Case Note & Summary
The dispute arose from a money recovery suit filed by the respondent, a partnership firm, against the appellant, a private limited company, for outstanding payments on goods supplied. The respondent had first approached the Company Court with a winding up petition, but that court relegated the respondent to the civil remedy and directed security for two admitted bills. The Trial Court dismissed the money recovery suit on the ground that the respondent's registration as a partnership firm was not proved, rendering the suit barred under Section 69(2) of the Indian Partnership Act, 1932. On appeal, the First Appellate Court accepted Exhibit-8, a memorandum from the Registrar of Firms, and a certified copy of Form-VIII, concluded that the firm was registered with registration number L73931 dated 14.05.2010, and decreed the suit for Rs.24,36,105 with interest at 6% per annum from the date of filing until realization. The appellant-defendant challenged this decree before the Supreme Court, primarily on limitation and lack of proof of registration. The Supreme Court first held that the registration of the respondent firm was sufficiently proved by Exhibit-8 and the corroborating Form-VIII, and the First Appellate Court correctly admitted the additional document under Order XLI Rule 27(1) of the Code of Civil Procedure, 1908. On the question of limitation, the Court found that the suit was filed on the strength of specific bills raised against the appellant, not on a running account, despite numerous transactions between the parties. Annexure P-18, a reply by the appellant, did not acknowledge the debt claimed; the payments made were for specifically admitted invoices and did not constitute part payment for the disputed claim. The respondent's argument that time spent in prosecuting the winding up petition before the Company Court should be excluded under Section 14 of the Limitation Act, 1963 was rejected. The Court applied Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari and Jignesh Shah v. Union of India, holding that winding up proceedings are a distinct remedy, not for the same relief as a suit for recovery, and therefore time spent there cannot be excluded. The Company Petition was filed on 10.02.2009, which was beyond limitation for the two bills dated 30.01.2006, and the suit was filed on 05.06.2010, beyond limitation for the remaining bills, the last of which was dated 06.03.2007. Consequently, the Supreme Court found no reason to sustain the First Appellate Court's order, allowed the appeal, set aside the decree, and dismissed the respondent's suit as barred by limitation.
Headnote
A) Partnership Law - Maintainability of suit - Registration of firm under Section 69(2) - Indian Partnership Act, 1932, Section 69(2) - Exhibit-8 memorandum from Registrar of Firms, West Bengal, showed registration number L73931 and date 14.05.2010, and certified Form-VIII corroborated it - Held that respondent firm was registered and suit not barred by Section 69(2); Trial Court's finding erroneous (Paras 4, 6). B) Civil Procedure - Additional Evidence - Admission of document under Order XLI Rule 27(1) - Code of Civil Procedure, 1908, Order XLI Rule 27(1) - First Appellate Court allowed certified copy of Form-VIII to further cause of justice and enable court to pronounce judgment - Held that additional document admissible to corroborate registration (Paras 4-5). C) Limitation Law - Basis of claim and acknowledgment - Limitation Act, 1963 - Suit filed on strength of bills, not running account; Annexure P-18 did not acknowledge debt; payment for admitted bills not part payment for disputed claim - Held that cause of action as pleaded not established and suit barred by limitation (Paras 7-8, 15-17). D) Limitation Law - Exclusion of time under Section 14 - Limitation Act, 1963, Section 14 - Winding up proceeding is separate remedy; time spent cannot be excluded; Company Petition filed after limitation for some bills; suit filed well beyond limitation - Held that Section 14 not applicable; judgment and decree of First Appellate Court set aside and suit dismissed (Paras 12-16, 18).
Issue of Consideration
Whether the respondent-plaintiff firm was registered under the Indian Partnership Act, 1932 so as to maintain the suit under Section 69(2); whether the suit for recovery of money based on invoices was barred by limitation, including whether time spent in winding up proceedings could be excluded under Section 14 of the Limitation Act, 1963; whether the First Appellate Court correctly allowed additional evidence under Order XLI Rule 27(1) of the Code of Civil Procedure, 1908.
Final Decision
The Supreme Court allowed the appeal, set aside the judgment and decree of the First Appellate Court, and dismissed the respondent-plaintiff's suit for recovery of money as barred by limitation. The Court held that the registration of the respondent-firm was sufficiently proved, but the suit was filed on the strength of invoices and not on a running account, and no acknowledgment of debt or part payment extended limitation. Time spent in winding up proceedings could not be excluded under Section 14 of the Limitation Act.
Law Points
- Registration under Section 69(2) of the Indian Partnership Act
- 1932 requires proof
- and a memorandum issued by the Registrar of Firms with a certified Form-VIII is sufficient. A suit for recovery based on invoices is not a running account
- part payment for admitted bills does not amount to acknowledgment of disputed debt. Winding up proceedings before the Company Court are a distinct remedy
- not the same relief
- time spent cannot be excluded under Section 14 of the Limitation Act
- 1963. Section 5 and Section 14 of the Limitation Act are meant for granting relief where a mistake has been committed
- and a party bona fide prosecuting a remedy with due diligence may be considered. Additional evidence under Order XLI Rule 27(1) of the Code of Civil Procedure
- 1908 may be allowed to further the cause of justice and enable the court to pronounce judgment.
