CHEF Versus UNION COOPERATIVE CLUB LIMITED

This is a suit for declaration, permanent injunction, damages and specific performance of an agreement dated 7‑9‑1988 filed by a partnership firm as claimed in the memo. of plaint.

2. The case of the plaintiff is that they obtained lease for a land measuring 5000 square yards from defendant No. l which is a cooperative society duly registered under the Cooperative Societies Act, 1925 through an agreement dated 7‑9‑1988, for 10 years. That on 17‑5‑1990 the defendant No. l informed the plaintiff that the general body of the club refused to approve the agreement. It is claimed by the plaintiff that a considerable amount of money has been invested on the uplift of the land and that the plaintiff being in physical possession of the area is entitled to continue till expiry of the lease. The plaintiff has prayed for the following reliefs:‑‑

(a) Declare that the Lease Deed dated 7‑9‑1988 is subsisting, valid and binding on the parties and the defendants cannot unilaterally cancel, revoke, recall or back out from the said Lease Deed and notice dated 17‑5‑1990 is of no legal effect.

(b) Permanent injunction restraining the Defendants, their Agents, Servants or any one acting on their behalf from disturbing the possession of the plaintiffs on the plot in question and from obstructing, interfering or causing any hurdle in the construction or enjoyment of the lease by the plaintiffs.

(c) Mandatory Injunction directing the defendants or any one under their instructions to render full assistance and full cooperation with the plaintiffs for compliance of the requisite formality of construction, maintenance and full enjoyment of the lease.

(d) The plaintiff further prays for damages against the defendants in the sum of Rs.17,32,384 with interest.

3. The case of the defendant No.l is that for the purpose of generating funds for providing modern Tennis Court and Swimming Pool to its members, the plaintiff was allowed to enter upon a 'portion of land with the prior condition that the plaintiff shall first develop new Tennis Court for the use of members of the said defendant. The defendant No.l has denied that any constriction or development work was done by the plaintiff. The validity and legality of the lease deed executed between the plaintiff and the defendant No. l is also challenged by the said defendant. Defendant No.2 has, more or less stated the same facts as of written statement of defendant No.l. However, both the defendants have raised objections to the maintainability of the suit on the grounds as embodied in section 69 of the Partnership Act, 1932 as well as in section 70 of the Cooperative Societies Act, 1925.

4. On 31‑10‑1993 consent issues were adopted by this Court which also include two legal issues on the question of maintainability of this suit. There after, defendant No.l filed an application under Order XV, Rule 3, C.P.C. (C.M.A. 2909/95) praying that the three issues be disposed of first, without recording evidence. On 31‑8‑1995 the said application was granted and the parties were directed to make their respective submissions 'on the following two issues:‑‑

(i) Whether the suit is maintainable in law?

(ii.) Whether the plaintiff has given notice under section 70 of the Cooperative Societies Act, 1925 before filing of this suit?

5. I have heard Mr. Hassan Inamullah, Advocate for plaintiff and Mr. Muhammad Zaki Ahmed and Mr. Iqbal Kazi, Advocates for the defendants. It is contended by both the learned counsel for the defendants that this suit is not maintainable in view of clear bar contained in section 69 of the Partnership Act, 1932. They have referred to the title of plaint as well as agreement (Annexure B) to the plaint which shows that the plaintiff is a firm duly registered under Partnership Act, 1932. They have also referred to Annexure ' D' filed with the plaint in support of their contention that the plaintiff claimed itself to be a registered partnership firm. In these circumstances, it was argued that the plaintiff is liable to show the Registration Certificate of the Registrar of the Firms in order to fulfil the requirement of subsection (2) to section 69 of the Partnership Act, 1932.

