Partnership Act | Eviction Suit by Unregistered Firm Maintainable if Based on Statutory Right: Madhya Pradesh High Court

“The bar under Section 69(2) applies to rights arising out of a contract, not statutory rights flowing from the Rent Act”— In a seminal ruling the High Court of Madhya Pradesh, comprising Justice Dwarka Dhish Bansal, dismissed a second appeal, holding that an eviction suit filed by an unregistered partnership firm is maintainable if founded on statutory grounds of bonafide requirement.

Unregistered Firm vs. Tenant

The dispute centered on a shop situated in Bhopal. The original owners let out the premises to the defendants in 1987. In 2007, the plaintiff, M/s Surjit Auto Agency, purchased the property via a registered sale deed. The plaintiff subsequently filed a suit for eviction under Section 12(1)(f) of the M.P. Accommodation Control Act, 1961, citing a bonafide requirement for expanding its Bajaj Auto Agency business.

The defendants (tenants) raised a preliminary objection that struck at the root of the suit's competency. They argued that the plaintiff was an unregistered partnership firm. Consequently, they contended that the suit was barred by Section 69(2) of the Indian Partnership Act, 1932, which prohibits an unregistered firm from suing to enforce a right arising from a contract.

Both the Trial Court and the First Appellate Court decreed the suit in favor of the landlord. The tenants approached the High Court, raising the substantial question of law: Whether the suit filed by an unregistered firm is hit by Section 69(2)?

Contractual Bar vs. Statutory Right

The appellants (tenants) argued that since the firm was unregistered, it had no locus standi to file the suit. They relied on the mandatory nature of Section 69(2), suggesting that the relationship of landlord and tenant is contractual, and thus any enforcement of rights falls within the statutory bar.

“Section 69(2) is a penal provision which deprives the plaintiff of its right to get its case examined on merits... It will, therefore, have to be strictly construed.”

The respondent (landlord) countered that the suit was not filed to enforce a contractual right (like a specific clause in a lease deed) but was filed to enforce a statutory right provided by the Rent Act—specifically, the right to evict a tenant for bonafide need.

The Distinction that Saved the Suit

Justice Bansal conducted a deep dive into Supreme Court precedents, specifically relying on the landmark judgments of M/s. Raptakos Brett & Co. Ltd. v. Ganesh Property and Haldiram Bhujiawala v. Anand Kumar Deepak Kumar.

The Court clarified the scope of Section 69(2). The bar applies only when a suit seeks to enforce a right "arising from a contract." However, the relationship between a landlord and tenant, while originating in contract, is governed by the Rent Control legislation once the Rent Act applies. The right to evict a tenant on the ground of bonafide requirement is a statutory right conferred by the legislature, not a right created by the partnership contract or the lease agreement.

“Where the claim originates from a statutory obligation, the said provision [Section 69(2)] has no application.”

The Court observed that by operation of law (purchase of property), the plaintiff became the landlord. The suit was not for the enforcement of a term of the contract but for the enforcement of a right created by the M.P. Accommodation Control Act.

The High Court held that the suit was clearly maintainable. It further noted that the plaintiff had proven the authority of the partner signing the plaint through a power of attorney. The concurrent findings of the lower courts regarding the bonafide need were upheld, and the appeal was dismissed.

Date of Decision: 09 December 2025