Bangalore District Court
M/S Gtv Reddy And Sons vs Chandrashekar G V on 19 November, 2025
Com.OS.No.273/2020
KABC170179842020
IN THE COURT OF LXXXV ADDL. CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH-86) (Commercial Court)
THIS THE 19th DAY OF NOVEMBER 2025
PRESENT:
SRI.ARJUN. S. MALLUR. B.A.L.LL.B.,
LXXXV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.OS.No.273/2020
BETWEEN:
M/S GTV Reddy And Sons,
A registered partnership firm,
having its business place at:
No.21/3, Old No.11-12,
Sri Vinayaka Building Albert Victor Road,
Kalasipalyam, Bengaluru-02
Rep. By Its Partner
Shri.Haris Reddy,
S/O N.Thimma Reddy,
Aged About 42 Years,
R/At No.57, 4th Main,
Domlur 2nd Stage,
Bengaluru-71.
[email protected]
: PLAINTIFF
Represented by Sri.Raghuram Cadambi, Advocate.
1
Com.OS.No.273/2020
AND
1. Shri. Chandrashekar G V
S/o Late Shri G.T. Venkataswamy Reddy,
Aged about 54 years,
R/At Gunjur Village And Post,
Varthur Hobli,
Bengaluru East Taluk,
Bengaluru-560087
[email protected]
2 Shri. Palaksha G V
Aged about 56 years,
R/At Gunjur Village And Post
Varthur Hobli
Bengaluru East Taluk
Bengaluru-560087.
[email protected]
3. Shri Satheesha Reddy G V
S/o Late Shri G T Veenkataswamy Reddy
Aged about 58 years,
R/At Gunjur Village And Post
Varthur Hobli
Bengaluru East Taluk
Bengaluru-560087.
[email protected]
4. Smt. Sudha N
Wife of Late Shri G V Nagaraja Redy,
Aged about 52 years,
R/At Gunjur Village And Post
Varthur Hobli
Bengaluru East Taluk
Bengaluru-560087.
[email protected]
2
Com.OS.No.273/2020
5. M/S GTV Properties Private Limited
A Company incorporated and validly existing
under the provisions of the Companies Act,1956,
Having its Registered Office At: 21/3
Old No.11-12, Sri Vinayaka Building
Albert Victor Road, Kalasipalyam
Bengaluru-560002.
[email protected]
6 Smt.Ramakka G V
Wife fo Shri N Thimma Reddy,
Aged about 65 years,
R/At No.57, 4th Main
Domlur 2nd Stage,
Bengaluru-560071
[email protected]
7. Smt.Kantha Sanjeev
Wife of Late Shri G V Sanjeev,
Aged about 57 years,
Residing at No.95
11th Cross, Indiranagar 1st Stage
Bengaluru-560038.
[email protected]
8. Shri. Babu Nath Giri
S/o Shri N Thimma Reddy,
Aged about 40 yeas,
R/At Flat 505, Blazer Court
28a St.Johns Wood Road
London Nw87JY, United Kingdom.
Also at C/o Smt. G V Ramakka,
R/At No.57, 4th Main
Domlur 2nd Stage,
Bengaluru-560071
3
Com.OS.No.273/2020
[email protected]
9. Shri. Manish C
S/o Shri G. V. Chandrashekar,
Aged about 23 years,
R/At Gunjur Village And Post
Varthur Hobli, Bengaluru East Taluk
Bengaluru-560087.
[email protected]
10. M/S GTV Estates
A registered partnership firm,
Having its Principal Place of Business at:
No.7, Ground Floor, 9th Main
Jayanagar 2nd Block, Bangalore-560011
Rep. By Its Partners
A.Smt.Lakshmi Jayaram
W/O Shri L Jayaram
Aged about 47 Years
R/At No.108, 1st Block
5th Main Road, Banashankari III Stage
Bengaluru-560085.
B. Smt.C.Shantha
W/O Shri.C.Krishna Murthy
Aged about 67 Years
R/At No.1474, 1st Main Road
Muneshwara Nagar, Kolar -563 101.
11. Shri. Jayarama L
Son of Lakshminarayanappa,
Aged about 57 years,
4
Com.OS.No.273/2020
R/At No.108, 5th Main Road
1st Block, Banashankari 3rd Stage
Bengaluru-560085.
[email protected]
12. M/S Fullerton India Credit Company Ltd.
Lal Bagh Main Road, K.S.Garden
Raja Ram Mohanroy Extension
Sudhama Nagar
Bengaluru-560002.
[email protected]
[email protected]
[email protected]
13. M/S FIS Global
Embassy Icon, Floor 2
No.3, Infantry Road
Bengaluru-560001.
[email protected]
14. M/S Saankhya Labs Pvt. Ltd.
Embassy Icon, Floor 3
No.3, Infantry Road
Bengaluru-560001.
[email protected]
15. M/S Karnataka Bank
Kasturba Road
Sampangi Rama Nagar
Shanthala Nagar
Ashok Nagar
Bengaluru-560001.
[email protected]
[email protected]
16. M/S Axis Bank
Corporate Banking Branch
5
Com.OS.No.273/2020
Level3, Nitesh Time Square
No.8, M.G.Road
Bengaluru-560001.
17. M/S Kotak Mahindra Bank
No.22, Ground Floor ING Vysya House
Mahatma Gandhi Road,
Bengaluru-560001.
[email protected]
[email protected]
[email protected]
18. M/S Bio Electric Pvt. Ltd.
Having its office at No.7
Ground Floor, 9th Main
Jayanagar 2nd Block
Bangalore-560011.
Rep. By Its Directors
Smt.Lakshmi Jayaram And Shri L.Jayaram
[email protected]
: DEFENDANTS
By Sri.Abhilash J, Advocate for D1
By Sri.Vivek B R, Advocate for D2
By Sri.Imran Pasha, Advocate For D3
By Sri.Vinay T R, Advocate for D 5
By Sri.Mohammed Mujassims, Advocate for D6 to D8
By Sri.Abhilash J, Advocate for D9
By Sri.K.G.Raghavan learned designated Senior Counsel
for S B Ramesh, Advocate for D10, D10(a),D10(b),D11.
By Sri.Chandrashekar S N, Advocate for D12
By Sri.Aditya Narayan, Advocate for D14
By Sri.Sriharsha R Londhe, Advocate for D15
By Sri.Dhirendra N Katti, Advocate for D16
By Sri.K Rama Bhat & Associates, Advocate for D17.
D4, D13 and D18 are Exparte.
6
Com.OS.No.273/2020
Date of Institution of the suit 12.10.2020
Nature of the suit (suit on
pronote, suit for declaration & Suit for Recovery of Money.
Possession, Suit for injunction
etc.)
Date of commencement of 04.01.2023
recording of evidence
Date on which judgment was 19.11.2025
pronounced
Total Duration Year/s Month/s Day/s
05 01 07
(ARJUN. S. MALLUR)
LXXXV Addl.City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
Suit for declaring that the Memorandum of Understandings dated 10.05.2017 are illegal, void and not binding upon the plaintiff firm and its partners and direct the defendant Nos.10, 10(a) and 11 to jointly and severally pay the plaintiff firm a sum of Rs.43,01,51,428/- with future interest at 18% p.a. from the date of suit till realization and also to reimburse the plaintiff firm monthly payment of EMI of Rs.24,47,788/- paid to defendant No.12 7 Com.OS.No.273/2020 from the date of suit towards the loan raised and paid to defendant Nos. 10, 10(a) and 11.
2. The case of the plaintiffs in brief is as under:-
The plaintiff is a partnership firm. The defendant Nos. 1 to 8 and the representative of the plaintiff by name Harish Reddy are all its partners. Defendant No.5 is a private limited company of which defendant Nos.1 and 2 are the Directors. Defendant No.10 is a partnership firm of which defendant Nos.1, 2 and late G V Nagaraja Reddy husband of defendant No.4 and defendant No.10(a) were its founding partners. Subsequently defendant No.10 is reconstituted and presently defendant Nos.10(a) and (b) are its partners. Defendant Nos.13 and 14 are the tenants in the schedule property standing in the name of defendant Nos.10 and 11. Defendant No.12 is the financial institution from which financial assistance is obtained by the plaintiff for the benefit of defendant No.10 and its partners. The rents paid by defendant Nos.13 and 14 have been the basis for grant of financial assistance by defendant Nos. 15 to 17 to defendant Nos.10 and 11.
(a) It is submitted that the plaintiff is a registered partnership firm incorporated in the year 2009 under the 8 Com.OS.No.273/2020 registered partnership deed dated 29.04.2009. Initially the plaintiff firm had six partners name Late G.T. Venkataswamy Reddy, Late Sri. Nagaraj Reddy, defendant No.1, defendant No.2, defendant No.3 and defendant No.5. The representative of the plaintiff Harish Reddy was inducted as a partner on 29.08.2019 with 1.6% share in the firm. Upon induction the representative of the plaintiff got involved in the activities of the plaintiff firm and had undertaken examination of the financial statements, books of accounts maintained by the partnership firm in its normal course of business. It is submitted that the examination of books of accounts revealed that properties of defendant No.5 has been provided as capital contribution to the plaintiff firm. The balance sheet ending 31.03.2014 revealed that the plaintiff firm had declared a total income of Rs.3,48,06,020/- and the liabilities and loans to the third persons as on 31.03.2014 was at Rs.54,00,000/-. The liabilities and borrowings of the plaintiff stood at Rs.3,28,82,474/-. The financial position of the plaintiff firm as on 31.03.2014 permitted the partners of the firm to raise a loan of Rs.14,29,00,000/- from Axis Bank for a period 01.04.2014 to 31.03.2015. Firm and its partners were the co-borrowers and guarantors of the said loan. Out of the borrowed amount a deposit of 9 Com.OS.No.273/2020 Rs.1,00,00,000/- has been created in order to reduce the interest burden. However the liability of the firm increased to Rs.17,61,70,119/- and which affected the accounts of the firm as on closure of accounts dated 31.03.2015. The financial position of the plaintiff firm as on 31.03.2014 and 31.03.2015 with respect to liabilities was Rs.3,28,82,474/-
and 3,32,85,937/-. The long term borrowing as on 31.03.2015 stood at Rs.14,28,84,182/- and a total liability amounting to Rs.17,61,70,119/-. The loans to third parties as on 31.03.2015 stood at Rs.54,00,000/-, loans to Topaz Investments stood at Rs.12,00,00,000/- and loans related to defendant No.10(a) was at Rs.1,26,50,000/- and a total loan as on 31.03.2015 was Rs.13,80,50,000/-. Towards the said loan the firm had made interest payments amounting to Rs.32,29,198/- to the Axis Bank.
(b). It is further the contention that during the financial year 01.04.2015 to 31.03.2016 defendant No.10 firm came to be constituted with defendant Nos.1, 2 and Late G.V. Nagaraj Reddy and defendant No.10(a) as its founding partners. Defendant No.10(a) was designated as authorized person to manage the affairs of defendant No.10 and she was entitled for 2% share in the gross revenue. The capital contribution towards defendant No. 10 Com.OS.No.273/2020 10 firm from G.V. Nagaraj Reddy and defendant No.2 was 20% each amounting to Rs.40,00,000/- each and defendant Nos.1 and 10(a) was 30% each amounting to Rs.60,00,000/- each and the total contribution being Rs.2,00,00,000/-. It is submitted that the books of accounts of the firm reveal that subsequent to 01.04.2015 the plaintiff firm had taken a loan of Rs.22,27,43,535/- form M/s Fullerton India Credit Company i.e., defendant No.12 which has been used to pre-close the Axis Bank Loan. This loan from defendant No.12 has been availed at a higher rate of interest that has been used to close the loan with Axis Bank which was at a lower rate of interest. The loan amount from defendant No.12 was paid directly from the bank account of the plaintiff to third parties including defendant No.10 for purchase of a property known as Embassy Icon located on Infantry Road, Bengaluru in the name of defendant No.10. The amount being transferred from the account of the plaintiff and paid to M/s Topaz Investment Pvt. Ltd. was repayable by defendant No.10 and its partners. During the financial year 01.04.2015 to 31.03.2016 the amount transferred by the plaintiff to M/s Topax Investment Pvt. Ltd., with respect to purchase of the said property was for the exclusive benefit and use of defendant No.10 firm. The 11 Com.OS.No.273/2020 said amount amount is due to the plaintiff firm even to this date. The books of account also revealed no repayment of the said amount loaned from the plaintiff account to defendant No.10 has taken place. As on 31.03.2016 the liabilities of the plaintiff stood at Rs.4,46,64,932/-, long term borrowings at Rs.22,03,66,273/-, short term borrowing at Rs.2,73,90,302/- the total liability being Rs.24,77,56,575/-. The loans by the plaintiff to defendant No.10 stood at Rs.22,86,07,072/- and other third parties including defendant No.10(a) at Rs.7,21,24,165/- and to others at Rs.54,00,000/-. It is submitted that the liability of the plaintiff financed through borrowings has been transferred to defendant No.10 firm and third parties related to defendant Nos.10(a) and 11. The loan related expenses and interest paid by the plaintiff is shown as liabilities of defendant No.10 as on 31.03.2016. Plaintiff firm has made a total interest payment of Rs.2,40,36,596/- during the financial year 31.03.2016. There has been no repayment by defendant No.10 to the plaintiff towards this liability nor any third parties have repaid the said amounts.
