PETITIONER: VASANT RAO AND ANOTHER Vs. RESPONDENT: SHYAMRAO AND ORS. DATE OF JUDGMENT28/07/1977 BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. SHINGAL, P.N. CITATION: 1977 AIR 2021 1978 SCR (1) 218 1977 SCC (4) 9 ACT: Companies Act, 1956, Part X, S. 590 vis-a-vis Indian Partnership Act, 1932. for winding up of unregistered companies. HEADNOTE: In a civil suit for the dissolution of partnership between the appellants and respondents, the defendants-respondents raised an objection that the court had no jurisdiction to entertain the suit in view of Part X of the Companies Act, 1956 application was rejected by the Trial Court and thereafter by the High Court in revision. it was argued before this Court that as Part X of the Companies Act contains special provisions for the winding up of unregistered companies including partnerships containing more. than seven members, such partnerships can be wound up only in accordance with the procedure prescribed in the Companies Act, and that the suit before the Senior Civil Judge was not maintainable. Dismissing the appeal by special leave, the Court, HELD : The provisions for winding up of the affairs of a firm which Chapter VI of the Indian Partnership Act contains besides provisions for the dissolution of partnership, are left untouched by Section 590 of the Companies Act, 1956. Section 590 makes it clear that Part X of the Act does not affect the operation of other enactments providing for any partnership, association or company being wound up. [220H, 221A] Pattada Authayya v. Pattada Somayya & Ors. AIR 1955 Mysore 149, partly over-ruled. JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 393 of 1977.
Apopeal by Special Leave from the Judgment and Order dated
8-10-1976 of the Bombay High Court in Civil Revision No.
137/76.
K. S. Ramamoorthy, S. Balakrishnan and N. N. Ghatate for
the Appellants.
Naunit Lal, Miss Latita Kohli and S. G. Ghate for
Respondents Nos. 1 and 3 to 6.
The Judgment of the Court was delivered by
GUPTA, J.-The two appellants and the six respondents were
partners of a firm called “Shivraj Fine Art Litho ‘Works.”
The appellants as plaintiffs instituted civil suit No. 9 of
1974 in the Court of the Senior Civil Judge,, Nagpur, for
dissolution of the partnership and accounts.The reliefs
asked for included a declaration that the firm
stood dissolved on and from January 9, 1974. It appears
that thereafter the original defendants who are the
respondents before us were transposed as plaintiffs and the
appellants who were originally the plaintiffs were
transferred to the category of defendants.The transposed
defendants raised an objection that the court hadno
jurisdiction to entertain the suit in view of the provisions
of Part X
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of the Companies Act, 1956. The trial court rejected the
application. The defendants then moved the, Bombay High
Court, Nagpur Bench, in ‘revision. The High Court having
dismissed the revision petition the present appeal has been
filed with special leave granted by this Court.
it is argued on behalf of the appellants that as Part X of
the Companies, Act, 1956 contains special provisions for the
winding up of unregistered companies, which expression as
defined in that Act includes a partnership consisting of
more than seven members, any action for the winding up such
a partnership must be in accordance with the procedure
prescribed for that purpose in the Companies Act, and the
suit instituted in the court of the Senior Civil Judge was
not maintainable. Part X of the Companies Act includes
sections 582 to 590. Section 582 defines the expression
“unregistered company” as follows :
Meaning of “unregistered Company”.
“unregistered company
(a) shall not include-
(i) a railway company incorporated by any
Act of Parliament or other Indian law or any
Act of Parliament of the United Kingdom;
(ii)a company registered under this Act; or
(iii)a company registered under any previous
companies law and not being a company the
registered office whereof was in Burma , Aden
or Pakistan immediately before the separation
of that country from India; and
(b) save as aforesaid, shall include any
partnership. association or company consisting
of more than seven members at the time when
the petition for winding up the partnership,
association or company as the case may be, is
presented before the Court.”
It is not disputed that the partnership in question had more
than seven members at the time when the suit was instituted.
