Unregistered Status of a Partnership Firm Prevents Its Partners From Suing Another Partner for Recovery of Dues | SC

Case Details: Sunkari Tirumala Rao v. Penki Aruna Kumari - [2025] 173 taxmann.com 649 (SC)

Judiciary and Counsel Details

• J.B. Pardiwala & R. Mahadevan, JJ.

Facts of the Case

In the instant case, petitioners (original plaintiffs) filed a suit for recovery of money in their capacity as partners of an unregistered partnership firm against the respondent (original defendant) in her capacity as a partner of the same unregistered partnership firm.

The issue regarding the suit’s maintainability was raised on the ground that a partner of an unregistered partnership firm could not have filed the suit for recovery of money, being hit by section 69 of the Indian Partnership Act, 1932.

The Trial Court itself found that the agreement executed between the parties was, in fact, a partnership deed and not a bond, as claimed by the petitioners. The Trial Court held that the suit was maintainable.

The defendants, dissatisfied with the order passed by the Trial Court deciding the preliminary issue as stated above, challenged the same by filing a Civil Revision Application before the High Court. The High Court took the view that the suit was not maintainable, being hit by section 69 of the Partnership Act.

Thereafter, an appeal was made before the Supreme Court against the order passed by the High Court. It was noted that the suit had not been instituted by or on behalf of the firm against any third persons to fall under the ambit of Section 69(2) of the Act.

Further, since the petitioners had also not filed the instant suit for enforcing any statutory right conferred under any other law or a common law right to exempt the application of Section 69, the rigours of Section 69(1) would apply on such a suit. Consequently, the unregistered status of the partnership firm would prevent the petitioners from filing a bare suit to recover money from the respondent.

Supreme Court Held

The Supreme Court held that a suit filed by an unregistered partnership firm and all proceedings arising thereunder, which fall within the ambit of section 69, would be without jurisdiction.

Further, the Supreme Court held that the High Court was correct in considering that a suit of such nature could not be said to be maintainable without registration of a partnership firm. Thus, the Special Leave Petition failed and was to be dismissed.

List of Cases Reviewed

• SLP dismissed against order of High Court of Andhra Pradesh at Amravati in Civil Revision Petition No.2944/14, dated 17-7-2019 [Para 18]