(c). It is further alleged that the amount loaned by the plaintiff and used by defendant No.10 for acquiring the 12 Com.OS.No.273/2020 properties described in schedule 1 and 2 of the plaint. The records reveal that the mezzanine floor on the said property has been acquired under a agreement to sell dated 16.09.2015 and another floor also under a separate agreement of the same date. Though the purchase deed is in the name of defendant No.10 firm it is the jointly owned asset of the partners of defendant No.10 with their respective shares at 30% with respect to defendant No.1, 20% to defendant No.2, 20% to Late G .V. Nagaraja Reddy and 30% to defendant No.10(a). The defendant No.10 has paid a sum of Rs.5,55,70,000/- to Late G V Nagaraj Reddy, Rs.3,00,00,000/- to defendant No.2, Rs.2,16,43,376/- to defendant No.1 and Rs.4,10,00,000/- to defendant No.10(a) totally amounting to Rs.14,82,13,376/-. The defendant No.11 acting on behalf of the sellers of the said property had negotiated and signed all the documents as as witness which clearly discloses that the sale was made for the benefit of defendant No.11. It is further submitted that the loan amount raised from defendant No.12 and the overdraft amounts during September 2015 raised by plaintiff and defendant No.5 has been used to clear the liability due to Axis Bank. Further a sum of Rs.7,36,00,000/- has been given as loan to defendant No.10 and a sum of Rs.7,04,56,065/- is given as loan to 13 Com.OS.No.273/2020 various third parties at the behest of defendant No.10(a) which has been thereafter routed back to defendant No.10 and 11. In paras 17.1 and 17.2 the plaintiff has given a table of the loans from plaintiff to various third parties. It is submitted that the amount advanced by the plaintiff to various third parties as described in table 17.3 has been subsequently paid to defendant No.10 account on 11.09.2015. Therefore the liability arose on defendant No.10 to refund to the plaintiff firm and clear the total liability of Rs.1,60,00,000/-. It is submitted that one of the third party to whom the amount has been transferred by the plaintiff at the behest of defendant No.10(a) is her husband defendant No.11 Mr. L Jayarama. The same has been acknowledged and confirmed in the first Memorandum of Understanding. The defendant No.10 has given a loan of Rs.1,60,00,000/- to defendant No.11 on 14.09.2015 towards sale of a floor in Embassy Icon which is purchased by none other than defendant No.11 himself on 28.01.2016. The amount of Rs.1,60,00,000/- has been deposited in the account of defendant No.10 as transfer of funds from the plaintiff through third parties and therefore defendant No.10 becomes liable to clear the said amounts.
14Com.OS.No.273/2020
(d). It is the further allegation that on 10.09.2015 and 01.01.2016 a sum of Rs.37,00,000/- and Rs.1,50,00,000/- has been borrowed from the plaintiff by M/s L Jayarama and Co., The Proprietary Concern run by defendant No.11 and has been used by defendant No.11 to purchase a property in Embassy Icon which is described in schedule 4 to the plaint. In addition to it the defendant No.11 has borrowed a sum of Rs.3,45,40,000/- from defendant No.10 under the entity L Jayaram and Co and had used to purchase the property described in schedule 3 to the plaint under sale deed dated 28.01.2016. The defendant No.11 has totally received a sum of Rs. 6,15,98,000/- from the plaintiff firm and defendant No.10 and has used the same to purchase the properties at schedule 3 and 4 of the plaint. The defendant No.11 is liable to repay these amounts to the plaintiff and defendant No.10 collectively. The bank statements of defendant No.10 further reveal that the amounts received as rent deposits and others have been transferred on a monthly basis to various third parties starting from December 2015. These parties have remitted some of amounts towards EMI on the loans taken by defendant No.10 for purchase of the property in the building Embassy Icon. The defendant No.10 (a) along with defendant No.11 have acted detrimental to the 15 Com.OS.No.273/2020 interest of defendant No.10 by not repaying any of the amounts. The loan raised on 24.10.2016 has been transferred to Ram Financial Services amounting to Rs.2,02,00,000/-, Vaibhava Consultants amounting to Rs.1,25,00,000/- and Eshwar Enterprises amounting to Rs.1,25,00,000/- totally a sum of Rs.4,52,00,000/-. These transactions have been undertaken to cover up misuse of the funds. It is submitted that in the first memorandum of understanding dated 10.05.2017 defendant No.10(a) has admitted receiving the amount of Rs.27,67,06,065/-. The earlier partners of defendant No.10 mainly defendant Nos.1, 2 and Late G.V. Nagaraj Reddy have transferred further a sum of Rs.10,72,13,376/- to defendant No.10 and the total amount so transferred to defendant No.10 and defendant No.11 is Rs.38,39,19,441/-. Of the said amount a sum of Rs.38,01,62,851/- has been used by defendant Nos.10 and 11 as down payments for purchase of the properties described in schedules 1 to 4 of the plaintiff. The acquisition of all the properties has been made solely on the basis of the funds from the plaintiff firm and defendant Nos.1,2 and Late Nagaraj Reddy without there being any contribution on part of defendant Nos. 10(a) and 11.
16Com.OS.No.273/2020
(e). It is the further allegation that upon death of G V. Nagaraj Reddy the defendant No.10 firm was reconstituted on 02.02.2016. Subsequently defendant No.1 expressed his intention to retire from defendant No.10 and in his place defendant No.9 came to be inducted as partner of defendant No.10. Upon reconstitution of the firm and on induction of a new partner no relinquishment deed has been executed by the retiring partners. Records of the plaintiff firm also did not reveal balance sheet and profit and loss account being drawn as on 02.02.2016. The reconstituted deed of defendant No.10 firm dated 02.02.2016 also did not disclose valuation of assets done and payments any made to the retiring partners. It is submitted that upon examination of the accounts of the plaintiff firm as on 31.03.2017 the liabilities and provisions of the plaintiff firm increased to Rs.5,07,77,100/- from Rs.3,28,82,474/- as on 31.03.2014. Likewise the long term advances also stood at Rs.21,70,17,054/- and the short term borrowings stood at Rs.2,59,38,787/- and the total liability as on 31.03.2017 stood at Rs.29,37,32,941/-. Likewise the loans advanced by the plaintiff firm to defendant No.10, the third parties to defendant No.10(a) and others stood at Rs.31,63,38,174/-. This has been duly acknowledged as 17 Com.OS.No.273/2020 the liability due by the partners who have accepted the financial statements and signed the same confirming the entries. It is submitted that the defendant No.10 firm was again reconstituted on 24.04.2017. The defendant No.9 retired from defendant No.10 firm and in his place defendant No.10(b) came to be inducted as a partner. The continuing partners have released the retiring partners form all their debts and obligations including the taxes payable by defendant No.10 which is contrary to the law. Further with respect to matters relating to settlement of the accounts of the retiring partners defendant Nos.2 and 9 no balance sheet or statement of profit and loss has been drawn up nor any details are forthcoming with regards to the payments made to the retiring partners as on 24.04.2017. Once again the value of the immovable property is also not obtained. There was another reconstitution of the defendant No.10 firm again on 05.05.2017 when defendant No.4 retired from the firm and defendant Nos.10(a) and (b) remained as the existing partners. Under the said reconstitution deed defendant No.10(a) was laving the largest 99% share. The remaining 1% share was with defendant No.10(b). The reconstituted deed dated 02.05.2017 revealed settlement of capital of the retiring partners at Rs.6,50,00,000/- for which no 18 Com.OS.No.273/2020 records are forthcoming and also there is no mention about the same either in the balance sheet or the profit and loss account drawn up on 02.05.2017. It is submitted that though the defendant No.10 firm was reconstituted thrice since its formation in the year 2015 neither the statement of accounts and the valuation assets by the authorized authority of defendant No.10 was drawn up nor payments made to the retiring partners at the time each reconstitution has been specifically shown. The reconstituted deeds dated 02.02.2016, 24.04.2017 and 02.05.2017 permitted transfer of the retiring partners in the immovable properties standing in the name of defendant No.10 and those instruments were neither registered nor required stamp duty being paid and have become inapplicable in law. The reconstitution of defendant No.10 has been undertaken without there being any relinquishment of right or interest of the retiring partners on the immovable properties.
(f). It is further allegation that two Memorandum of Understandings were executed on 10.05.2017. The first Memorandum of Understanding was between defendant No.4 Ms. N Dhruthi, Ms. N Rashmi. Defendant No.2, defendant No.1, defendant No.10 along with plaintiff and 19 Com.OS.No.273/2020 defendant No.5 and 9. To the said instrument defendant No.10(a) and 11 and defendant No.3 have joined as signatories in their individual capacities which clear shows acceptance of liability and usage of funds taken from the plaintiff. The contents of both the Memorandum of Understandings dated 10.05.2017 are contradictory to the terms of reconstitution deeds of defendant No.10 firm. Late G.T Ventakaswamy Reddy, the partner of the plaintiff was not a signatory to any of these Memorandum of Understandings or the reconstituted deed of partnership. The first Memorandum of Understanding confirmed the loans from the plaintiff and also constituted the acknowledgment of debts payable with interest by defendant No.10. The defendant Nos.10(a) and 11 has promised to make monthly payments of Rs.6,92,500/-until defendant No.10(a) share of Rs.5,63,86,298/- has been cleared. Further the amount from the plaintiff has been directly received by defendant No.10, 10(a) and 11 and persons related to them and the assets are purchased in the names of defendant Nos. 10 and 11 and they continued to exist in their names. To the second Memorandum of Understanding dated 10.05.2017 defendant No.4, her children, defendant No.10 represented by defendant No.10(a) and defendant Nos.10 20 Com.OS.No.273/2020
(a) and 11 in their individual capacity had affixed their signatures. As per the terms of the second MOU defendant No.4 who had chosen to retire from the partnership of defendant No.10 was required to be paid a sum of Rs.6,50,00,000/- as her share of which she has been paid Rs.1,50,00,000/- and there is a balance of Rs.5,00,00,000/- to be payable in six months commencing from 10.05.2017. In the second MOU defendant No.10(a) agreed to clear the liabilities of Tata Capital which was standing in the name of defendant No.4 and was also to pay a sum of Rs.50,00,000/- to late G T Venkataswamy Reddy within six months from 10.05.2017. It is submitted that the terms of both the MOUs are not as per the prevailing accounting standards and they have been drawn up based on incorrect facts and omissions and therefore the same is not binding upon the plaint firm. Both the MOUs did not reflect all the loans that has been raised and taken from the plaintiff firm. The additional money borrowed by defendant No.10(a) through third parties has been omitted from the MOU. Though liability of defendant No.10 firm to the plaintiff is accepted the MOUs did not reveal the correct figures and the amounts being payable to the plaintiff firm. The books of accounts further revealed that the plaintiff firm has made a payment of 21 Com.OS.No.273/2020 Rs.2,45,71,393/- as interest towards the loans that has been utilized by defendant No.10, 10(a) and 11 which affected the running of the accounts of the firm ending 31.03.2018. For the period 01.04.2018 to 31.03.2018 the books of accounts revealed increase in the rental income of the plaintiff but repayment of the loans affected and caused reduction in the distributable income of the plaintiff. Further on account of non payment of the liability of defendant No.10 and it partners also caused financial loss to the plaintiff. For the year ending 31.03.2019 the plaintiff firm has made payment of a sum of Rs.2,40,28,465/- towards interest for the loans utilized for the benefit of defendant Nos.10, 10(a) and 11. It is submitted that presently defendant Nos.10, 10(a) and 11 are getting a rental income of more than Rs.40,00,000/- per year which has not been disclosed to defendant Nos.15 to 17. The partners of the plaintiff who became partners of defendant No.10 on 25.07.2015 and remained partners till 02.05.2017 have failed to notice that the execution of MOU dated 10.05.2017 was more in the nature of compromising or relinquishing claim of the plaintiff's legally recoverable debts from defendant No.10 firm which they were not empowered to do so. Moreover Late G.T.Venkataswamy Reddy was not a signatory to the 22 Com.OS.No.273/2020 MOUs dated 10.05.2017 and therefore it does not bind the plaintiff's and its partners. It is submitted that plaintiff is entitled for the amount transferred by it for the benefit of defendant No.10 and its partners and defendant Nos.10, 10(a) and (b) being the partners of defendant No.10 are liable to pay the huge amounts back to the plaintiff firm. It is submitted that the rental income received by defendant No.10 and the amount extended to third parties from the plaintiff have all flown back to defendant Nos.10, 10(a), 10(b) and 11 and these amounts are being utilized by defendant No.11 in acquisition of various properties without repaying the amounts that has been due to be repaid to the plaintiff. It is submitted that involvement of defendant No.10(a) and 11 in defendant No.18 is revealed in the public documents maintained at the Registrar of Companies which discloses acquisition of a property by paying rent of Rs.1,00,000/- per month and also acquisition of a property at Thippasandra Village by defendant No.10(a) and (b) and 11 as per the agreement to sale dated 30.05.2016. The amounts invested by defendant No.10(a) and 11 including the land purchased at Doddakallasandra Village , Uttarahalli Hobli is out of the funds that have been transferred from the plaintiff account which they are liable to be paid to the plaintiff. It 23 Com.OS.No.273/2020 is further submitted that the loans given to the third parties from the plaintiff firm were all persons who are directly related to defendant Nos.10(a) and 11 which clearly reveals the financial mismanagement caused with the accounts of the plaintiff firm. It is submitted that defendant No.11 being a professional Chartered Accountant has resorted to unethical and corrupt practices by diverting the funds obtained from the plaintiff firm and misusing the same for acquisition of properties in his individual names and not repaying the amounts due to the plaintiff firm. As on 31.03.2020 the transfer of funds to third parties from the plaintiff firm at the behest of defendant Nos.10, 10(a) and 11 stood at Rs.27,67,06,065/-. The interest payment on availed loans stood at Rs.13,99,85,259/-, The Axis Bank Loan related charges at Rs.49,03,459/- and the Fullerton loan related charges stood at Rs.85,56,645/- totally amounting to the suit claim which the defendant Nos.10 its partners defendant Nos.10(a) and (b) and defendant No.11 are liable to pay. In addition to it the plaintiff firm continues to bare a monthly EMI of Rs.24,47,788/- being paid to defendant No.12 for the financial assistance received which also becomes liable to be repaid by defendant Nos.10, 10(a) and 11.
24Com.OS.No.273/2020
(g). It is further contended that the plaintiff vide letter dated 27.06.2020 addressed to defendant Nos.1 to 8 and defendant No.10(a) called upon them to pay the amounts as claimed above. To the said letter there was no reply which would virtually amount to contents of the said letter. It is submitted that defendant No.10 being a partnership concern was required to maintain books of accounts. The transactions by which money which has been lend to defendant No.1 are through the banking channels and have duly recorded in the books of accounts maintained in the ordinary course of business. It is submitted that the defendant No.10 which underwent reconstitution twice was required to maintain the balance sheet, profit and loss account every time when the firm was reconstituted and also required drawing up of trading account, profit and loss account and the balance sheet but the defendant No.10 has not complied with any of those requirements and has all the assets stands in the name of defendant No.10 even as on today the defendant No.10(a) and (b) being its partners are liable to clear the liabilities. Hence the present suit.
