was corroborated by the certified Form-VIII rightly admitted as additional evidence in appeal. The Trial Court's dismissal of the suit on this ground could not be upheld. (¶¶ 4, 5, 6)
- A winding-up proceeding, which may or may not lead to recovery, is a separate remedy that does not affect the limitation for a suit for recovery of money. Following Yeswant Deorao Deshmukh and the converse reasoning in Jignesh Shah, the period spent on the Company Petition did not save the suit. (¶¶ 13, 14, 16)
- The Company Court did not extend limitation and was not competent to do so. The defendant's undertaking before it to secure two bills was not an admission that gave up the plea of limitation. (¶ 14)
- The defendant's reply (Annexure P-18) did not acknowledge the debt sued upon. The payment made was for specific invoices the defendant admitted, not a part payment of the claimed debt, and one of those invoices was not even in the plaint schedule. (¶¶ 15, 17)
- The suit was founded on individual invoices and not on a running account. Showing deductions for payments of admitted bills in the plaint schedule does not turn the claim into a running account. (¶¶ 7, 17)
- Recovery on the bills of 30.01.2006 needed a suit before 29.01.2009, and the last unpaid bill was dated 06.03.2007, whereas the suit was filed on 05.06.2010. The claim was therefore barred by limitation, even though the suit was properly instituted by a registered firm. (¶¶ 16, 18)
Result
Appeal allowed; the High Court's decree for recovery reversed and the suit dismissed as barred by limitation, though the finding that the plaintiff firm was registered was upheld.