1. Heard learned advocate for the parties.
2. On 15.02.2012, this Court passed the following order;
“Learned advocate for the petitioner has submitted that the matter was slated for final disposal but there is a leave note, hence it may be placed on appropriate date. Hence, let the matter be come up on 22.02.2011.”
3. Accordingly, the matter was taken up for final disposal. Hence, Rule. Rule is waived by learned advocate for the respective parties. Rule is fixed forthwith in terms of the order made hereinabove.
4. The petitioner by way of this petition filed under Article 226 of the Constitution of India challenged the order dated 18.12.2010 purported to have been passed in exercise of the power under Section 64 of the Indian Partnership Act, accepting the request for cancelling the entry qua one of the partner – respondent no.2 in respect of the constitution of partnership firm.
5. Facts in brief leading to filing this petition, as could be culled out from the memo of the petition deserve to be set out as under;
6. The petitioner is a partnership firm constituted under the Indian Partnership Act. All partners are real brothers. The petitioner alleged in the memo of the petition that one of the partners of the partnership firm i.e. respondent no.2 tendered his resignation vide letter dated 12.12.2009 sent by Register Post A.D. to the partnership firm and also to Registrar of firms. The firm received the said letter on 12.12.2009. On 15.12.2009, the resignation letter was accepted by the partners. The factum of acceptance of the resignation was communicated to out going partner vide letter dated 24.02.2010, which was also sent by Register Post A.D. and hand delivery with signature of the acceptance as well as Under Certificate of Posting. Pursuant to the aforesaid exercise, the respondent no.2 demanded 25% of the profit of the firm, as its legitimate share as an out going partner of the firm. The change in the constitution of firm was accordingly invited to the partnership firm indicating that respondent no.2 has resigned. The said change is to register but on account of objection from respondent no.2 the Registrar did not exercise power under Section 64 of the Partnership Act and came to the conclusion that the say and objection of respondent no.2 was correct and hence passed order dated 18.12.2012, holding that respondent no.2 be considered as live partner of the said firm and his representation to that effect is acceptable and therefore, it was decided to cancel the effect from the original date. The amendment dated 16.04.2010 by which the retirement of respondent no.2 was recorded in the firm of Messrs Supreme Tech Engineering and to restore Mr. Mathew's name as live partner from the original effect. This power is exercised under Section 64(1) of the Partnership Act for rectifying the mistake.
7. Being aggrieved and dissatisfied with the order the present petition is filed under Article 226 of the Constitution of India for the reasons stated in the memo of petition.
8. Learned Advocate for the petitioner invited this Court's attention to the provision of Section 64, 65 and 71 of the Indian Partnership Act, 1932 (hereinafter referred to as the “Partnership Act”, for the sake of brevity) and contended that the action impugned is absolutely without jurisdiction and hence the resultant order is nullity.
9. Learned advocate appearing for the petitioner contended that the Registrar of partnership firm did not have jurisdiction to adjudicate upon the disputed facts with regard to the validity of resignation and/or validity of withdrawal of resignation. The plain reading of provision of Section 64 would clearly indicate that the power is conferred upon the Registrar for rectifying the mistakes only, that too at the behest of all the concerned. In the instant case, when the say of the respondent no.2, or the objection of the respondent no.2, addressed to the Registrar was contested by other partners, then in that view of the matter it was not open to the respondent no.1 to pass an order purported to have been passed under Section 64(1) for rectifying the mistake which cannot be said to be a mistake so as to cloth the Registrar with the power of rectification. The said order, therefore being palpably erroneous and contrary to provision of law, is required to be quashed and set aside.
10. Learned advocate for the petitioner relying upon the following authorities:
(I) 2010(0) ALJ-RJ 1823320 (Rajasthan High Court)
(ii) 2002(0) ALJ-DL 1319193 (Delhi High Court)
(iii) (2208) 2 Supreme Court Cases 439 (vii)(1996) 9 Supreme Court Cases 499 (viii)(1996) 9 Supreme Court Cases 502 (ix) (2003) 5 Supreme Court Cases 455 (x)(2003) 5 Supreme Court cases 461 with due emphasis contended that the power to pass an order on disputed question of facts is conspicuously absent and therefore, this order which is impugned in this petition is required to be quashed and set aside.