3. The defendant Nos.2 and 5 have filed written statement sailing along with the plaintiff conceding to the 25 Com.OS.No.273/2020 plaint averments and have sought for decreeing the suit as prayed by the plaintiff and pass suitable orders. Likewise defendant No.3 is also one of the consenting defendant who has admitted all the plaint averments and has sought for decreeing the suit of the plaintiff as prayed. Defendant Nos.6 to 8 are also consenting parties to the suit and in their written statement they also admit all the averments made in the plaint and seeks for decreeing the suit with costs.
4. Defendant No.14 has filed written statement wherein it is contended that there are no averments in the plaint as against the defendant No.14 and no relief is sought against it and therefore defendant No.14 is neither a proper party nor a necessary party to the present suit. It is contended by defendant No.14 that it has entered into three registered lease deeds with defendant No.10 dated 05.12.2017 with respect to property measuring 12,652 sq.ft. in the third floor, Mezzanine floor, Embassy Icon by paying a refundable security deposit of Rs.1,07,54,200/- which is later increased to Rs.1,27,83,011/-. It has entered into another registered lease deed dated 16.02.2018 with respect to property measuring 2,387 sq.ft. on the 3 rd level, Mezzanine floor of Embassy Icon by paying a security 26 Com.OS.No.273/2020 deposit of Rs.22,67,650/- subsequently increased to Rs.26,49,570/- and a third registered lease deed with defendant No.10 dated 24.07.2018 in respect of the property measuring 715 sq.ft. at the 3 rd level, Mezzanine floor, Embassy Icon. The defendant No.14 further contends that it is not aware of any of the allegations made in the suit as it is a dispute inter say between the partners involving and concerning with defendant No.10 for which the defendant No.14 is not at all a party. It is submitted that all the rentals with respect to the leased properties are being paid by defendant No.14 to defendant No.10 and that defendant No.10 has executed an indemnity undertaking dated 04.01.2021 to keep defendant No.14 indemnified against all claims and damages arising out of the present suit. It is submitted that defendant No.14 is a bonafide tenant in one of the schedule properties having taken the properties on lease for about 6 years and there are about 150 employees working under defendant No.14 in the leased premises and further contended that as no relief is claimed against defendant No.14 suit may be dismissed against it.
5. Defendant No.15 has filed a separate written statement wherein it is alleged that there is no cause of action for 27 Com.OS.No.273/2020 the suit against defendant No.15 and that the suit is bad for misjoinder of parties as no specific relief is claimed against defendant No.15. It is submitted that the defendant No.15 has sanctioned cash loan facility to M/s GTV Estates for Rs.3,800/- lakhs and the present outstanding amount is about Rs.4,043/- lakhs payable by GTV Estates. It is submitted that all the allegations in the plaint only discloses an inter say dispute between the partners and defendant No.10 firm for which the defendant No.15 bank has no role to play and is no way concerned and that it is only concerned with the recovery of the amounts advanced to GTV Estates. On these grounds defendant No.15 has sought for dismissl of the suit.
6. Defendant No.16 Axis Bank also has filed a separate written statement wherein it is contended that no cause of action is disclosed as against defendant No.16 and no relief is claimed and therefore suit as against defendant No.16 is bad for misjoinder of parties. It is averred that defendant No.11 has availed LRD term loan facility from defendant No.16 to the extent of Rs.21 crores and has created equitable mortgage of the commercial property measuring 27,370 sq.ft and a cafetaria measuring 1342 28 Com.OS.No.273/2020 sq.ft. located at level4, 2 nd floor, No.3, Embassy Icon Building. It is submitted as on the present outstanding due is around Rs.20.20 crores. It is submitted that defendant No.16 is no way concerned with the dispute between the partners and defendant No.10 as regards the management of the accounts of the partnership firm and has sought for dismissing the suit as against it with costs.
7. Defendant No.10, 10(a) and (b) and 11 are the main contesting defendants against whom the plaintiff have sought the reliefs as claimed in the suit. These defendants in their written statements contend that defendant Nos.1 to 3 and late G.V. Nagaraj Reddy are the children of one deceased G T Venkataswamy Reddy. The fourth defendant is the wife of G.V. Nagaraj Reddy and daughter in law of G.T. Venkataswamy Reddy. 5th defendant is the company registered under the Companies Act which has the capital contribution for the benefit of the plaintiff firm. Defendant Nos.6 to 8 are also the partners of the plaintiff firm with effect from 29.08.2019. It is submitted that the plaintiff firm has been constituted only for the purpose of distribution of the rental income from the 5 th defendant which has contributed the rental income as capital contribution in favour of plaintiff firm. It is submitted that 29 Com.OS.No.273/2020 pursuant to a Memorandum of family partition dated 31.01.1995 the first defendant executed a lease deed in favour of M/s Chrysalis Educare Pvt. Ltd., dated 24.01.2011 with respect to lands in Sy.No.219/3 and 219/5 situated at Gunjur Village, Varthur Hobli, Bengaluru South Taluk, wherein the first defendant was required to construct and deliver 30,000 sq.ft. of built up area. The first defendant having the lands situated inside Gunjur Village offered to sell the same in favour of defendant No.10(a) and on the basis of offer so made the defendant No.10(a) started paying amounts through defendant No.11 who is her husband and on various dates the defendant No.1 has totally received a sum of Rs.2,52,25,000/- till the end of March 2013 for the purpose of construction of the school building and also has purchased land in Sy.No.125 measuring 3 acres 34 guntas at Gombena Agrahara Village, Bidarahalli Hobli, Bengaluru East Taluk in the name of his wife B.R. Shylaja under the registered sale deed dated 14.02.2013.
(a). It is submitted that the first defendant being the owner of the land in Sy.No.233/1 intended to develop the said property and entered into a registered JDA dated 14.05.2013 with M/s JSV Projects. Pursuant to the said JDA 30 Com.OS.No.273/2020 the defendant Nos.1, 9 and one Mr. Mohith Kumar decided to sell an extent of 35,000 sq.ft of the super built up area land in Sy.No.233/1 with all proportionate undivided share, right, title and interest for their legal necessities and to discharge their debts to the 11th defendant. The 11th defendant agreed to purchase the same and entered into agreement to sell dated 10.03.2014 by paying an advance consideration of Rs.2,50,00,000/-. Thereafter the first defendant received the amount of Rs.2,52,25,000/- from defendant No.10(a) through defendant No.11 and in view of it the defendant No.10(a) requested to execute an agreement of sale for which the defendant No.1 told that once the Memorandum of partition is registered he would execute the agreement of sale and further demanded consideration for the purpose of additional construction of the school building and received an additional consideration of Rs.85,50,000/- from defendant No.10(a) between 01.04.2013 to 31.03.2014. It is submitted that defendant No.1 also received advance sale consideration of Rs.3,37,75,000/- on various dates agreeing to execute agreement to sell with respect to land in Sy.No.234/2 and totally received a sum of Rs.5,87,75,000/- and also additionally received another sum of Rs.28,95,000/- totally amounting to Rs.6,16,70,000/-.
31Com.OS.No.273/2020
(b) It is submitted that the defendant No.3 claiming to be the owner of the larger extent of land in Sy.Nos.46, 48, 49, 50, 51 and 53 of Halasannahalli Thipasandra Village, Srjapura Hobli, Anekal Taluk entered into three JDAs dated 19.08.2011, 03.10.2011 and 13.01.2012 along with his children with M/s Geown Developers Pvt. Ltd., and offered to sell the plots bearing No.41, 42 each measuring 6204 sq.ft and executed two registered agreements of sale dated 20.12.2014 by receiving the entire sale consideration and agreed to execute the sale deed in favour of defendant No.10(a) and 11 after obtaining the 11-E Sketch. Meanwhile the first defendant and his family members entered into a registered partition dated 03.11.2013. It is submitted that the defendant Nos.1 to 3 and the husband of defendant No.4 being the children of deceased G.T. Venkataswamy Reddy having acquired commercial properties and school buildings and also having entered into JDAs with the developers have brought the proposal for sale of suit schedule 3 and 4 properties. During the course of discussions the defendant No.1 represented to the defendants No.10 (a) and 11 that the amount of Rs.6,16,70,000/- received by him from defendant Nos.10(a) and 11 shall be treated as advance sale consideration with respect to purchase of the said 32 Com.OS.No.273/2020 properties and proposed defendant Nos.10(a) and 11 to join him in execution of the projects by stating that the first defendant would contribute the sale consideration of defendant Nos.10(a) and 11 and that the defendant Nos.2, 3 and husband of defendant No.4 would have no objections for purchase of the properties jointly along with defendant Nos.10(a) and 11 with a condition that the share of consideration of defendant No.10(a) and 11 was to be paid by defendant No.1. Accepting the said proposal the defendant Nos. 10 (a) and 11 have joined along with defendant Nos.1 to 3 and husband of defendant No.4 and entered into the agreement of sale with respect to schedule 3 and 4 suit properties by receiving advance sale consideration of Rs.4,00,00,000/- with respect to schedule 3 property and Rs.8,00,00,000/- with respect to schedule 4 property. It is submitted that as on the date of entering into the agreement to sell the defendant Nos.1 to 3, Late Nagaraj Reddy and defendant Nos.10(a) and 11 were aware of the charge created on the said properties with Kotak Mahindra Bank to the extent of Rs.28,00,00,000/- and second charge with SVC Bank to the extent of Rs.30,00,00,000/- which have to be liquidated before execution of the sale deeds.
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(c) It is further contended by these defendants that the defendant Nos.1 to 3 and Late Nagaraj Reddy failed to mobilize the required sale consideration and further were unable to mobilize required funds for discharging the liabilities in favour of IndusInd bank to the extent of Rs.21.96 crores. The defendant Nos.1 to 3, G V Nagaraj Reddy and defendant No.10(a) approached IndusInd bank with a proposal of purchasing the Level 2 and Level 3 properties and take over the liabilities in their individual needs for which the bank declined to consent expressing that taking over the liability either by a company or by a firm would be more beneficial rather than taking over the liability by individual. Thus for the purpose of clearing the liability and purchasing Level 2 and Level 3 floors the defendant Nos.1, 2, Late Nagaraj Reddy and defendant No.10(a) entered into a partnership firm by name GTV Estates i.e., defendant No.10. In the said firm the defendant No.10(a) had 30% share in the profit and loss. Majority of the shares of defendant No.10 came to be held by defendant Nos.1 ,2 and Late Nagaraj Reddy. The object of the defendant No.10 firm was to manage, improve, develop, hold or acquire the properties and at the time of constituting the defendant No.10 firm the defendant No.10(a) was appointed to manage the affairs for which 34 Com.OS.No.273/2020 she would be entitled for 2% grace rent received from the buildings. After constitution of the defendant No.10 firm IndusInd Bank sanctioned a loan of Rs.19 Crores 65 Lakhs which was subject to clearing the outstanding loan to the extent of Rs.21.96 crores for the purpose of purchasing Level 2 and Level 3 of Embassy Icon. Subsequently the said property came to be purchased and the registered sale deed came to be executed on 16.09.2015 in favour of 10th defendant represented by its partners defendant Nos.1 to 3, Late Nagaraj Reddy and defendant No.10(a). It is submitted that the 11 th defendant is not a partner of defendant No.10.
(d). When things stood thus Nagaraj Reddy died leaving behind him defendant Nos.4 and his daughters. Subsequently the 4th defendant came to be inducted as a partner to plaintiff firm and thereafter the first defendant retired from the partnership firm and in his place the 9 th defendant came to be inducted as a partner and the partnership came to be reconstituted on 02.02.2016. It is submitted that at the time of purchasing Level 2 of the Embassy Icon building there was an existing tenant which was not paying any rents for the premises and in the course of negotiations it was revealed that there were 35 Com.OS.No.273/2020 various deficiencies in the building and 10th defendant firm was called upon to fulfill the deficiencies which required huge amount. There were certain differences among the partners of the 10th defendant as regards the capital contribution and negotiations were held for resolution of the said dispute. The partners of the 10 th defendant had incurred a total sum of Rs.52,83,37,228/- towards purchasing Level 2 and Level 3 of Embassy Icon. Pursuant to the demands made by the tenants the partners of the 10th defendant and M/s Zensar Technologies the tenant entered into an MOU and a letter of intent dated 05.08.2016 wherein the partners of the 10th defendant undertook to fulfill the requirements for letting out the additional space of 12,625 sq.ft. It was agreed that the partners of the 10 th defendant would complete the civil works in the Level 3 as per the specifications provided by the tenant. Pursuant to the said mutual understandings among the partners of the 10 th defendant they raised a loan from 12th defendant by short closing the loan at Axis Bank and out of the said loan amount only the defendant Nos.1, 2 and Late Nagaraj Reddy were the beneficiaries and the third defendant who was not the beneficiary his share of the loan came to be utilized for purchasing the property by partners of the 10 th 36 Com.OS.No.273/2020 defendant distributing the loans raised by the 12 th defendant into five shares of which the share of the 3 rd defendant and 50% share of G T Venkataswamy Reddy came to be transferred in favour of defendant No.10(a). The terms of the MOU came to be reduced into writing and an MOU dated 15.08.2016 came to prepared. As per the terms of the MOU the defendant Nos.1 to 3, Late Nagaraj Reddy and deceased G.T Venkataswamy Reddy have raised two loans for Rs.22,55,45,190/- in the name of GTV Reddy and Sons and Rs.3,60,00,000/- towards OD facilities. The loan amount of Rs.22,55,45,190/- was utilized by defendant No.1, 2, Late Nagaraj Reddy and defendant No.10(a) for purchasing of the property. The 3 rd defendant and G T Venkataswamy Reddy were not partners of the 10th defendant and the share of the loan amount of 3rd defendant to an extent of Rs.4,51,09,038/- has been transferred to defendant No.10(a) and likewise 50% of the share of loan amount of G T Venkataswamy Reddy to the extent of Rs.2,25,54,519/- has also been transferred to defendant No.10(a) and thus a total amount of Rs.6,76,63,557/- has been transferred to defendant No.10(a) which they have agreed to repay. Under the said MOU the 11th defendant agreed to clear the OD interest and close the OD facility to the extent of Rs.3,60,00,000/-
37Com.OS.No.273/2020 and defendant No.10(a) also agreed to pay her share to the extent of 30% on the loan raised at Tata Capital Finance Ltd. Thus as per the MOU dated 15.08.2016 the defendant No.10(a) admitted the liability to the extent of Rs.7,66,63,557/- and defendant No.11 admitted the liability to the extent of Rs.3,60,00,000/- totally the defendant Nos.10(a) and 11 have admitted liability to the extent of Rs.11,26,63,557/-.
