Mrs. SHAISTA BEGUM vs GOVERNMENT OF SINDH and 2 others

1. ' HAZIQUL KHAIRI, J.---The petitioner Mrs. Shaista Begum entered into partnership with one Dr. Abdul Ghani Abdul Hameed Al-Kindy, a Yemeni national, to carry on business under the name and style of "M/s. International Development Company" vide deed of partnership dated 14-31992. In order to protect their rights and interest on 14-3-1992 both the partners applied in the prescribed form to the respondent No,3 namely, The Registrar of Firms for Karachi, under section 58 of Partnership Act for registration of the firm. On or about 24-3-1992 the respondent No,3 by his letter required the petitioner to remove inter alia the following objection: "You are further advised to produce N.O.C. From Ministry of Foreign Affairs, Government of Pakistan, Islamabad in respect of doing business in Pakistan with foreign partner Dr. Abdul Ghani Abdul Hameed Al-Kindy."

2. ' Accordingly to the petitioner she tried to explain through her Advocate that it was not at all necessary for her to obtain any N.O.C. From any Ministry including the Ministry of Foreign Affairs as the Government of Pakistan under the Foreign Investment Policy has liberalized foreign investment but the same was of no avail. However the petitioner in order to expedite registration of the firm Ministry .Sent a letter, dated 13-4-1992 to the Minist of Foreign Affairs requesting for "No-Objection Certificate" from it to which the petitioner received a reply, dated 23-5-1992 confirming the stand of the petitioner in the following words: "This is to confirm that no N.O.C. Is required from the Ministry of Foreign Affairs for registration of firms under the Partnership Act."

3. ' On 26-4-1992, the petitioner furnished the original N.O.C. To respondent No,3 with request to expedite the matter. Through another letter, dated 30-4-1992 the petitioner reminded the respondent No,3 that since the petitioner had removed all objections raised by him and complied with all other formalities required under section 58 of the Partnership Act, 1932, the firm may be registered stating further, that delay in registration of the firm has caused financial losses to her.

4. Despite this, the respondent No,3 refused to register the firm stating that "there is no provision under the Partnership Act much foreign capital investment will be made for import, export or manufacture in. Pakistan and whether it is above 100 million rupees or less than 100 million of rupees under Liberal Foreign Investment Policy of Pakistan as the partnership deed in question is silent in these matters.

(4) The said partner is a foreigner and the Registrar of Firm is dissatisfied with his identification and personal data under section 59 of the Partnership Act, 1932.

(5) There is no clarification from the Ministry of Foreign Affairs whether the said foreign partner can do business in Pakistan. Since the Registrar is not satisfied with the documents, he has referred the matter to the Law Department, Government of Sindh for advice which is awaited.

(6) It is necessary to protect the fundamental right of a citizen of Pakistan when the identification of a foreigner is not known and when it is not clear how much investment will be made by him and what type of business will be done by him in Pakistan legally."

5. ' It may be stated here that under section 58 of the Partnership Act the registration of firm may be effected at any time by sending by post or delivering to the Registrar in which any place of business of the firm is situated or proposed to be situated a statement in the prescribed form and accompanied by prescribed fees stating (a) the firm name, (b) the place or principal place of business of the firm, (c) the names of any other places where the firm carries on business, (d) the date which each partner joined the firm, (e) names in full and permanent addresses of the partners and (f) duration of the firm. This statement has to be signed by all the partners or their agents specially authorized in this behalf and each such person signing the statement shall also verify it in the manner prescribed. Under section 71(1) a Provincial Government is empowered to make rules prescribing the fees for registration and for inspection of documents etc. Whereas under section 71(2)(b) a Provincial Government may prescribe the form of a statement submitted under section 58 and of the verification thereof. A photostat copy of prescribed form under section 71(2)(a) duly filled in was submitted by the petitioner giving the necessary details as above under section 58 of the Partnership Act. This form contains the following directions: "N.B.--(a) This form must be signed by all partner or their Agents specially authorized in this behalf in the presence of a Justice of Peace, a Magistrate, a Notary Public or an Advocate. The witness must clearly state the names of the partners to whose signatures he has attested.

(2) If any Partner is a minor the fact that he has been admitted to the benefits of Partnership, should be set out therein."

6. Under section 59 of the Partnership Act, "when the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a Registrar called the register of firms, and shall file the statement." This is the only provision under the Partnership Act, 1932 under which- a Registrar may raise objection to Registration of a Firm, which position is accepted by the learned Deputy Attorney-General as well as the Additional A.-G. Sindh.

7. However the satisfaction of Registrar must necessarily relate to the requirements of section 58 thereof and should not extend to anything outside it. It is not his business to seek information as to why the Partnership was entered into between a Pakistani and a foreigner, nor he can question as to the nature of the business of Partnership nor whether foreign capital investment will be made available in Pakistan for the purpose of the business of import, export or manufacture of goods etc. He cannot even ask for a copy of Partnership deed as in case of registration of a firm under section 68 of the Income Tax Ordinance, 1979, for the simple reason that this is not the requirement of Section 58 of the Partnership Act. Thus under the Partnership Act, 1932 a Partnership Firm formed orally can also get itself registered.

8. ' It may also be clarified here that registration of a firm is not compulsory under the Partnership Act, 1932 as under English Law which imposes penalty for non-registration of a firm. It is left open to partners to enter into Partnership in writing or orally or to get the firm registered under the Partnership Act, 1932. 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 in terms of section 69 of the Partnership Act. Similarly under section 68 of Partnership Act "Any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated."

9. ' Both learned Deputy Attorney-General and Additional Advocate-General agreed with Mr. Mushir Alam, learned counsel for the petitioner that all the objections raised by the respondent No,3 except with regard to verification by the partners and attestation of their signatures were uncalled for and without lawful authority. While going through the photostat copy of application for registration under section 58 of the Partnership Act being Annexure T/3' submitted by the petitioner, we also took note of the fact that although the application was signed by the partners, it was not neither verified as contemplated under section 58 of the Partnership Act nor attested as required under the prescribed form under section 71(2)(a) of the Act. Without proper verification and attestation, registration of a firm cannot be affected by C the Registrar of firm under section 59 of the Partnership Act, 1932. The respondent No,3 was thus justified to call upon the petitioner to properly verify e application for registration under section 58 and to get it attested as enquired in the prescribed form under section 71(2)(a) thereof. In so far as ether objections are concerned, for reason recorded by us above, the same are without lawful authority and without jurisdiction. With these observations we pose of the petition but with no order as to costs.