11. Learned advocate for the petitioner invited this Court's attention to the decisions of Calcutta High Court and Madras High Court sought to be relied upon by the advocate for respondent no.2 and indicated there from that the facts and ratio of those judgments would be of no avail or help to the respondent no.2 for justifying and supporting the order passed by respondent no.1, as the facts of those cases were so glaring than one on hand. It was thus attempted to indicate distinguishing features in the judgment for indicating that they are not applicable in the facts of the present case.
12. Learned advocate for respondent no.2 invited this Court's attention to the documents on the record and contended that the power exercised by the respondent no.1 is based upon his diligence and enquiring into the facts and therefore, when the respondent no.1 realized about his mistake in carrying out the change, he was entitled to rectify the said mistake. The petition under Article 226 of the Constitution of India would not be maintainable for assailing such an administrative order, which is passed in due exercise of the power conferred upon the statutory and administrative authority.
13. Learned advocate for the respondent no.2 invited this Court's attention to the documents and indicated that even after the date of so called resignation, the respondent no.2 is said to have functioned as partner of the firm which would be belie the contention, averments and claim of the petitioners with regard to so called validity of the resignation and its acceptance.
14. Learned advocate for respondent no.2 thereafter contended that the order impugned is passed in consonance with the provision of Section 64(1) read with Rule 8 and 16 of the Gujarat Partnership Rules.
15. The plain reading of Section 71 (2)(D) and Rule 7, 8 and 16 of the Rules would conclusively go to establish that the power exercised by respondent no.1 cannot be said to be in any manner illegal and/or perverse so as to call for any interference by this Court under Article 226 of the Constitution of India.
16. Learned advocate for respondent no.2, relied upon the decision of Calcutta High Court in case of “Durga Prosad Sarawagi and Others Vs. Registrar of Firms, West Bengal and another”, reported in AIR 1966 Calcutta 573 (Vol.53, C.97) and Madras High Court in case of “K.C.Palanisamy Vs. The Registrar of Firms”, reported in AIR 2004 Madras 375.
Learned advocate for respondent no.2 relying upon those two cases contended that Registrar while exercising power under Section 64(1) of the Partnership Act is not merely a registering authority so as to restrict his power to rectify only ministerial mistakes. The power is substantive power in nature and therefore, the decision of the Calcutta High Court as well as Madras High Court should be considered for rejecting this petition of the petitioner.
17. Learned advocate for respondent no.2 thereafter invited this Court's attention to the decision of the Division Bench of this Court in case of “Ota Kandla Pvt. Ltd. Vs. Union Of India” reported in 2011 (2) GLR 1279 to support his contention that the judicial review of the decision of the administrative authority is permissible only if the decision is illegal, unreasonable, irrational or suffering from procedural impropriety. In the instant case, the petitioner has not established any of the aforesaid exigency which would warrant interference of this Court under Article 226 of this Constitution of India and hence the petition is required to be dismissed.
18. Learned advocate for respondent no.2 thereafter invited this Court's attention to the decision of the Apex Court in case of “Bhagwan Budha Prathmik Technical Training College Nirmali Vs. State of Bihar, reported in 2010 (8) Supreme 111 to support the contention that the authority who has power to issue, has inherent power to withdraw also in the instant case. The Registrar was the person and authority who effected the change and thus the change which is effected by the Registrar is likely to be rectified, if it is found to be based upon any erroneous or mistaken belief. The exercise of the power in such rectification, if resorted to, as provided under Section 64(1) of the Partnership Act, then in that case the same cannot be frowned upon by this Court under Article 226 of the Constitution of India and therefore, the petition is required to be dismissed.