(e). It is further contended by the defendants that the partners of the plaintiff firm had raised loan of Rs.22,55,45,190/- from the Fullerton India Credit Co., Ltd., and a OD facility of Rs.3,60,00,000/- from Vijaya Bank. The defendant No.1 has admitted his share of the loan at Rs.4,51,09,038/-, 50% of G T Venkataswamy Reddy's share in the loan to the extent of Rs.2,25,54,519/- and OD facility of Rs.3,60,00,000/-. Likewise defendant No.2 had admitted his share of the loan of Rs.4,51,09,038/- and defendant No.4 had admitted her share of the loan of Rs.4,51,09,038/-. Third defendant had admitted his share of the loan at Rs. 4,51,09,038/- and also the balance 50% of the share of G.T. Venkataswamy Reddy in the loan to the extent of Rs.2,25,54,519/-. These admissions of the share of the loan have been referred to in the MOU dated 38 Com.OS.No.273/2020 10.05.2017 which would indicate that the settlement arrived between the parties and acted upon by them there by indicating that all the transactions prior to entering into the MOU and with respect to the purchase of the property at Embassy Icon have been mutually settled and there is no claim against each other except as mentioned in the MOU. It is submitted that the plaintiff firm is represented in the MOU through the 2 nd defendant and its managing partner who was also the authorized signatory of the firm and with consent of all the partners has signed the MOU dated 10.05.2017 and therefore the terms of the MOU is binding upon upon the partners of the plaintiff firm. It is submitted that as per the terms of the MOU dated 15.08.2016 the loan borrowed by the 11 th defendant from 2nd defendant has been settled and the amount of Rs.25,00,000/- received under the registered mortgage deed was to be continued till all the loans undertaken to cleared by defendant No.10(a) and 11. It is submitted that by virtue of the cancellation of the JDA dated 11.08.2020 and 14.05.2013 the property in land bearing Sy.No.233/1 has been obtained. It is submitted that in terms of the MOU defendant No.10(a) and 11 have been paying rents to defendant No.3. It is submitted that the representative of the plaintiff firm Mr. Harish Reddy has been 39 Com.OS.No.273/2020 representing the plaintiff without any authorization and that the present suit is filed in collusion with defendant No.1 to 4 and 6 to 9 and all the transactions have been duly settled in the month of May 2017 and the suit filed in the year 2020 is barred by limitation. These defendants have made a para wise denial of all the averments made in the plaint as false and and baseless and contends that the partners of the plaintiff firm who have contributed their capital share have been settled during the course of reconstitution of 10th defendant firm and defendant No.10(a) has taken over all the liabilities in order to discharge the share of settlement of retiring partners and on account of which liabilities of the 10 th defendant firm to the banks and financial institutions has been intern increased. It is also contended that there is absolutely no cause of action for the suit and on these grounds sought for dismissal of the suit with exemplary costs.
8. The defendant Nos.1, 9, 12 and 17 who have appeared through their counsels have not filed written statement. Defendant Nos.4, 13, and 18 have remained absent on service of summons and have been placed exparte.
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9. On the basis of the above pleadings the following issues have been framed:
ISSUES
1. Whether the plaintiff proves that the Memorandum of Understandings dated 10.05.2017 were illegal, void and not biding on plaintiff?
2. Whether the plaintiff further proves that defendants 10, 10A and 11 are jointly and severally are liable to pay the sum of Rs.43,01,51,428/- to the plaintiff firm along with the interest @ 18% p.a., on the same ?
3. Whether the plaintiff further proves that he has paid the EMI of Rs.24,47,788/- to the 12th defendant towards the loan raised by defendants 10, 10A and 11?
4. What order or decree?
10. The representative of the plaintiff Mr. Harish Reddy examined himself as P.W.1. One witness by name Mr. Keshavayya has been examined as P.W.2. The plaintiff has got marked documents at Ex.P.1 to P.38. Defendant No.11 for himself and on behalf of defendant Nos.10, 10(a) and
(b) has examined himself as D.W.1 and has got marked documents at Ex.D.3 to D.71. Ex.D.1 and D.2 have been marked through the cross examination of P.W.1.
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11. Heard the Learned Counsel appearing for the plaintiff and the learned counsel for defendant No.2. Heard Sri. K.G.Raghavan, Learned Designated Senior Counsel apearing for the counsel for defendant Nos.10, 10(a) and
(b) and 11. Notes of submissions are furnished by defendant Nos.10, 10(a) and (b) and 11. The learned counsel for the plaintiff, defendant No.2, defendant Nos.10, 10(a) and (b) and 11 and defendant No.3 have submitted their respective written submissions. Perused the entire material on record.
12. My answer to the above issues are as under:-
Issue No.1 : In the Negative.
Issue No.2 : In the Negative.
Issue No.3 : In the Negative.
Issue No.4 : As per final order for the following.
REASONS
13. Before taking up the issues for answering I deem it just and proper to refer to the evidence adduced by both parties and also the arguments put forth by the learned counsels for both sides.
42Com.OS.No.273/2020 The representative of the plaintiff firm has examined himself as P.W.1 and has got marked documents at Ex.P.1 to Ex.P.38. Ex.P.1 is the True copy of partnership deed of the plaintiff firm dated 29.04.2009. Ex.P.2 is the is the True copy of Acknowledgment of registration of firm. Ex.P.3 is the True copy of deed of reconstitution of partnership dated 29.08.2019. Ex.P.4 is the True copy of memorandum acknowledging receipt of documents along with 2 enclosures. Ex.P.5, 6 & 7 are the True copies of statement of accounts of the plaintiff as on 31.03.2014, 31.03.2015 and 31.03.2016 (marked subject to plaintiff examining his auditor). Ex.P.8 is the True copy of partnership deed dated 25.07.2015 along with acknowledgment of registration of firm (admitted). Ex.P.9 is the True copy of bank account statement of defendant No.10. (admitted). Ex.P.10 is the True copy of sale deed dated 16.09.2015(admitted). Ex.P.11 is the True copy of agreement to sell dated 16.09.2015(admitted). Ex.P.12 is the True copy of bank account statement of plaintiff firm from 2015 (marked subject to producing either computerized copy or certified copy from bank). Ex.P.13, 14 & 15 is the Certified copies of bank account statements of plaintiff firm issued by Bank of Baroda. Ex.P.16 is the True copy of reconstitution deed dated 02.02.2016 (admitted). Ex.P.17 is the True copy of 43 Com.OS.No.273/2020 statement of account of plaintiff as on 31.03.2017 issued through charted accountant (marked subject to examining charted accountant). Ex.P.18 is the True copy of deed of reconstitution of partnership dated 24.04.2017 (admitted). Ex.P.19 is the True copy of deed of reconstitution of partnership dated 02.05.2017 (admitted). Ex.P.20 is the True copy of memorandum of understanding dated 10.05.2017 (admitted).
(a). Ex.P.21 is the True copy of memorandum of understanding dated 10.05.2017 (admitted). Ex.P.22 is the True copy of Income tax return acknowledgment along with balance sheet as on 31.03.2018 (marked subject to examining concerned charted accountant). Ex.P.23 is the True copy of balance sheet as on 31.03.2019 (marked subject to examining concerned charted accountant). Ex.P.24 is the Statement prepared by the charted accountant with regard to amount due from defendant 10, 10a and 11 and related parties (marked subject to examining concerned charted accountant). Ex.P.25 is the Statement showing the interest paid to concerned bank towards loans related to amounts due from defendant 10, 10a and 11 issued by charted accountant (marked subject to examining concerned charted accountant). Ex.P.26 is the True copy of statement of account of Axis Bank from 44 Com.OS.No.273/2020 01.01.2015 to 07.05.2015 and 01.04.2015 to 31.03.2016. Ex.P.27 is the True copy of Statement issued by Fullerton India Credit Company Limited with regard to repayment schedule (marked subject to producing certified copy). Ex.P.28 is the True copy of Axis Bank loan charges said to have been paid by plaintiff. Ex.P.29 is the True copy of Fullerton India Credit Company Limited loan charges said to have been paid by plaintiff. Ex.P.30 is the True copy of account statement issued by Fullerton India Credit Company Limited on 05.10.2020. Ex.P.31 is the Office copy of demand notice issued by plaintiff's representative i.e., myself against defendants herein. Ex.P.32 is the True copy of mediation application form filed by Mr.Harish Reddy as applicant against plaintiff firm and others. Ex.P.33 is True copy of emails addressed by D11 to the District Legal Service Authority. Ex.P.34 is the True copy of deed of Reconstitution of Partnership Firm dated 17.02.2016. Ex.P.35 is the True copy of the certificate issued by concerned Registrar of Firms in pursuance of Reconstitution of Partnership Firm dated 14.06.2016. Ex.P.36 is the Certificate u/S 65B of Indian Evidence Act. Ex.P.37 is the Certified copy of bank statement issued by Axis Bank. Ex.P.38 is the Certified copy of bank statement issued by Fullerton India Credit Co. Ltd., 45 Com.OS.No.273/2020
14. The plaintiff firm has also examined the Chartered Accountant who had audited the accounts of the plaintiff firm Sri. Keshavaiyya as P.W.2. Both P.W.1 and 2 have been cross examined at length.
15. Against the evidence of the plaintiff the defendant No.11 for himself and on behalf of defendant Nos.10, 10(a) and (b) has examined himself as D.W.1 reiterating the averments made in the written statement. He has got marked documents at Ex.D.1 to D.71. Ex.D.1 and D.2 are is the agreements to sell dated 25.02.2025. Ex.D.3 is the Certified copy of the Lease Deed dated 24.01.2011 entered between 1st defendant in favour M/s.Chrysakus Educare Pvt. Ltd., Ex.D.4 is the Certified copy of Sale Deed dated 14.02.2013 executed by one Sri.Jayaramappa and others in favour of Smt. B.R.Shylaja (Wife of the 1st defendant). Ex.D.5 is the Certified copy of Joint Development Agreement dated 14.05.2023 entered between the 1st defendant and his children with M/s. JSV Projects, represented by its Managing Partner, Mr.Sama Abishek Reddy. Ex.D.6 is the Certified copy of Lease Deed dated 06.12.2013 entered between 1st defendant with M/s. Varthur Foundation Trust. Ex.D.7 is the Certified copy of Lease deed dated 21.02.2014 entered between Smt. 46 Com.OS.No.273/2020 B.R.Shylaja (wife of the 1st defendant) with M/s. Kadugodi Foundation Trust. Ex.D.8 is the Certified copy of Lease Deed dated 20.10.2014 entered between 1st defendant with M/s. Varthur Foundation Trust. Ex.D.9 is the Certified copy of Lease Deed dated 14.07.2015 entered between 1st defendant with M/s. Varthur Foundation Trust. Ex.D.10 is the Certified copy of Lease Deed dated 25.11.2014 entered between 1st defendant with M/s. Varthur Foundation Trust. Ex.D.11 is the Order dated 28.09.2015 passed by the District Registrar, Bengaluru. Ex.D.12 is the Certified copy of Agreement to Sell dated 13.06.2016 entered between the 1st defendant with defendant 10(a) and 11th defendant. Ex.D.13 is the Certified copy of Memorandum of Understanding dated 15.08.2016 between Defendants 1 to 3 and 4 th defendant and her children and defendants 10(a) and 11. Ex.D.14 is the Certified copy of Agreement to Sell dated 16.09.2016 entered between the 1st defendant with 11th defendant. Ex.D.15 is the Certified copy of the Sale Deed dated 03.10.2016 executed by one Sri.G.K.Seetharam and others in favour of 1st defendant. Ex.D.16 is the Certified copy of Lease Deed dated 10.11.2016 entered between 1st defendant with M/s. Varthur Foundation Trust. Ex.D.17 is the Original Lease Deed dated 01.10.2016 entered 47 Com.OS.No.273/2020 between 10th defendant with Tenant. Ex.D.18 is the Certified copy of Deed of Cancellation of Agreement dated 10.05.2017 entered between 1st defendant with defendants 10(a) and 11. Ex.D.19 is the Certified copy of Deed of Cancellation of Agreement dated 10.05.2017 entered between 1st defendant with defendants 10(a) and
11. Ex.D.20 is the Certified copy of Agreement to Sell dated 10.05.2017 entered between 1st defendant with 2nd defendant.
(a). Ex.D.21 is the Certified copy of Deed of Cancellation of Agreement dated 20.08.2020 entered between 1st defendant with 2nd defendant. Ex.D.22 is the Certified copy of Sale Deed dated 20.08.2020 executed by 1st defendant and his family members in favour of Mysore Projects Pvt. Ltd., Ex.D.23 is the Certified copy of Cancellation of JDA dated 11.08.2020 executed by 1st defendant and his Sons in favour of M/s. JSV Projects. Ex.D.24 is the Certified copy of Sale Deed dated 20.08.2020 executed by 1st defendant and his family members in favour of Mysore Projects Pvt. Ltd., Ex.D.25 is the Authorization letter dated 31.05.2024 authorizing 11th defendant to give evidence on behalf of defendants 10(a) and 10(b). Ex.D.26 is the E-mail dated 06.08.2016 sent from David Kumar ([email protected]) to 48 Com.OS.No.273/2020 [email protected] along with Three attachments. Ex.D.27 is the E-mail dated 06.08.2016 sent from David Kumar [email protected] to [email protected] along with Three attachments.