6. Mr. Hassan Inamullah, learned counsel appearing for the plaintiff has not denied the fact that the plaintiff is a registered firm but he argued that since an issue was framed earlier by this Court on the question whether the plaintiff is a registered firm, the plaintiff is entitled to prove this fact at the time of recording of evidence and not at the time of hearing of these preliminary issues. He has referred to the case of Messrs Hoechst Pakistan Ltd. v. Cooperative Insurance Societies and others (1993 MLD 2464). In this reported case, a learned Division Bench of the Lahore High Court held that since an issue was framed on the question of notice under section 70 of the Punjab Cooperative Societies Act, 1925, the Court should have decided the suit after recording evidence on the issues already framed and further held that the Court committed an illegality in passing an order on miscellaneous application without affording an opportunity to the parties to produce evidence. In the present case, this Court granted hearing of the preliminary legal issues as provided under Order XV, Rule 3, C.P.C. which provides that when the parties are at issues on some legal question which issues have been framed by the Court, and if the Court is satisfied that no further arguments or evidence is required upon such preliminary issues, the Court may proceed to determine such issues. On 31‑8‑1995 it was ordered in the presence of plaintiff's counsel that the parties should argue these two legal issues. No appeal was filed against this order which has attained finality and it is too late in the day for Mr. Hassan Inamullah to raise such objections. Therefore, the rule laid down in the case of Hoechst (supra) is not applicable in the instant case.

7. The effect of non‑registration of partnership firm was recently considered by a Division Bench of this Court in the case of Mst. Shaista Begum v. Government of Sindh and 2 others (1994 MLD 274) where it was held that in case of non‑registration of a firm, the partnership firm and its partners would suffer from legal disability in filing suits against parties and as against one another. Earlier, a Full Bench of the Hon'ble Supreme Court also held in the case of Usman and others v. Haji Umer and others (PLD 1966 SC 328) that section 69 of the Partnership Act, 1932 only bars a suit for enforcing a right arising out of a contract against either the firm or any past or present members of it or against any third party. Another Division Bench of this Court in the case of Province of West Pakistan and another v. M/s. Asghar Ali Muhammad Ali & Company (PLD 1968 Karachi 196) held that section 69 of the Partnership Act, 1932 stands as a bar to filing a suit and that when a suit is filed in the name of a firm, it was for the plaintiff to establish that the bar did not operate. In the case of Abdul Majeed v. Riaz Brothers Commission Agents, Hafizabad (1986 CLC 242), a learned Single Judge of Lahore High Court considered implication of this provision of law and held that the plaintiff should know the law that an unregistered firm could not sue even a third person and if such plaintiffs have withheld an information, the inference would be that they were trying to hoodwink the provisions of law.

8. Consequence of non‑registration of a partnership firm and its entitlement to maintain a suit was considered in detail by a Division Bench of this Court comprising Mr. Inamullah and Mr. Sajjad Ahmad Jan, JJ. (as they then were) in the case of Messrs United Cotton Factory, Hyderabad v. Ahmad Khan (PLD 1960 Karachi 774) in the following words:‑‑

"The provisions of section 69 of the Partnership Act are mandatory and there is no power of condonation vested in the Courts to grant to the defaulting firm in this respect any relief against the disability imposed by this section. The prohibition contained in the section is against the institution of the suit or the proceedings of the nature mentioned therein and its effect, therefore, has to be determined at the time of the institution of the suit or the proceedings. The section entails a disability on the part of a Court to take cognizance of the suit or proceedings from their very inception in the same way as it would not take the cognizance of a suit barred by limitation or of a suit suffering from a defect of jurisdiction in the form in which it is instituted. The view, which now firmly holds the field, is that the registration of a firm is a condition precedent to its right to institute a suit of the nature mentioned in section 69(2) of the Partnership Act and that a registration after the institution of the suit cannot cure the defect of non‑registration existing at the instance of the institution of the suit."

