The Madhya Pradesh High Court has held that a plaint cannot be rejected under Order VII Rule 11 CPC solely on the ground that the underlying partnership firm is unregistered, particularly where the plaintiff is not seeking to enforce a contractual right of the firm against a third party but is asserting independent rights based on alleged investment in property.
The appeal arose from a suit filed by the appellant seeking declaration of co-ownership and injunction over certain land, which was rejected at the threshold on the ground that the underlying partnership firm was unregistered and thus barred from instituting the suit.
Allowing the appeal, the High Court reiterated that while considering an application under Order VII Rule 11 CPC, only the averments in the plaint are relevant, and the court cannot rely on the defence or disputed facts. It emphasised that the test is whether, assuming the plaint averments to be true, a cause of action is disclosed.
On the applicability of Section 69(2), the Court held that the statutory bar applies only where a suit is filed by an unregistered firm to enforce a right arising from a contract entered into by the firm with a third party in the course of business. It found that the present case did not fall within this category, as the plaintiff was not enforcing a contractual right of the firm against a third party but was asserting independent rights based on alleged investment.
At the same time, the Court observed that the relief of declaration of ownership appeared prima facie untenable in absence of a registered sale deed transferring title. However, it clarified that the trial court had not rejected the plaint on this ground and had confined itself only to Section 69(2).
Holding that the trial court failed to consider all relevant grounds and misapplied the law, the High Court quashed the impugned order and remanded the matter for fresh consideration of the application under Order VII Rule 11 CPC.
The Court directed that all grounds raised in the application be reconsidered after giving an opportunity to the parties to present their case.
Appearances
Shri Avinash Zargar with Shri Kedar Prasad Kuswaha – Advocate and Shri Gouransh Bhurrak and Shri Arvind Soni – Advocate for the appellant.
Shri Ashok Kumar Gupta – Advocate for the respondent No.1.
Shri Anshuman Singh, with Shri Anuj Shrivastava – Advocate for the respondents No.2, 4 and 5.
Shri Fuzail Usmani, learned counsel for the respondent No.3