Ex.D.28 is the E-mail dated 06.08.2016 sent from Rajiv Mundhra [email protected] to
[email protected] along with Two attachments. Ex.D.29 is the Death certificate of G.T.Venkataswamy Reddy who died on 15.05.2019. Ex.D.30 is the Legal Notice dated 19.12.2016 issued on behalf of 3rd defendant to plaintiff firm and others. Ex.D.31 is the Legal Notice dated 10.04.2017 issued on behalf of 3rd defendant to plaintiff firm and others. Ex.D.32 is the Loan Sanction letter dated 30.08.2017 issued by Bajaj Finserv in favour of 10th defendant firm. Ex.D.33 is the Loan Sanction letter dated 16.03.2019 issued by Karnataka Bank Ltd., (15th defendant) in favour of 10th defendant firm for an sum of Rs.38.00 crores. Ex.D.34 is the Loan sanction letter dated 04.06.2019 issued by Karnataka Bank Ltd., (15th defendant) in favour of 10th defendant firm for an sum of Rs.2.5 crores. Ex.D.35 is the Certified copy of Memorandum of Deposit of Title Deeds dated 29.04.2019 executed by the 10th defendant firm in favour of 15th defendant bank. Ex.D.36 is the Certified copy of 49 Com.OS.No.273/2020 Deed of Rectification dated 30.04.2019 executed by 10th defendant firm in favour of the 15th defendant bank. Ex.D.37 is the Loan statement of Account maintained at 15th defendant bank from 29.03.2019 to 23.05.2024. Ex.D.38 is the Overdue statement of account maintained at 15th defendant bank from 07.06.2019 to 23.05.2024. Ex.D.39 is the Supplemental Agreement dated 23.10.2019 to the Memorandum of Understanding dated 10.05.2017 executed by 4th defendant and her daughters in favour defendant 10(a) and 11th defendant. Ex.D.40 is the Deed of cancellation of agreement for Sale dated 01.07.2020 executed by M/s. Ram Financial Services in favour of 4th defendant and her daughters along with M/s.N.D. Developers Pvt. Ltd., pertaining to VILLA No.B-06.
(b). Ex.D.41 is the Deed of cancellation of Agreement for Sale dated 01.07.2020 executed by defendant No.10(a) in favour of 4th defendant and her daughters pertaining to VILLA No.A-41. Ex.D.42 is the Certified copy of Absolute Sale Deed dated 24.06.2024 executed by 4th defendant and her daughters along with confirming parties in favour of Mrs. Varika Goel and another in respect of the VILL No.B-90. Ex.D.43 is the Order passed by Sole Arbitrator filed in A.C.No.584/2023 filed by 2nd defendant against the 10th defendant firm along with notices dated 50 Com.OS.No.273/2020 26.09.2023. Ex.D.44 is the Certified copy of letter dated 19.07.2023 written by the plaintiff firm to Fullerton India Credit Company Ltd., Ex.D.45 is the Certified copy of Legal notice dated 17.07.2023 issued by the plaintiff firm to defendants 6, 7, 8 and Sri.Harish Thimma Reddy (claiming to the representative of the plaintiff firm in the above suit). Ex.D.46 is the Certified copies of Arbitration application in Com.A.A.No.132/2024 filed Sri.Harish Thimma Reddy (representative of the plaintiff firm) and defendants 6 and 8 against the plaintiff firm, defendants 1 to 5, 7 and Sri.Y.Keshavayya (PW2) along with statement of truth and list of documents. Ex.D.47 is the Acknowledgment of registration of Firm of 10th defendant firm dated 07.08.2015. Ex.D.48 is the Memorandum of acknowledgment receipt of documents of the 10th defendant firm dated 19.10.2016 showing the reconstitution of the Firm on 02.02.2016. Ex.D.49 is the Memorandum of acknowledgment receipt of documents of the 10th defendant firm dated 12.06.2017 showing the reconstitution of the Firm on 24.04.2017. Ex.D.50 is the Memorandum of acknowledgment receipt of documents of the 10th defendant Firm dated 12.06.2017 showing the change of address. Ex.D.51 is the Memorandum of acknowledgment receipt of documents of the 10th 51 Com.OS.No.273/2020 defendant firm dated 12.06.2017, showing the reconstitution of the Firm on 02.05.2017. Ex.D.52 is the Certified copy of order sheet in C.C.No.30805/2017 filed by the 3rd defendant against the defendant No.10(a) with compliant and sworn statement. Ex.D.53 is the Certificate under Section 63 of BSA. Ex.D.54 to 57 are theTrue copies of the balance sheet of 10th defendant firm for the assessment years 2016-17, 2017-18 as on 24.04.2017 and as on 02.05.2017. (subject to objection). Ex.D.58 & 59 are the Property valuation reports dated 16.01.2019 and 11.02.2022 with respect to level 2 and level 3 secured from Karnataka Bank Ltd., (subject to objection).
(c). Ex.D.60 & 61 are the Certified copies of the order sheet and claim statement in A.C. No.585/2023. Ex.D.62 is the Certified copy of the claim statement filed in AC No.584/2023. Ex.D.63 is the Printouts of the email dated 24.01.2017 sent to D2 and daughter of D4 with draft reconstitution deed for approval. (subject to objection). Ex.D.64 is the Email dated 24.04.2017 sent to D2 with draft re-constitution deed. (subject to objection). Ex.D.65 is the Email dated 31.01.2017 sent by M/s.Zensar Technologies Limited of Level 3 intimating to terminate the tenancy. (subject to objection and relevancy). Ex.D.66 is the Email dated 15.07.2021 sent by D13 with respect of 52 Com.OS.No.273/2020 Level 2 intimating to terminate the tenancy attaching the termination notice. (subject to objection and relevancy). Ex.D.67 is the Email dated 04.09.2024 with regard to merger of D14 with Tejas network Limited. (subject to objection and relevancy). Ex.D.68 is the Email dated 30.09.2024 sent by Tejas Network Limited of level 3 intimating to terminate the tenancy. (subject to objection and relevancy). Ex.D.69 is the Digitized copy of the lease deed dated 25.08.2022. Ex.D.70 is the Photographs of level 3 (33 numbers collectively marked). Ex.D.70(a) is the CD pertaining to said photographs. Ex.D.71 is the Certificate u/S 63(4)(C) of BSA, 2023 with respect to documents marked at Ex.D.63 to D.70.
16. D.W.1 has been cross examined by plaintiff and defendant No.2 who is sailing along with the plaintiff.
17. The learned counsels for the plaintiff, defendant No.3 and defendant Nos.10, 10(a) and 11 have also submitted their respective written submissions. It is the submission of the plaintiff that the plaintiff was firm initially constituted on 29.04.2009 with Late G.T. Venkataswamy Reddy, G.V. Nagaraj Reddy the husband of defendant No.4 and defendant Nos.1 to 3 and 5 as the partners.
53Com.OS.No.273/2020 Subsequently the firm has been reconstituted in 2019 and the defendant No.5, defendant Nos.1 to 3 were the partners of the reconstituted firm. From the plaintiff firm and GTV Properties Limited i.e., defendant No.5 there is totally a sum of Rs.27,67,06,065/- that has been paid to defendant No.10, 10(a) and 11 Topaz Investments and other related third parties. Further through the said 3 rd parties a sum of Rs.1,60,00,000/- has been routed to defendant No.10 firm. It is submitted that by making use of the above funds those amounts have been transferred out of the accounts of the plaintiff firm and has been utilized for the purpose of acquiring the properties as described in the schedule. It is the submission of the plaintiff that for the purpose of relinquishing the debts due to be repaid to the plaintiff firm the partners among themselves in collusion with defendant Nos.10, 10(a), (b) and 11 have fraudulently got fabricated two MOUs which are at Ex.P.20 and P.21 both dated 10.05.2017. Under these MOUs it has been illegally and fraudulently mentioned that the amounts transferred from plaintiff firm to be treated as capital contribution and it is also illegally mentioned that no amounts would be payable by defendant No.10 to the plaintiff firm but in fact the beneficiary has been the defendant No.10 who is duty 54 Com.OS.No.273/2020 bound to repay the said amounts as claimed. It is submitted that in the said MOUs it has been fraudulently mentioned that the parties have settled all the financial transactions which had taken place prior to the MOUs and there is no claim except as mentioned in the MOUs between the parties thereof. It is submitted that these MOUs have been brought into existence only to defraud the plaintiff and restrain the plaintiff from recovery of the amounts. It is submitted that in the MOU G V Palaksha Reddy has been shown as the Managing Director but in fact he had no authority to represent the firm in the capacity of Managing Director and therefore any conduct of G V Palaksha Reddy is in violation of Sec.19 of the partnership act. It is submitted that the MOUs which says that all the claims on behalf of plaintiff firm to be treated as capital contribution is impermissible without the concurrence of all the partners and admittedly G T Venkataswamy Reddy was not at a signatory to all these MOUs and therefore the same is not binding upon the plaintiff. It is submitted that the contention of the defendants that partners individual payments to the vendors can be treated as capital contribution but not payments advanced by another firm altogether and therefore the amounts belonging to the partnership firm 55 Com.OS.No.273/2020 being used for purchase of the properties in the name of defendant No.10 cannot be equated as capital contribution by the partners. It is further submitted in the written submissions that the contention of defendant No.10 that the entire claim amounts to overdrawing by the partners for which the defendant No.10 cannot be held liable is totally baseless and unfounded and it is only an attempt to mislead the Court. It is submitted that the allegations of overdrawing made by the partners of the plaintiff firm is totally a baseless allegation which has no basis whatsoever and the alleged overdrawing as mentioned in Ex.P.31 have no connection what so ever with regards to the amounts advanced by the plaintiff firm for the benefit of defendant No.10 firm and therefore such a contention cannot be sustained. It is also further submitted in the written submissions that the contentions of defendant No.2 that G V Palaksha Reddy was the Managing Partner of the plaintiff firm and was entitled to sign the MOUs has no basis what so ever because the firm had not designated any single partner as a Managing Partner and all the partners had equal liability and responsibility to discharge and therefore merely because G V Palaksha Reddy has signed the MOUs it would not amount to acceptance on behalf of the firm as G T 56 Com.OS.No.273/2020 Venkataswamy Reddy who was then the partner has been deliberately excluded from the MOUs which was executed without his consent.
18. The defendant No.3 in the written submission has more or less reiterated the pleadings in brief and contends that defendant No.3 is not the beneficiary as it is admitted that the share of defendant No.3 and 50% share of G T Venkataswamy Reddy has been made in favour of defendant No.10(a) and that from the terms of the MOU it is abundantly clear that there is clause for entitlement of the share of rent from the plaintiff firm and that the contends of the Ex.D.13, D.30, D.31 and D.52 which have remained unchallenged would strengthen the case of defendant No.3 and therefore in light of the admission given by defendant No.10, 10(a) and 11 for having admitted their failure to repay the loans in so far as relating to share of defendant No.3 the suit of plaintiff is required to be decreed.
19. The learned designated senior counsel appearing for defendant No.10, 10(a) and (b) and 11 advanced extensive and to put them in brief the learned counsel also submitted the written submissions. It is submitted 57 Com.OS.No.273/2020 that during early part of 2016 there were several differences amongst the defendant No.10 firm and G.V. Sathish Reddy and to resolve the said differences the MOU dated 15.08.2016 at Ex.D.13 came to be entered into between Smt. N Sudha, the defendant No.4, Smt. N Drithi, Smt. N Rashmi, Sri. G.V.Palaksha, defendant No.2, defendant No.1 and between defendant No.10(a) and 11 and Sathish Reddy the defendant No.3. The rent falling to the share of G Sathish Reddy was never paid by the plaintiff firm and nor there was any such agreement under the said MOU and therefore defendant No.3 was not a signatory to the said MOU. Thereafter in the legal notices dated 19.12.2016 and 10.04.2017 it has been mentioned that the partners of the plaintiff firm have taken loan from defendant No.12 and Vijaya Bank for purchase of the property Embassy Icon in the name of defendant No.10 firm and it has been agreed to pay monthly rentals to defendant No.3 and also to deposit the rents payable to G.T. Venkataswamy Reddy. In the said notices at Ex.D.30 and D.31 defendant No.3 has mentioned that he is not liable to pay any amount to defendant No.12 or Vijaya Bank and also had threaten to initiate Civil and Criminal proceedings against defendant Nos.1, 2 and 4. It is submitted that in Ex.D.30 and D.31 there are no 58 Com.OS.No.273/2020 allegations against defendant No.10, 10(a) and defendant No.11. It is submitted that defendant No.2 was managing partner of the plaintiff firm and in Ex.D.30 it has been admitted that he is the authorized signatory and has executed the lease deed in favour of M/s T E Connectivity India Private Limited on 29.05.2015. Para 3 of the Ex.D.30 clearly highlights that defendant No.2 was the authorized signatory of the plaintiff firm being responsible and for disbursing the rents received from the tenants to the partners of the plaintiff firm. It is further submitted that in the PIM application filed before DLSA under Ex.P.32 by P.W.1 in his individual capacity he has categorically admitted that the plaintiff firm is represented by its managing partner defendant No.2. Therefore once having already contended that defendant No.2 is the authorized signatory of the plaintiff firm and also admitted in the PIM proceedings that he is the managing partner of the plaintiff firm he cannot be permitted to again contend that he was not at all authorized to represent the firm. It is further submitted that the MOU has been duly acted upon by the parties and now plaintiff firm and its partners cannot go back and contend that they were not at all authorized to act on the terms of the MOU. It is submitted that as per the terms of the MOU there was no liability for 59 Com.OS.No.273/2020 the defendant No.10 firm to make any payments. Therefore the allegations made in the plaint are totally baseless and in fact the plaintiff himself admits that defendant Nos.1, 2 and 4 had agreed to pay a sum of Rs.10,36,63,557/-, Rs.4,51,09,038/- each as their share of loan availed from defendant No.12. It is submitted that as per the MOU at Ex.P.20 there has been no relinquishment of claim and further the admissions elicited in the cross examination of P.W.1 and 2 categorically substantiates that all the partners have been duly settled with their accounts with respect to the amounts payable to them on account of retirement from the plaintiff firm. It is submitted that with respect to the second MOU which is at Ex.P.21 though the plaintiff seeks for a declaration that it shall be declared as null and void and not binding it is not at all a signatory to the said MOU and therefore the firm has no locus standi to challenge the same. With regard to the transactions between plaintiff firm and defendant No.10 the second MOU which is at Ex.P.21 has got no role to play. Further the entries in the balance sheets which are at Ex.P.6, P.7, P.17 and P.22 coupled with the answers elicited in the cross examination of P.W.1 and 2 clearly stipulates that no liability has accrues on defendant Nos.10, 10(a) and (b) and 11 to pay any amounts 60 Com.OS.No.273/2020 whatsoever to the plaintiff much less the alleged claims. It is submitted that the plaintiffs have hopelessly failed to substantiate the allegations made against defendants and therefore the plaintiffs would not be entitled to any claims much less the suit claim.