19. Learned advocate for respondent no.2 thereafter relyied upon the decision of the Apex Court in case of “ Commissioner of Income Tax, Andhra Pradesh, Hyderabad, Vs. M/s. Jayalakshmi Rice and Oil Mills Contractor Co.”, reported in AIR Supreme Court 1015, in support of his contention. Learned advocate for respondent no.2 submitted that Registrar is not merely a recording officer while recording entries under Sections 57 and 59 of the Partnership Act and when such a proposition is laid down by the Apex Court, this Court may appreciate the same in its proper perspective and may not interfere with the order impugned in this petition.
20. Learned AGP appearing for respondent no.1 adopted the submissions and support the case of respondent no.2 and submitted that the submissions made on behalf of the respondent no.2 would go to show that this Court may not interfere with the order impugned.
21. This Court has heard learned advocate appearing for the parties and perused the orders. The plain reading of the following provisions which are set out for appreciating their purport, would go to show that the contentions raised on behalf of the respondent no.2 are not tenable in eye of law. The provisions are set out as under:
“Section 64: Rectification of mistakes: (1) The Registrar shall have power at all times to rectify any mistake in order to bring the entry in the Register of Firms relating to any firm into conformity with the documents relating to that firm filed under this Chapter.
(2) On application made by all the parties, who has signed any document relating to a firm filed under this Chapter, the Registrar may rectify any mistake in such document or in the record or note thereof made in the Register of Firms.
Section 71: Power to make rules:- (1) [State Government] [may by notification in the Official Gazette make rules], describing the fees which shall accompany documents sent to the Registrar of Firms, or which shall be payable for the inspection of documents in the custody of the Registrar of Firms, or for copies from the Register of Firms:
Provided that such fees shall not exceed the maximum fees specified in Schedule I.
(2) The State Government may [also] make rules, -
(a) prescribing the form of statement submitted under section 58, and of the verification thereof;
(b) requiring statements, intimations and notices under sections 60, 61, 62 and 63 to be in prescribed form, and prescribing the form thereof;
(c) prescribing the form of the Register of Firms, and the mode in which entries relating to firms are to be made therein, and the mode in which such entries are to be amended or notes made therein;
(d) regulating the procedure of the Registrar when disputes arise;
(e) regulating the filing of documents received by the Registrar;
(f) prescribing conditions for the inspection of original documents;
(g) regulating the grant of copies;
(h) regulating the elimination of registers and documents;
(i) providing for the maintenance and form of an index to the Register of Firms; and
(j) generally, to carry out the purposes of this Chapter.
(3) All rules made under this section shall be subject to the condition of previous publication.
[(4) Every rules made by the State Government under this section shall be laid, as soon as it is made, before the State Legislature.] Rule 7 : Amendment of Register:- when an entry made in the Register is to be amended, the amendment shall be made by drawing a red line through the entry and making a new entry at the end of the existing entries. A reference in red ink to the serial number of the new entry shall be made against the amended entry.
Rule 8:- Procedure on dispute: If any person wishes to dispute any entry in the Register, such person shall give the Registrar notice in writing that he disputes the said entry and the registrar shall make remark to effect at the end of the then existing entries and shall also make a remark in red ink in the remarks column against the entry so disputed.
The Registrar shall then, as soon as may be, send an intimation of such notice to all the partners of the firm concerned and if the person giving such notice is one of the partners, to the remaining partners of such firm, as the case may be.
Rule 16 :Power to make further inquiries, etc.:- The Registrar may make such further inquiries in respect of any statement, intimation, application or notice received by him under the Act or rules thereunder and may call for production of such evidence as he may consider necessary.
