ESKAY HOSPITALITY SERVICES INDIA PRIVATE LIMITED v. STERLING HOSPITALITY THR MR. PRANAY GOYAL
High Court of Bombay, Bombay (Civil)
2025:BHC-AS:43773
Provides detailed analysis of Section 69(2) of the Indian Partnership Act and its applicability to unregistered firms.
Legal Discussion:
- The Companies Act, 2013: The judgment mentions that Eskay Hospitality Services India Pvt. Ltd. is a company incorporated under the provisions of the Companies Act, 2013. No specific sections of the Act are discussed.
- Constitution of India: The judgment refers to Article 227 of the Constitution of India, stating that the writ petition calls into question the legality, propriety, and correctness of an order dated 7 April 2025. The court's power of superintendence under Article 227 is invoked to examine the lower court's order.
- Code of Civil Procedure, 1908: The judgment discusses Order VII Rule 11(1)(a) and (d) of the Code of Civil Procedure, 1908. The Notice of Motion was taken out by the Petitioner – Defendant No.1 for rejection of the plaint under these provisions, which was dismissed by the City Civil Court. The court analyzes whether the plaint should have been rejected under these rules, focusing on whether a cause of action exists and whether the suit is barred by law. The judgment emphasizes the "normative discipline" required when determining an application for rejection of the plaint under Order VII Rule 11, requiring a meaningful reading of the plaint as a whole.
- The Indian Partnership Act, 1932: The judgment extensively discusses Section 69(2) of the Indian Partnership Act, 1932, concerning the effect of non-registration of a partnership firm. The court analyzes whether the suit is barred by Section 69(2) because the plaintiff firm was unregistered at the time of the suit's institution. The court outlines the conditions necessary to attract the bar under Section 69(2): (1) the firm must be unregistered on the date of the suit; (2) the suit must be against a third party; and (3) the suit must be for enforcement of a right arising from a contract between the unregistered firm and the third party. The judgment refers to several Supreme Court cases, including Haldiram Bhujiawala and Anr. V/s. Anand Kumar Deepak Kumar and Anr., Raptakos Brett and Co. Ltd. vs. Ganesh Property, Purushottam And Anr Vs Shivraj Fine Arts Litho Works and Ors, and Shiv Developers Through Its Parnter Sunil Bhai Somabhai Ajmeri Vs Aksharay Developers & Ors, to interpret the scope and applicability of Section 69(2). It emphasizes that the contract must be one entered into by the firm with the third-party defendant in the course of the firm's business dealings. The court ultimately concludes that the bar under Section 69(2) is attracted in this case.
- Specific Reliefs Act: The judgment mentions that the specific reliefs awardable under the Specific Reliefs Act are the remedies and not the statutory rights.
- Trade Marks Act: The judgment mentions that the suit is based on infringement of statutory rights under the Trade Marks Act.
- General Principles of Law: The judgment discusses the distinction between statutory remedies and statutory rights, stating that a statutory or common law right can be enforced by an unregistered partnership firm, but the invocation of a statutory remedy based on rights arising out of a contract falls foul of Section 69(2) of the Indian Partnership Act. The judgment also touches upon the principle that a plaint cannot be rejected in part, but this is qualified by the analysis of whether the relief sought (refund of investment) is inextricably linked to the contract.
List of Laws: The Companies Act, 2013; Constitution of India; Code of Civil Procedure, 1908; The Indian Partnership Act, 1932; Specific Reliefs Act; Trade Marks Act; General Principles of Law