20. With these evidence and the arguments on record, it is now required to take up the issues for answering.
21. ISSUE Nos.1 to 3:- To avoid repetition of facts and evidence these issues are taken up together for answering.
As mentioned above P.W.1 and 2 and D.W.1 have all been extensively cross examined. P.W.1 and 2 have been cross examine at length by defendant Nos.10, 10(a) and
(b) and 11. The other defendants have not chosen to cross examine these two witnesses. Moreover it is only the defendant Nos.10, 10(a) and (b) and 11 who are the contesting defendants. In the course of cross examination of P.W.1 it is elicited that the partners of the first plaintiff firm and the directors of the 5 th defendant company are all father and sons being related to each other. The intention of establishment of plaintiff firm was to acquire and develop properties and since its establishment in the year 2009 till date there has been no properties purchased and 61 Com.OS.No.273/2020 all the properties of defendant No.5 are in the name of defendant No.5. It is brought out in the cross examination that the plaintiff firm has been constituted to distribute rental income of the 5th defendant among the father and sons of G T Venkataswamy Reddy. P.W.1 also admits that he is the son of 6th defendant. In the cross examination P.W.1 deposes that there is no person called as a managing partner in the plaintiff firm since its inception and also there is no such person designated as an authorized representative of the plaintiff firm. Further in the cross examination P.W.1 deposes that he has no knowledge about the affairs of the firm during 2009 and also after its reconstitution in the year 2016 and he deposes that he does not no whether G V Nagaraja Reddy was having all the knowledge about the purchase of the properties in the name of the plaintiff firm. Further in the cross examination of P.W.1 Ex.D1 and D.2 which are the agreement to sell has been got marked by admission of signature of defendant No.3 in the said documents. Further in the course of cross examination at para 10 P.W.1 categorically admits the execution of Ex.D.1 and D.2 and the investments made with respect to purchase of the properties, the amounts paid to Topaz Investments for purchase of properties. Further in the cross examination it 62 Com.OS.No.273/2020 is admitted that as per Ex.P.31 a sum of Rs.28,50,908/- is shown as amount receivable from defendant No.1 and as per the closing balance dated 31.03.2017 a sum of Rs.9,82,22,023/- from defendant No.1, Rs.7,21,77,984/- from defendant No.2 , Rs.5,84,86,380/- from G V Nagaraja Reddy and Rs.7,68,09,521/- from G.T. Venkataswamy Reddy is shown as receivable and they have not been repaid by those persons. Further in the cross examination at para 11 P.W.1 categorically admits the entries found in Ex.P.17 the financial statement for the year ending 31.03.2017 and also admits the amounts due that has been mentioned in the said document to be payable to the plaintiff firm. There is also admission regarding the entries in Ex.P.22 in which there is no mention about any loans or advances due to be paid to plaintiff firms and the amount recoverable is Rs.6,80,19,565/- from G.T. Venkataswamy Reddy , Rs.8,09,33,839/- from defendant No.1 Rs.5,61,98,196/- G V Nagaraja Reddy and Rs.7,01,89,800/- from defendant No.2. Again P.W.1 admits that as per the schedule and annexures to Ex.P.23 except the amount of Rs.1,12,56,301/- shown as loans and advances there is no other loans and advances due. He also admits the entries in schedule 2 with regard to the amounts recoverable from G.T. Venkataswamy Reddy, 63 Com.OS.No.273/2020 defendant Nos.1 and 4 and defendant No.2. There are certain admissions regarding the entries found in the statement at Ex.P.17 for the year ending 31.03.2017 and also admits the entries showing the amounts paid to several other persons as mentioned in the statements produced at Ex.P.5 to P.7.
22. P.W.1 has also been cross examined through commission on nearly 7 dates and in the course of these cross examination which is spread over nearly 7 hearing dates it has been consistent answer from P.W.1 that either he is not aware or he has no knowledge about the events to which suggestions have been put forth.
23. P.W.2 has also been cross examined and in the course of cross examination he deposes that the partnership firm was was constituted only with an intention to collect the rents and distribute the same among the partners of the firm. P.W.2 deposes that the statement of accounts prepared during 17.02.2016 at the time of reconstitution of plaintiff firm is available with him and he has no difficulties to produce the same to Court but till date the same is not produced. He further deposes that the loans and advances as per the balance sheet dated 31.03.2014 64 Com.OS.No.273/2020 are with respect to loans given by the firm to third parties and advances are towards the expenditures. P.W.2 further deposes in the cross examination that the loans and advances as mentioned in the balance sheet for the year ending 31.03.2015-16 are not reflected in the balance sheet of 31.03.2017 and he further deposed that in Ex.P.17 the earlier loans and advances are shown towards the debit of partners of the plaintiff. Further he deposes that as on 31.03.2017 the interest incurred by the plaintiff firm towards the loan is brought under the administrative expenses and deposes that there is no mention in schedule 6 of Ex.P.17, 22 and 23 with respect to the amounts receivable either in the name of defendant No.10 or in the name of others. Further in the cross examination he deposes that there is no entry in the books of accounts dated 31.03.2019 with respect to amounts due from defendant No.10, 10(a) and 11. He further deposes that he has not examined the books of accounts of defendant No.1 and he also deposes that there are no documents to substantiate the payments of amount due from defendant Nos.10, 10(a) and 11 as on 05.10.2022. Further it is elicited in the cross examination that the dues payable by defendant Nos.10, 10(a) and 11 are not reflected in the balance sheets of the firm from 31.03.2017 to 31.03.2019.
65Com.OS.No.273/2020 P.W.2 in the cross examination deposes that a sum of Rs.2,99,67,615/- as mentioned in schedule 11 of Ex.P.17 is with respect to the interest paid by the plaintiff firm to the bank which is recoverable from 3rd parties under the loans and advances and the same is not reflected under the head loans and accounts in Ex.P.17. Further he deposes that the liabilities as mentioned in para 15.1 and15.2 of the plaint are the liabilities from the plaintiff firm and not the amounts due to the plaintiff.
24. D.W.1 has also been subjected to cross examination at length. Initially the plaintiff did not choose to cross examine D.W.1 but after completion of his cross examination by defendant No.2 who is sailing with the plaintiff, the plaintiff has chosen to cross examine him. D.W.1 in his cross examination at length by defendant No.2 and in the course of entire cross examination except with regarding raising of loans by D.W.1 from his savings payment of the consideration for the properties at schedule 1 and 2 and contribution with regard to the purchase of the schedule 1 and 2 properties nothing else is forthcoming to draw an inference that the MOUs dated 10.05.2017 are fraudulent, illegal and not binding. Further in the course of cross examination D.W.1 has reiterated 66 Com.OS.No.273/2020 that after signing the MOU dated 15.08.2016 produced at Ex.D.13 there has been no payments made to the plaintiff as terms of the MOU required the amounts from the plaintiff firm to be treated as capital contribution. Further in the cross examination D.W.1 deposes that the defendant No.10(a) had undertaken to pay the share of the loan of defendant No.3 and 50% share of late GTV Reddy and that the defendant No.10 alone receives all the rental incomes from schedule 1 and 2 properties and that defendant No.10(a) was paying the share of defendant No.3 in the rents till reconstitution of defendant No.10 on 24.04.2017 and 02.05.2017. He has categorically denied the suggestion that a sum of Rs.22,86,07,072/- has been lent by the plaintiff firm for purchase of schedule 1 and 2 properties.
25. In the cross examination by the plaintiff D.W.1 deposes that in the MOU dated 10.05.2017 and MOU at Ex.D.13 it has been mentioned that no amount is required to be paid to the plaintiff firm as the other partners of the firm had undertaken to discharge the liability due to the plaintiff firm. D.W.1 also admits that G T V Reddy was not part of the said MOU and because of his old age and health problems he was excluded from the MOU.
67Com.OS.No.273/2020
26. The learned counsel for the plaintiff in the course of his arguments contended that under Sec.19(2)(c) of the Partnership Act 1932 the implied authority of a partner will not extend for compromising or relinquishing any claim or portion of a claim by the firm. In support of his arguments he relied upon the following judgments.
1. ILR Madras Series 1036. Muddenur Nagappa vs. Firm of Bhagavanji Rasaji, Bombay, wherein it is observed as under:
As a general proposition, an authority to give discharge for a debt on payment, does not include a power to compromise or settle it in any way a partner likes. We may mention that this principle has now received statutory recognition
2. 1941 SCC Online Bom 119, Krishnaji Bharmalji and Co. vs. Abdulrazak Ahmedbhoy, wherein in para 3 it is observed as under:
Para 3: It cannot be disputed that a partner in a trading firm has a right to assign a debt. This is an ordinary function of a partner and a transaction in the ordinary course of business of a partnership firm. But as a matter of policy the legislature has enacted that a partner has no implied authority to compromise or relinquish any claim or a portion of a claim by the firm.
3. Judgment of Division Bench of Hon'ble Madras High Court in Chainraj Ramchand, registered 68 Com.OS.No.273/2020 partnership firm of Bankers vs. V.S. Narayanaswamy and others dated 31.08.1981, wherein at para 6 it is observed as under:
Para 6: Section 19(2) of the Partnership Act 1932 clearly lays down that in the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to compromise or relinquish any claim or portion of a claim by the firm or to withdraw the suit or proceeding filed on behalf of the firm, This section makes it clear that unless there is an express authority given to a partner by all the partners, that partner cannot compromise the claim or withdraw a suit.
4. 1966 SCC Online AP 116, Bellapu Venkatappaya vs. Adusumilli Venkata Ramanjaneyulu, wherein at para 4 it is observed as under:
Para 4: It is not denied that under S. 19(2)(c) of the Partnership Act, while a partner can receive monies for and on behalf of a partnership firm, and give receipts therefor he has no implied authority to compromise or relinquish any claim or a portion of a claim of the partnership. The question whether a compromise was made honestly or bona fide it not relevant because no implied authority exists in a partner to effect a compromise or relinquish any claim without receiving full payment for the same. The provisions of Sec. 19(2) of the said Act seems to have given a definiteness to this aspect while prior to it, there was Borne doubt in this regard. It is stated that the English Law as interpreted by some courts, did infer an implied authority in a partner to give release. In England in some old cases it has been held that a partner has an implied authority to give release but as 69 Com.OS.No.273/2020 we have said. have no such implied authority on the other band Sec 47 which is after the enactment of Sec. 19(2) there can be no doubt that partners applicable only in cases of dissolution of a firm, was enacted to continue the authority of a partner but for the limited purpose of "Winding up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution but not otherwise". The words of the section qualified the authority of each party to bind the firm after the dissolution of the firm. The qualification is an important condition pre-requisite to the continuing authority of a partner to bind a firm which governs the other mutual rights and obligations of the partners.
5. 2000 SC Online Guj 37, Nandlal Deepchand and Co. vs. Dwarka Co-operative Housing Society Ltd. and another, wherein similar observations has been made.
27. The learned counsel for the plaintiff would further contend that it is not within the powers or authority of a partner for setting off his own separate debt against the debt due to the firm and if any payment is made by way of such set off and the payment is not being within the implied authority of one partner the same would be deemed to be fraudulent and not binding on the partnership firm. In support of his arguments he has placed reliance upon judgment of the Hon'ble Bombay High Court reported in 1977 SCC Onlien Bom 90, 70 Com.OS.No.273/2020 Dalichand V Parekh vs. Mathuradas Ravji and others, wherein the observations made by the Calcutta High Court in Bakunta Nath vs. Hara Lal Pal in 9 Ind Cas 116(cal) has been reiterated as under:
Para 4: "Now a partner has no implied authority to discharge his private debts by set off against a debt due to the partnership; consequently, such a set off by one partner cannot prejudice his co-partners. To put the matter in another way, whenever a party received from any partner in payment for a debt due from that partner only, the indebtedness or obligation of the firm in any form, the presumption of the law is that the partner gives this and the creditor receives it in fraud of the partnership; in other words, if a partner releases a debt due to his firm in consideration of a release to him of a debt due. by him solely, the presumption will do that the transaction was fraudulent."
28. Per contra the learned counsel for defendant Nos.10, 10(a) and (b) and 11 has contended that mere production of the books of accounts by the plaintiff would by itself not be sufficient to cast the liability on defendant Nos.10, 10(a) and (b) and 11 as contended in the plaint. It is further contended that the plaintiff is resorting to approbate and reprobate his stand which would only brings down the credibility of the evidence and has further contended that a partner has got undivided ownership with other partners who were all the assets of the partnership and if one of the partner chooses to use 71 Com.OS.No.273/2020 any of them for his own purpose and accountable civilly to other partners and it would not amount to misappropriation. The learned counsel for the defendant Nos.10, 10(a) and (b) and 11 have placed reliance on the following decisions:
1. (1998) 3 Supreme Court Cases 410, Centra Bureau of Investigation vs. V.C. Shukla and others , wherein at para 16,17,37 and 38 it has been observed as under:
Para 16: Section 34 of the Act reads as under: Entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability.
Para 17: From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability.
Para 37:That entries in books of account are not by themselves sufficient to charge any person with 72 Com.OS.No.273/2020 liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. The rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts."
Para 38:Such entries though relevant were only corroborative evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid in accordance with those entries.
2. (2022) 2 Supreme Court Cases 25, Union of India and others vs. N Murugesan and others, wherein at para 26 it is observed as under:
APPROBATE AND REPROBATE Para 26:These phrases are borrowed from the Scott's law. They would only mean that no party can be allowed to accept and reject the same thing, and thus one cannot blow hot and cold. The principle behind the doctrine of election is inbuilt in the concept of approbate and reprobate. Once again, it is a principle 73 Com.OS.No.273/2020 of equity coming under the contours of common law. Therefore, he who knows that if he objects to an instrument, he will not get the benefit he wants cannot be allowed to do so while enjoying the fruits. One cannot take advantage of one part while rejecting the rest. A person cannot be allowed to have the benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. This principle has to be applied with more vigour as a common law principle, if such a party actually enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. An element of fair play is inbuilt in this principle. It is also a species of estoppel dealing with the conduct of a party.
3. 1964 SCC Online SC 185, Veji Raghavji Patel vs. State of Maharastra, wherein at para 9 of the judgment it is observed as under:
Para 9: It is obvious that an owner of property, in whichever way he uses his property and with whatever intention will not be liable for misappropriation and that would be so even if he is not the exclusive owner thereof. As already stated, a partner has, undefined ownership along with the other partners over all the assets of the, partnership. If he chooses to use any of them for his own purposes he may be accountable civilly to the other partners. But he does not thereby commit any misappropriation.
