In a significant ruling, the Supreme Court has upheld the Madras High Court’s decision that denied an unregistered law firm, ‘The Chennai Law Firm’, the right to recover fees from its client, Reyvish Associates Pvt Ltd. The top court’s bench, comprising Justices Surya Kant and N Kotiswar Singh, ruled that the lawsuit was not maintainable under Section 69(2) of the Indian Partnership Act, 1932.
The dispute originated from an agreement between The Chennai Law Firm and Reyvish Associates to handle filings under the SARFAESI Act, with an agreed fee structure that entailed a 50% payment at the initiation and the balance upon completion. Despite issuing multiple demands and even an insolvency notice due to non-payment, resulting in an outstanding amount of ₹6.57 lakh, the firm faced continuous non-compliance by Reyvish Associates.
Initially, the Chennai City Civil Court ruled in favor of The Chennai Law Firm, mandating the payment of the outstanding amount with interest. However, this decision was overturned by the appellate court, citing the unregistered status of the firm which nullified their claim under the strict regulations of the Indian Partnership Act.
Further complicating the firm’s position, the Madras High Court dismissed their argument that the legal fees owed were for professional services rendered and not part of a business transaction. Justice PT Asha noted that the contractual agreement for remuneration made the registration under the Partnership Act a necessity for enforceability in court.
With no available registration certificate presented, the law firm’s position weakened significantly. The Supreme Court concurred with the High Court, stating, “We see no reason to take a different view than that of the High Court,” thereby affirming that without registration, no contractual rights can be enforced against third parties.