22. The language employed by the legislature in casting the relevant provision namely Section 64(1) would eminently go to show that what is envisaged is rectification of mistake. This in itself is sufficient to persuade the Court to accept the plain and simple purport of the provision namely that provision is only for the purpose of rectifying the mistake. While undertaking the procedure of rectifying the mistake, as could be seen from the procedure itself, at least the statute does not lay down any elaborate scope of enquiry which would render justification to exercise of enquiring into the disputed claims, which otherwise can never be subject matter of adjudication by the administrative authority. Even if it is assumed and presumed that authority is exercising quasi judicial power which is unfortunately is not the present case. So far as the provision of Section 64(1) of the Act is concerned. The principle of administrative law has by now cristalized to conclude safely that where ever there is disputes in respect of veracity of a claim of a party, same is required to be established upon leading of evidences by the administrative authority, if not equipped with proper elaborate procedure enabling it to come to a conclusion, then the said authority cannot be said to have power to adjudicate upon disputes. In the instant case, the plain language of Section 64(1) eminently prescribes the purport of the Section and provision and therefore, in my view, there exists strong case in favour of the petitioner for quashing of the order impugned.
23. This Court is unable to accept the submission canvassed on behalf of the respondent no.2 for upholding the order on the basis of the decision of Madras High Court as well as Calcutta High Court, as the facts of those cases do not warrant applicability of those ratio so far as the facts of the present case are concerned, as they are distinguished from the facts of the present case. Those decisions would be of no avail to the respondent no.1 in supporting the order passed by respondent no.1.
24. The decisions cited at the bar, on behalf of the petitioner, of Rajasthan High Court and Delhi High Court would go to show that the facts and ratio of those cases will have applicability to the facts and circumstances of the present case also. The decision cited at the bar on behalf of the petitioner have already been listed hereinabove and therefore, in order to avoid repetition, the Court would not elaborately delve thereupon. Suffice it to say here that the view expressed by the Rajasthan High Court in case of “M/s Sri Lakha Granites Vs. Eklavya Singh”, reported in 2010 (0) ALJ-RJ 1823320 and Delhi High Court in case of “Raman Kapur Vs. Government Of The National Capital Territory Of Delhi”, reported in 2002(0) ALJ-DL 1319193, is the ratio which this Court would follow, as the facts of those cases are much more similar and similar to the facts of the present case. The Court is unable to accept the submission of learned advocate for respondent no.2 that the factum of resignation being not accepted on account of documentary evidence would be of no consequence, as this Court is persuaded to hold that so far as the provision of Section 64(1) is concerned, the adjudication procedure is unfortunately not prescribed thereunder.
25. Learned advocate for respondent no.2's reliance upon the Gujarat Rules would also be of no avail to support or sustain the order passed by respondent no.1, as when plain reading of the parent statute itself is very clear. Amusing for the sake of argument that there exists some scope of inquiry under the rule, then, that scope cannot be stretched to justify adjudicatory process assumed by respondent no.1 and hence that submission is also of no avail to the respondent no.2.
26. The Court is of the considered view that in light of the ratio laid down by the Rajasthan High Court as well as Delhi High Court, so far as Section 64(1) of the Partnership Act is concerned, the petitioner's case is required to be accepted. The order impugned is required to be quashed and set aside and is accordingly quashed and set aside. The acceptance of this petition would not be in any manner construed as pronouncing upon the claim of the respondent of no.2 qua his resignation or his entitlement to continue, as it is absolutely open to him to approach the competent Court for appropriate adjudication on these issues. This petition is accepted only on the principle that Section 64(1) of the Partnership Act would not justify the Registrar in assuming power to himself for adjudicating the disputed question of facts.
27. Hence, the petition is accepted only to that extent and this acceptance shall not be construed as pronouncement upon the rights which are to be threshed out at appropriate Court under the appropriate provision of law. Rule made absolute. No costs.
28. Learned advocate for respondent no.2, at this stage, requested that Court may stay the operation of this order for a period of two weeks. Learned advocate for the petitioner objected the submission of learned advocate for respondent no.2. But this Court is of the considered view that as there is already an order and when respondent no.2 is desirous of approaching Letters Patent Appeal Bench, if permissible under law, then there is no prejudice will be caused, if this order is stayed for a period of one week. Accordingly, the order is stayed only for a week and it shall take effect from 06.03.2012.
(S.R.BRAHMBHATT, J.)
Pankaj