9. The defendant No. l in para. (ii) of their written statement have clearly sated that the suit is barred in view of section 69 of the Partnership Act, 1932. Likewise, the defendant No.2 in para. (i) of its written statement has claimed that the plaintiff is not a registered firm and they are not entitled to sue and that the suit is liable to be dismissed. It was in view of this plea that the legal issues as to the maintainability of this suit on the question of section 69 was framed on 31‑8‑1995. Since then, till hearing of these two issues, the plaintiff had ample opportunity to rebut these allegations by producing certificate of registration. But I am unable to understand why certificate from Registrar of Firms was not produced even during hearing. The learned counsel for the plaintiff insisted that he will produce `the required documents at the stage of evidence. In the circumstances, I am constrained to draw an adverse inference to the effect that the plaintiff is not a registered firm and, therefore, it cannot bring a suit in the name of partnership firm.

10. The other legal issue is that the plaintiff has failed to serve prior notice under section 70 of the Sindh Cooperative Societies Act, 1925 and, therefore, the plaint is liable to be rejected: In reply to this argument, Mr. Hassan Inamullah has referred to legal notice dated 6‑6‑1990 filed alongwith the counter‑affidavit of one Shaheen Ilyas, Honorary Secretary of defendant No. l. This notice is addressed to the President of defendant No.l. Mr. Hassan Inamullah has also referred to para.13 of the plaint wherein the plaintiff has stated that a letter was addressed through their lawyer to the defendants on 6‑6‑1990 claiming damages for mental tension and loss of market reputation etc. According to the learned counsel for the plaintiff, it is merely an omission that a copy of said legal notice dated 6‑6‑1990 was not filed arid that the provision of section 70 of the Sindh Cooperative Societies Act, 1925, have been fully complied with.

11. Section 70 of the Sindh Cooperative Societies Act, 1925 creates a bar that no suit shall be instituted against a Cooperative Society or any of its officer in respect of any act touching the business of the society unless a notice in writing has been delivered to the Registrar of the Cooperative Societies appointed under the Act, 1925 and that two months' time has passed after delivery of such notice. There is further requirement of this law that the plaintiffs should disclose in the said notice, the cause of action, the name, description and place of residence of the plaintiff and the relief which the plaintiff intends to claim. It is further envisaged in section 70 of the Act, 1925 that the effect of delivering such notice shall be mentioned in the plaint. Notice dated 6‑6‑1990 referred to by Mr. Hassan Inamullah, Advocate does not fulfil the requirements of section 70 of the Act, 1925. The plaintiff has admitted in the plaint that the defendant No. l is a registered cooperative society and on its insistence the defendant No.l has filed copy of its bye‑laws in Court on 7‑4‑1996.

12. In the case of Metro Cooperative Housing Society Limited v. Bonanza Garments Industries Limited (1996 MLD 593) I have considered the effect of non‑service of notice and its noel‑disclosure in the body of plaint. After referring to tile cases of Zia‑ur‑Rehmam Alvi v. Messrs Allahabad Cooperative Housing Society Limited and 2 others (PLD 1995 Karachi 399), Muhammad Ali Memorial Cooperative Housing Society Ltd., Karachi v. Syed Sibtey Hasan Kazmi (PLD 1975 Karachi 428), Muzaffar Hussain and another v. Yousuf and 4 others (PLD 1976 Karachi 1107), Farida v. Prince Apartments Coopertaive Housing Society and 2 others (1984 CLC 2914) and the case of Faqir Muhammad Daj Muhammad v. Merchantile Cooperative Bank Limited (AIR 1940 Sindh‑ 143) this Court rejected the plaint on the ground that no notice as provided under section 70 of the Sindh Cooperative Societies Act was served prior to filing of the suit.

13. In the present suit, the plaint ' is silent whether any prior notice as provided under section 70 of the Act, 1925 was served. Notice dated 6‑6‑1990 referred by the learned counsel for the plaintiff cannot be treated as a notice under section 70 of the Act, 1925. I am, therefore, of the considered view that the present suit is not maintainable in view of section 69 of the Partnership Act, 1932 as well as in view of section 70 of Sindh Cooperative Societies Act, 1925. In view of this legal position, this suit is dismissed with no order as to cost.

A.A./T‑10/K Suit dismissed.