Railway Contractors’ Refund Decree Set Aside As Calcutta HC Finds Their Project JV An Unregistered Partnership Barred By Section 69(2)

The Railways’ tender permitted participation by a joint venture.

Respondents 2 and 3 formed respondent 1, Rahee-GPT (JV), under a memorandum of understanding and a subsequent joint venture agreement to undertake the project, allocate responsibilities and profits, and accept joint and several liability.

After a dispute concerning the contract, respondents 1–3 sued for relief, including repayment of security and earnest money, bank-guarantee proceeds and bill amounts.

The Single Judge granted relief and dismissed the Railways’ counterclaims.

Under Section 6 of the Indian Partnership Act, 1932, the existence of a partnership is determined from the real relationship between the parties, having regard to all relevant facts; nomenclature is not decisive.

The court looked for agreement, a business carried on for profit, and mutual agency, with profit-sharing being relevant but not conclusive.

Section 8 permits a partnership for a particular adventure or undertaking, and a joint venture may therefore take the form of a partnership.

Section 69(2) bars an unregistered firm from suing to enforce a right arising from a contract; registration must exist when the suit is instituted, and the bar cannot be waived by consent.

The court also relied on the principle that an unincorporated association is not, merely by its name, a separate juristic person capable of suing or being sued.

The agreements showed that respondents 2 and 3 agreed to execute a defined project, share its profits and responsibilities, and accept joint and several liability; the lead-member provisions also supported the creation of agency between them.

The court therefore found the essential features of a partnership, notwithstanding the “joint venture” label.

The tender conditions required a joint venture to be a legally competent entity, and the court found no evidence that respondent 1 was an incorporated company or another legal entity; it concluded that respondent 1 was the partnership of respondents 2 and 3.

Respondents admitted that respondent 1 was not registered under the 1932 Act. Because the claims arose from the contract, Section 69(2) barred the suit; joining all partners as plaintiffs did not avoid that bar.

Although the Railways had not raised the objection in its written statement or memorandum of appeal, the court considered it on appeal, holding that the plaintiffs bore the burden of establishing that the statutory bar did not apply and that the parties had been given an opportunity to address the issue.

It allowed the appeal, dismissed C.S. (COM) No. 56 of 2024, set aside the Single Judge’s judgment and decree, and made no order as to costs.