The Madras High Court has held that an unregistered partnership firm can successfully recover payments for goods supplied even in the absence of a formal contract, by invoking the principle of “non-gratuitous acts” under Section 70 of the Indian Contract Act.

The bench of Justice Senthilkumar Ramamoorthy has clarified that Section 69(2) of the Partnership Act bars suits by unregistered firms only when they seek to enforce contractual rights. Since the present claim was not based on a contract but on a quasi-contractual obligation under Section 70, the bar under Section 69(2) did not apply.

The case arose from a commercial suit filed by M/s Sri Vasan Minerals against M/s Totale Global Pvt. Ltd., seeking recovery of ₹2.55 crore along with interest. The plaintiff, an unregistered partnership firm, claimed that it had supplied raw materials over a period of time, for which payments remained outstanding.

According to the pleadings, over 100 invoices issued between February 2023 and November 2023 remained unpaid, despite repeated demands. The supplies were supported by e-way bills, GST returns, and other documentary evidence establishing delivery and tax compliance. 

The defendant, however, disputed the claim on multiple grounds, including allegations of over-invoicing, supply without requirement, and absence of contractual agreement.

The Court examined several crucial legal questions: Whether the suit was barred under Section 69(2) of the Partnership Act due to the firm being unregistered; Whether the absence of a written contract defeated the claim; Whether the suit could be sustained as a claim for compensation under Section 70 of the Contract Act; and Whether the plaintiff was entitled to interest under the MSMED Act.

A central finding of the Court was that no formal written or oral contract existed between the parties. The invoices and related documents did not demonstrate acceptance of terms such as price, quantity, or credit period by the defendant.

However, the Court emphasized that this did not absolve the defendant of liability. It observed that the plaintiff had clearly supplied goods, and there was no evidence that the goods were returned or rejected.

The Court held that such transactions fall within the scope of Section 70 of the Indian Contract Act, which imposes an obligation on a person who enjoys the benefit of non-gratuitous acts to compensate the provider.

The Court relied heavily on documentary evidence, including invoices and corresponding e-way bills, GST returns (GSTR-1 and GSTR-3B) reflecting declared supplies, and tax payments made on such supplies.

These documents established that goods were indeed delivered and that the defendant had enjoyed their benefit. 

Importantly, the defendant failed to file a written statement and did not produce any evidence to substantiate claims of over-invoicing or dumping of goods.

While the plaintiff sought interest at 24% per annum under the MSMED Act, the Court rejected this claim. It held that the claim was not for a “debt” but for compensation under Section 70. There was no contractual agreement on interest. The requirements to claim MSME benefits were not fully established

However, recognizing the commercial nature of the transaction and delay in payment, the Court awarded 9% simple interest per annum from the date of filing the suit till realization.

The Court decreed the suit in favour of the plaintiff and directed the defendant to pay ₹2,55,63,034 as principal amount, pay 9% interest per annum from the date of plaint, an pay ₹6,00,000 towards costs.

Case Details

Case Title: M/s Sri Vasan Minerals Versus M/s Totale Global Pvt. Ltd.

Citation: JURISHOUR-769-HC-2026(MAD) 

Case No.: C.S (Comm Div) No.95 of 2024

Date: 01.04.2026

Counsel For  Petitioner: Yashodh Vardhan, Senior Advocate

Counsel For Respondent: K. Shanmugakani

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