This was therefore an “unregistered company” as defined in
section 582(b). Section 583(1) states that subject to the
provisions of this Part, any unregistered company may, be
wound up under this Act, and all the provisions of this Act
‘with respect to winding up shall apply to an unregistered
company, with the exceptions and additions mentioned in
subsections (2) to (5)”. It is not necessary to refer in
any great detail to these sub-sections except to point out
that sub-section (4) mentions the circumstances in which an
unregistered company may be wound up, and one of the
circumstances is that the company has been dissolved. It
may also be stated that under subsection
220
(3) no unregistered company can be wound up under this Act
voluntarily or subject to the supervision of the court and
can only be wound up by the court. Admittedly this is not a
case of voluntary winding up or winding up subject to the
supervision of the court. Chapter VI of,, the Indian
Partnership Act, 1932 also contains provisions for the
dissolution of a firm and its winding up on ‘dissolution.
The argument for the appellants is that the special
provisions of Part X of the Companies Act exclude the
operation of the general law contained in the Partnership
Act in the matter of winding up of a firm having more than
seven persons, and as the Civil Judge trying the suit shall
have to apply the Partnership Act, the suit is not maintain-
able.
It is difficult to appreciate why the suit should not be
maintainable at any rate in. so far as it is one, for
dissolution of the firm. As already stated, one of the
reliefs prayed for is a declaration that the firm stood
dissolved from January 9, 1974. This is not a relief that
can be claimed in a proceeding under Part X of the Companies
Act which provides for the winding up of unregistered
companies. However it is not necessary to consider whether
the Civil Judge had jurisdiction to entertain some of the
claims made in the suit, because section 590 of the
Companies Act makes it clear that Part X of the Act does not
affect the operation of the Indian Partnership Act. Section
590 states
Saving and construction of enactments conferring power to
wind up partnership, association or company in certain
cases.
“Nothing in this Part shall affect the
operation of any enactment which provides for
any partnership, association or company being
wound up, or being wound up as a company or as
an unregistered company, under the Indian Com-
panies ‘Act, 1913 or any Act repealed by that
Act :
Provided that references in any such enactment
to’ any provision contained in the Indian
Companies Act, 1913 or in any Act repealed by
that Act shall be read as references to the
corresponding provision, if any contained in
this Act.”
As the marginal note to this section indicates, this is a
saving provision. It leaves unaffected the operation of any
enactment (a) which provides for any partnership,
association or company being wound up, or (b) which provides
for any partnership,association or company being wound up as
a company or as an unregistered company under the Indian
Companies Act, 1913 or any Act repealed by that Act. An
enactment means the whole Act or a part of it.The proviso
which contains a rule of construction of references in
any such enactment to any provision in the Indian Companies
Act, 1913 or any Actress pealed by that Act is not relevant for
the present purpose.It is. clear that the provisions for
winding up of the affairs of a firm which Chapter VI of the
Indian Partnership Act contains besides provisions for the
dissolution of partnership are left untouched by section 590
of the
221
Companies Act, 1956. The cases cited in support of the
respective contentions of the parties are not really on the
point under consideration except the decision of the Mysore
High, Court in Pattada Authayya v. Pattada Somayya and
others(1), to which counsel for the appellants referred.
The Mysore case contains an observation on section 271 of
the Indian Companies Act, 1913 which corresponds to section
590 of the, Companies Act, 1956. The learned single Judge
who decided the case held that there was nothing in section
271 or in the words “any unregistered company may be wound
up” appearing in that section to indicate that the aggrieved
party had an option to institute a suit for winding up of an
unregistered company. This decision does not take note of
sub-section (2) of section 271 which is similar to section
590 of the Companies Act, 1956 leaving unaffected the
operation of other enactments providing for any partnership,
association or company being wound up.
The appeal is dismissed with costs.
M.R.
Appeal dismissed.
(1)A.I.R. 1955 Mysore 149.
222