29. From the evidence of both parties both documentary as well as oral on record it is clear that the plaintiff firm is not disputing defendant No.2 G V Palaksha having signed the MOU as its authorized signatory or managing partner 74 Com.OS.No.273/2020 and the defendant Nos.1 and 3 who have filed their written statement also do not dispute the signature of G V Palaksha as managing partner and the defendant No.5 also does not dispute the representation clause appearing in the MOU. As per the terms of the MOU the share of defendant No.3 in the rentals from the plaintiff firm has been discharged by defendant Nos.10(a) and defendant No.11 which is evident from clause 3 and therefore the plaintiff firm has stopped paying rents to defendant No.3.
Subsequently the cheques which were issued by defendant No.10(a) under the MOU in favour of defendant No.3 came to be dishonored in response to which proceedings under Sec.138 NI Act was instituted under Ex.D.52 and thereafter upon payments being made the said complaint has been dismissed for non prosecution. The retiring partners of defendant No.10 namely defendant Nos.1, 2 and defendant No.4 have been paid the retirement benefits which is evident from the reconstitution deeds at Ex.P.18 and P.19 as per clause 7, 7(a) and 7(b). As per the terms of the MOU there is no liability for defendant No.10. Nothing is mentioned in the said MOU that the plaintiff firm has advanced loan to defendant Nos.10, 10(a) or 11 and the contentions put forth para 28 of the plaint and tables at 28.1 and 28.2 75 Com.OS.No.273/2020 have remained unsubstantiated. Further in schedule 2 of Ex.P.17, P.22 and P.23 there is mention about the over drawings made by the partners of the plaintiff firm. Therefore from the balance sheet as well as from the terms of the said MOU the liability to clear the loans can only be placed on the shoulders of the partners of the plaintiff firm and not on partners defendant No.10 and 11. In fact in the entire evidence the plaintiff firm has not placed on record any material or evidence to draw an inference that defendant No.10, 10(a) and 11 have acknowledged their liability to the plaintiff firm. Further as per reconstituted deeds pertaining to defendant No.10 firm the erstwhile partners or the retiring partners i.e., defendant Nos.1 ,2 and 9 have received retirement benefits as full and final settlements and non of these partners have ever challenged the legality or validity of the reconstituted deeds at Ex.P.18 and P.19. Further under clause 4 and clause 7 of Ex.P.20 there is a clear mention about the retiring partners having expressively agreed to discharge their respective share of the loan in favour of defendant No.12 and also defendant No.1 agreeing to repay the outstanding loan amounting to Rs.3.60 crores due to Vijaya Bank. The allegation of the plaintiff firm that the partners have acted beyond their authority or 76 Com.OS.No.273/2020 compromise with the lawful recoverable debt due to the firm is absolutely not substantiated and in fact it can only be termed as a dispute against the partners for which the plaintiff firm is at liberty to proceed against the partners and no where the said liability can be thirsted on the defendant Nos.10, 10(a) and (b) and 11. Clause 4 of the MOU at Ex.P.20 clearly stipulates a commitment upon defendant Nos.1, 2, 4 and 9 to discharge the liabilities of the firm and it does not in any manner amounts to relinquishment of the rights by plaintiff firm. On the other hand the plaintiff firm and its partners have acquired rights under the said MOU pursuant to which the partners have undertaken to settle the liabilities towards defendant No.12 bank. From the contents of the said MOU it is absolutely clear that there is no liability upon defendant No.10 to discharge against defendant No.12 bank.
30. Upon perusal of the MOU though the plaintiff is seeking a prayer to declare the MOU as null and void and not binding absolutely no specific allegations of any over tact being made against in the said MOU. Moreover to the said MOU the plaintiff firm is not at all a party and therefore the firm has got no authority to challenge the same. Defendant No.4 has not at all challenged the said 77 Com.OS.No.273/2020 MOU and in so far as the second MOU it has got nothing to do with the transactions between plaintiff firm and defendant No.10.
31. The plaintiff firm in the notice which is produced at Ex.P.31 and so also in the application filed for PIM proceedings more particularly P.W.1 the representative of the plaintiff has made allegations against his own partners and subsequently in the present suit deviating from the same the representative of the plaintiff firm is making attempts to cast the liability on defendant Nos.10, 10(a) and (b) and 11. At this juncture it would be just and proper to refer to some of the contents of Ex.P.31 and P.32 wherein the representative of the plaintiff firm alleges that the amount receivable from defendant Nos.10 and other third parties have been transferred to the accounts of partners of plaintiff firm namely defendant Nos.1,2,4 and G T Venkataswamy Reddy. Further in Ex.P.32 at para 20 and table 3 the representative of the plaintiff reiterates that the amount is receivable from defendant Nos.1,2 4 and G T Venkataswamy Reddy and not from defendant No.10 firm. In the 2nd table under the heading loans by the plaintiff firm though it is shown that as on 31.03.2017 the amount receivable from defendant No.10 as 78 Com.OS.No.273/2020 Rs.23,05,71,451/- and against third parties Rs.8,03,66,723/-. Ex.P.17 the financial statement for the year ending 31.03.2017 does not reflect upon any liability due by defendant No.10 to the plaintiff firm. Giving a complete contradictory version the representative of the plaintiff in para 11 of the Ex.P.31 categorically acknowledges debit balance of the partners of the firm being carried forward from 31.03.2017 to 31.03.2018 and also admits that G T Venkataswamy Reddy, defendant Nos.1, 2 and 4 are due to pay the amounts to the plaintiff firm. Thus the representative of the plaintiff firm is stating diametrically opposite versions one before the Court and another before the mediation forum and thus is approbating and reprobating himself which is impermissible in law.
32. In para 12 of Ex.P.31 the representative of the plaintiff firm gives a chart in which he admits that G T Venkataswamy Reddy, defendant Nos.1,2 and 4 are due to pay the amounts to the plaintiff firm and in paragraph 15 once again he acknowledges that the amount is due from partners of plaintiff firm. The representative of the plaintiff firm had also initiated Sec.9 proceedings under the Arbitration and Conciliation Act 1996 and in Sec.9 79 Com.OS.No.273/2020 application the representative of the plaintiff firm has contended that the funds of the firm were being used by defendant Nos.1,2 and husband of defendant No.4 for private benefit and unjust enrichment. There is further an allegation in the said application that all the funds received as settlement of accounts of defendant Nos.1,2 and 4 for retiring from GTV estates have been misappropriated for private gains. Further in the said petition P.W.1 has made a statement that the loan payable to defendant No.12 including the interest , processing fee and other charges must be debited solely to the partners names defendant Nos.1, 2 and 3 and husband of defendant No.4 as they are the sole beneficiaries of the loan. There is a statement made in the Sec.9 application by P.W.1 that the MOU entered among the partners of the plaintiff firm dated 18.10.2022 by defendant Nos.2 to 4 and Late Nagaraja Reddy is for the purpose of purchase of a commercial property for the benefit of G T V Estates. In the entire application no where the representative of the plaintiff firm makes any allegations about the defendant Nos.10, 10(a) and (b) and 11 being due to pay to the plaintiff firm.
33. The plaintiff in the course of evidence has produced 80 Com.OS.No.273/2020 balance sheets for the year ending 31.03.2015 to 31.03.2018 which are marked as Ex.P.6 , P.7, P.17 and P.22 and none of these balance sheets which carries schedule 6 with respect to loans and advances shown the names of defendant Nos.10, 10(a) and (b) and 11. In fact Ex.P.17 is not even a complete document as the entire statement is not placed before the Court. On the other hand the defendant in the course of his evidence has produced the balance sheets of defendant No.10 firm at Ex.D.54 to D.57 which clearly demonstrates that the amounts contributed by defendant No.1, 2 husband of defendant No.4 and defendant No.10(a) are shown under the head capital and current account balances and the balance of defendant No.1 has been transferred to his son defendant No.9 and the balance of Nagaraja reddy is transferred to his wife i.e., defendant No.4. Upon reconstitution of defendant No.10 on 24.04.2017 which was pursuant of retirement of defendant Nos.2 and 9 their dues have been settled by defendant No.10(a) in accordance with the terms of the MOU dated 10.05.2017. Thereafter upon second reconstitution consequent to the retirement of defendant No.4 the balances standing to her credit in the capital and current account has been transferred to defendant No.10(a) under the second MOU. Thus upon a total 81 Com.OS.No.273/2020 consideration of the evidence on record as narrated above no liability accrues against defendant Nos.10, 10(a) and
(b) and 11 to pay to the plaintiff firm. On the other hand as seen from the evidence on record and and also the entries reflected in the statement of accounts of various financial years it only leads to an inference that there has been financial irregularities committed by the partners of the plaintiff firm and therefore the plaintiff firm has to proceed against its partners for settlement of its accounts and recoveries if any to be made.
34. Upon perusal of Ex.D.1 and D.2 there is no mention about any payment being made for purchase of the schedule properties by the plaintiff firm. But on the other hand the plaintiff himself treats the monies brought into defendant No.10 by its partners as over drawing by the partners in its books of account and it is clear that defendant Nos.1 to 3 and husband of defendant No.4 have jointly over drawn funds to the extent of Rs.12 crores and they have been used as investments for purchase of schedule 3 and 4 properties. There is a categorical admission to that effect by P.W.1 in his cross examination. In fact as on the date of payment of advance sale consideration of Rs.12 crores the defendant No.10 was not 82 Com.OS.No.273/2020 even in existence. In Ex.D.1 and D.2 one cannot come across any recital indicating that the loan was availed by the partners of the plaintiff. The MOU at Ex.D.13 dated 15.08.2016 has been executed to settle the disputes among defendant Nos.1, 2, 4, 10(a) and 11 and only the the partners of defendant No.10 became aware of the loan taken from Axis Bank by the partners of plaintiff firm which is utilized by defendant Nos.1 to 3 and husband of defendant No.4 as their capital contribution in defendant No.10. Thus defendant No.10 firm cannot be made liable for the acts of the partners of plaintiff firm. As held by the Hon'ble Apex Court in Veji Raghavji Patel's case cited supra the provisions of Indian Partnership Act empowers partners with their inherent rights to withdraw or make over drawing from their respective capital contributions and they also hold a joint undivided interest in the assets of the firm including the right to use such assets for the purpose of the partnership. The partners of the plaintiff firm in exercise of their said right by making over drawings have contributed capital to defendant No.10 firm which is also reflected in the books of accounts of the plaintiff firm as seen in Ex.P.17, P.22 and P.23. The plaintiff firm is not a party to Ex.P.8 and therefore there is no privity of contract and thus the plaintiff firm has no 83 Com.OS.No.273/2020 authority to dispute the validity of the said document. Ex.P.8 contains a clause that any advance paid to the vendor by the partners towards purchase of the immovable property the same would be treated as capital contribution in the books of accounts of the firm. There being no privity of contract between plaintiff firm and defendant No.10 no money can be recovered without conceding that consideration has been made by the plaintiff firm to the vendor and therefore no liability can be thirsted upon defendant No.10 firm being due to pay to the plaintiff firm as alleged. There is no loan agreement executed between plaintiff firm and M/s Topaz Investment but on the other hand a registered sale agreement is entered into between partners of the plaintiff firm in their individual capacities with M/s Topaz Investments and the plaintiff firm being not a party to the said contract the claim cannot be characterized as a loan and treating the sale consideration made to Topaz Investments as loan is absolutely erroneous. In fact the name of M/s Topaz Investments Pvt. Ltd., no appears in the books of accounts of the plaintiff firm which is evident from the financial statement produced at Ex.P.17, 22 and P.23.
35. From the cross examination of P.W.2 it can be easily 84 Com.OS.No.273/2020 gathered that since inception of plaintiff firm it was G T V Reddy who was giving instructions for preparation of the balance sheet and statement of accounts and till G T V Reddy was alive all the entries in the balance sheet up to 2019 has been effected only on the instructions of G T Venkataswamy Reddy and these statements did not disclose any liability of defendant No.10, 10(a) and 11. It is an admitted fact that until his death G T Venkataswamy Reddy exercised complete control over the financial affairs fo the plaintiff firm and therefore was completely aware of all transactions carried out by the firm during his lifetime. In fact in the commercial application filed under Sec.9 by the representatives of the plaintiff firm in his individual capacity there is a prayer for recovery of the same amount as that is claimed in this suit wherein he is categorically stated that all these funds were being misused by the partners of the plaintiff firm namely defendant Nos.1 to 3 and deceased husband of defendant No.4. However in the present suit a totally inconsistent claim is raised alleging that those funds are the liability due by the defendant No.10, 10 (a) and 11 payable to the plaintiff firm. The plaintiff having chosen to proceed against its own partners in the earlier proceedings cannot now be permitted to go back and contend that the 85 Com.OS.No.273/2020 amounts are due to be paid by defendant No.10, 10(a) and 11. Thus upon a thread bare analysis of oral and documentary evidence on record it is abundantly clear that nothing is forthcoming on record to draw an inference that the terms of the MOU dated 10.05.2017 were illegal, detrimental to the interest of the firm and made with an intention to compromise the liability lawfully due to the firm and thus rendering the instrument illegal, void and not binding upon the plaintiff. Having observed that there is nothing in the document dated 10.05.2017 the MOU rendering it invalid and illegal no liability can be casted upon defendant Nos.10, 10(a) and 11 to pay the suit claim of Rs.43,01,51,428/- with interest at 18% p.a. as prayed. Also the plaintiff has equally failed to place on record any cogent and satisfactory evidence to conclude that the EMI of Rs.24,47,788/- paid to the 12th defendant has been with respect to the loan raised by the defendant Nos.10, 10(a) and 11. On the other hand the defendants have been able to satisfactorily demonstrate and prove before the Court that the loans raised by defendant No.10 is entirely different from the loans taken by the partners of the plaintiff firm in their individual capacity and subsequently being treated as capital contribution towards defendant No.10 which has been duly settled upon reconstitution of 86 Com.OS.No.273/2020 defendant No.10 twice. Thus the plaintiff would not be entitled for any of the reliefs as claimed in the suit and accordingly I answer Issue Nos.1 to 3 in the Negative.
36. Issue No.4:- For the aforesaid reasons, I pass the following.
ORDER Suit of the plaintiff is dismissed with costs.
Draw decree accordingly.
Office to send soft copy of the judgment to respective parties on their email if furnished.
[Dictated to the Stenographer Grade-III, transcribed by her, corrected and signed by me then pronounced in the Open Court, dated this the 19th day of November 2025] Digitally signed by ARJUN ARJUN SRINATH SRINATH MALLUR Date: 2025.11.21 MALLUR 10:36:23 +0530 (ARJUN. S. MALLUR) LXXXV Addl.City Civil & Sessions Judge, Bengaluru.
ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF PLAINTIFF:
PW-1 Sri.Mr. Harish Reddy
PW-2 Sri. Keshavayya
87
Com.OS.No.273/2020
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE PLAINTIFF Ex.P.1 True copy of partnership deed of the plaintiff firm dated 29.04.2009.
Ex.P.2 True copy of Acknowledgment of registration of firm.
Ex.P.3 True copy of deed of reconstitution of partnership dated 29.08.2019.
Ex.P.4 True copy of memorandum acknowledging receipt of documents along with 2 enclosures. Ex.P.5, 6 & True copy of statement of accounts of the 7 plaintiff as on 31.03.2014, 31.03.2015 and 31.03.2016 (marked subject to plaintiff examining his auditor).
Ex.P.8 True copy of partnership deed dated 25.07.2015 along with acknowledgment of registration of firm. (admitted) Ex.P.9 True copy of bank account statement of defendant No.10. (admitted) Ex.P.10 True copy of sale deed dated 16.09.2015.
(admitted) Ex.P.11 True copy of agreement to sell dated 16.09.2015. (admitted) Ex.P.12 True copy of bank account statement of plaintiff firm from 2015. (marked subject to producing either computerized copy or certified copy from bank).
Ex.P.13, 14 Certified copies of bank account statements of & 15 plaintiff firm issued by Bank of Baroda.
Ex.P.16 True copy of reconstitution deed dated
02.02.2016. (admitted)
Ex.P.17 True copy of statement of account of plaintiff as
on 31.03.2017 issued through charted
accountant. (marked subject to examining charted accountant) 88 Com.OS.No.273/2020 Ex.P.18 True copy of deed of reconstitution of partnership dated 24.04.2017. (admitted) Ex.P.19 True copy of deed of reconstitution of partnership dated 02.05.2017. (admitted) Ex.P.20 True copy of memorandum of understanding dated 10.05.2017. (admitted) Ex.P.21 True copy of memorandum of understanding dated 10.05.2017. (admitted) Ex.P.22 True copy of Income tax return acknowledgment along with balance sheet as on 31.03.2018. (marked subject to examining concerned charted accountant) Ex.P.23 True copy of balance sheet as on 31.03.2019.
(marked subject to examining concerned charted accountant) Ex.P.24 Statement prepared by my charted accountant with regard to amount due from defendant 10, 10a and 11 and related parties. (marked subject to examining concerned charted accountant) Ex.P.25 Statement showing the interest paid to conerned bank towards loans related to amoutn due from defendant 10, 10a and 11 issued by my charted accountant. (marked subject to examining concerned charted accountant) Ex.P.26 True copy of statement of account of Axis Bank from 01.01.2015 to 07.05.2015 and 01.04.2015 to 31.03.2016.
Ex.P.27 True copy of Statement issued by Fullerton India Credit Company Limited with regard to repayment schedule. (marked subject to producing certified copy) Ex.P.28 True copy of Axis Bank loan charges said to have been paid by plaintiff.
Ex.P.29 True copy of Fullerton India Credit Company Limited loan charges said to have been paid by plaintiff.
Ex.P.30 True copy of account statement issued by Fullerton India Credit Company Limited on 89 Com.OS.No.273/2020 05.10.2020.
Ex.P.31 Office copy of demand notice issued by plaintiff's representative i.e., myself against defendants herein.
Ex.P.32 True copy of mediation application form filed by Mr.Harish Reddy as applicant against plaintiff firm and others.
Ex.P.33 True copy of emails addressed by D11 to the District Legal Service Authority.
Ex.P.34 True copy of deed of Reconstitution of Partnership Firm dated 17.02.2016.
Ex.P.35 True copy of the certificate issued by concerned
Registrar of Firms in pursuance of
Reconstitution of Partnership Firm dated 14.06.2016.
Ex.P.36 Certificate u/S 65B of Indian Evidence Act. Ex.P.37 Certified copy of bank statement issued by Axis Bank.
Ex.P.38 Certified copy of bank statement issued by Fullerton India Credit Co. Ltd., LIST OF WITNESSES EXAMINED ON BEHALF OF THE DEFENDANT D.W.1 L Jayarama LIST OF DOCUMENTS EXHIBITED ON BEHALF OF THE DEFENDANT Ex.D.1& The agreements to sell dated 25.02.2025 D.2 Ex.D.3 Certified copy of the Lease Deed dated 24.01.2011 entered between 1 st defendant in favour M/s.Chrysakus Educare Pvt. Ltd., Ex.D.4 Certified copy of Sale Deed dated 14.02.2013 executed by one Sri.Jayaramappa and others in favour of Smt. B.R.Shylaja (Wife of the 1st 90 Com.OS.No.273/2020 defendant) Ex.D.5 Certified copy of Joint Development Agreement dated 14.05.2023 entered between the 1 st defendant and his children with M/s. JSV Projects, represented by its Managing Partner, Mr.Sama Abishek Reddy.
Ex.D.6 Certified copy of Lease Deed dated 06.12.2013 entered between 1st defendant with M/s. Varthur Foundation Trust.
Ex.D.7 Certified copy of Lease deed dated 21.02.2014 entered between Smt. B.R.Shylaja (wife of the 1 st defendant) with M/s. Kadugodi Foundation Trust.
Ex.D.8 Certified copy of Lease Deed dated 20.10.2014 entered between 1st defendant with M/s. Varthur Foundation Trust.
Ex.D.9 Certified copy of Lease Deed dated 14.07.2015 entered between 1st defendant with M/s. Varthur Foundation Trust.
Ex.D.10 Certified copy of Lease Deed dated 25.11.2014 entered between 1st defendant with M/s. Varthur Foundation Trust.
Ex.D.11 Order dated 28.09.2015 passed by the District Registrar, Bengaluru.
Ex.D.12 Certified copy of Agreement to Sell dated 13.06.2016 entered between the 1 st defendant with defendant 10(a) and 11th defendant. Ex.D.13 Certified copy of Memorandum of Understanding dated 15.08.2016 between Defendants 1 to 3 and 4th defendant and her children and defendants 10(a) and 11.
Ex.D.14 Certified copy of Agreement to Sell dated 16.09.2016 entered between the 1 st defendant with 11th defendant.
Ex.D.15 Certified copy of the Sale Deed dated 03.10.2016 executed by one Sri.G.K.Seetharam and others in favour of 1st defendant.
Ex.D.16 Certified copy of Lease Deed dated 10.11.2016 91 Com.OS.No.273/2020 entered between 1st defendant with M/s. Varthur Foundation Trust.
Ex.D.17 Original Lease Deed dated 01.10.2016 entered between 10th defendant with Tenant.
Ex.D.18 Certified copy of Deed of Cancellation of Agreement dated 10.05.2017 entered between 1 st defendant with defendants 10(a) and 11. Ex.D.19 Certified copy of Deed of Cancellation of Agreement dated 10.05.2017 entered between 1 st defendant with defendants 10(a) and 11. Ex.D.20 Certified copy of Agreement to Sell dated 10.05.2017 entered between 1st defendant with 2nd defendant.
Ex.D.21 Certified copy of Deed of Cancellation of Agreement dated 20.08.2020 entered between 1 st defendant with 2nd defendant.
Ex.D.22 Certified copy of Sale Deed dated 20.08.2020 executed by 1st defendant and his family members in favour of Mysore Projects Pvt. Ltd., Ex.D.23 Certified copy of Cancellation of JDA dated 11.08.2020 executed by 1st defendant and his Sons in favour of M/s. JSV Projects.
Ex.D.24 Certified copy of Sale Deed dated 20.08.2020 executed by 1st defendant and his family members in favour of Mysore Projects Pvt. Ltd., Ex.D.25 Authorization letter dated 31.05.2024 authorizing 11 defendant to give evidence on th behalf of defendants 10(a) and 10(b).
Ex.D.26 E-mail dated 06.08.2016 sent from David Kumar ([email protected]) to [email protected] along with Three attachments.
Ex.D.27 E-mail dated 06.08.2016 sent from David Kumar [email protected]) to [email protected] along with Three attachments.
Ex.D.28 E-mail dated 06.08.2016 sent from Rajiv Mundhra ([email protected]) to 92 Com.OS.No.273/2020 [email protected] along with Two attachments.
Ex.D.29 Death certificate of G.T.Venkataswamy Reddy who died on 15.05.2019.
Ex.D.30 Legal Notice dated 19.12.2016 issued on behalf of 3rd defendant to plaintiff firm and others. Ex.D.31 Legal Notice dated 10.04.2017 issued on behalf of 3rd defendant to plaintiff firm and others. Ex.D.32 Loan Sanction letter dated 30.08.2017 issued by Bajaj Finserv in favour of 10th defendant firm. Ex.D.33 Loan Sanction letter dated 16.03.2019 issued by Karnataka Bank Ltd., (15th defendant) in favour of 10th defendant firm for an sum of Rs.38.00 crores.
Ex.D.34 Loan sanction letter dated 04.06.2019 issued by Karnataka Bank Ltd., (15th defendant) in favour of 10th defendant firm for an sum of Rs.2.5 crores.
Ex.D.35 Certified copy of Memorandum of Deposit of Title Deeds dated 29.04.2019 executed by the 10th defendant firm in favour of 15th defendant bank.
Ex.D.36 Certified copy of Deed of Rectification dated 30.04.2019 executed by 10th defendant firm in favour of the 15th defendant bank.
Ex.D.37 Loan statement of Account maintained at 15th defendant bank from 29.03.2019 to 23.05.2024. Ex.D.38 Overdue statement of account maintained at 15th defendant bank from 07.06.2019 to 23.05.2024.
Ex.D.39 Supplemental Agreement dated 23.10.2019 to the Memorandum of Understanding dated 10.05.2017 executed by 4th defendant and her daughters in favour defendant 10(a) and 11 th defendant.
Ex.D.40 Deed of cancellation of agreement for Sale dated 01.07.2020 executed by M/s. Ram Financial Services in favour of 4th defendant and her 93 Com.OS.No.273/2020 daughters along with M/s.N.D.Developers Pvt. Ltd., pertaining to VILL No.B-06.
Ex.D.41 Deed of cancellation of Agreement for Sale dated 01.07.2020 executed by defendant No.10(a) in favour of 4th defendant and her daughters pertaining to VILL No.A-41.
Ex.D.42 Certified copy of Absolute Sale Deed dated 24.06.2024 executed by 4th defendant and her daughters along with confirming parties in favour of Mrs. Varika Goel and another in respect of the VILL No.B-90.
Ex.D.43 Order passed by Sole Arbitrator filed in A.C.No.584/2023 filed by 2nd defendant against the 10th defendant firm along with notices dated 26.09.2023.
Ex.D.44 Certified copy of letter dated 19.07.2023 written by the plaintiff firm to Fullerton India Credit Company Ltd., Ex.D.45 Certified copy of Legal notice dated 17.07.2023 issued by the plaintiff firm to defendants 6, 7, 8 and Sri. Harish Thimma Reddy (claiming to the representative of the plaintiff firm in the above suit).
Ex.D.46 Certified copies of Arbitration application in Com.A.A.No.132/2024 filed Sri.Harish Thimma Reddy (representative of the plaintiff firm) and defendants 6 and 8 against the plaintiff firm, defendants 1 to 5, 7 and Sri.Y.Keshavayya (PW2) along with statement of truth and list of documents.
Ex.D.47 Acknowledgment of registration of Firm of 10th defendant firm dated 07.08.2015.
Ex.D.48 Memorandum of acknowledgment receipt of documents of the 10th defendant firm dated 19.10.2016 showing the reconstitution of the Firm on 02.02.2016.
Ex.D.49 Memorandum of acknowledgment receipt of documents of the 10th defendant firm dated 94 Com.OS.No.273/2020 12.06.2017 showin the reconstitution of the Firm on 24.04.2017.
Ex.D.50 Memorandum of acknowledgment receipt of documents of the 10th defendant Firm dated 12.06.2017 showing the change of address. Ex.D.51 Memorandum of acknowledgment receipt of documents of the 10th defendant firm dated 12.06.2017, showing the reconstitution of the Firm on 02.05.2017.
Ex.D.52 Certified copy of order sheet in C.C.No.30805/2017 filed by the 3 defendant rd against the defendant No.10(a) with compliant and sworn statement.
Ex.D.53 Certificate under Section 63 of BSA. Ex.D.54 to True copies of the balance sheet of 10 th 57 defendant firm for the assessment years 2016- 17, 2017-18, as on 24.04.2017 and as on 02.05.2017. (subject to objection) Ex.D.58 & Property valuation reports dated 16.01.2019 59 and 11.02.2022 with respect to level 2 and level 3 secured from Karnataka Bank Ltd., (subject to objection) Ex.D.60 & Certified copies of the order sheet and claim 61 statement in A.C. No.585/2023.
Ex.D.62 Certified copy of the claim statement filed in AC No.584/2023 Ex.D.63 Printouts of the email dated 24.01.2017 sent to D2 and daughter of D4 with draft reconstitution deed for approval. (subject to objection) Ex.D.64 Email dated 24.04.2017 sent to D2 with draft re-constitution deed. (subject to objection) Ex.D.65 Email dated 31.01.2017 sent by M/s.Zensar Technologies Limited of Level 3 intimating to terminate the tenancy. (subject to objection and relevancy) Ex.D.66 Email dated 15.07.2021 sent by D13 with respect of Level 2 intimating to terminate the tenancy attaching the termination notice.
95Com.OS.No.273/2020 (subject to objection and relevancy) Ex.D.67 Email dated 04.09.2024 with regard to merger of D14 with Tejas network Limited. (subject to objection and relevancy) Ex.D.68 Email dated 30.09.2024 sent by Tejas Network Limited of level 3 intimating to terminate the tenancy. (subject to objection and relevancy) Ex.D.69 Digitized copy of the lease deed dated 25.08.2022.
Ex.D.70 Photographs of level 3 (33 numbers collectively marked) Ex.D.70(a) CD pertaining to said photographs. Ex.D.71 Certificate u/S 63(4)(C) of BSA, 2023 with respect to documents marked at Ex.D.63 to D.70.
(ARJUN. S. MALLUR) LXXXV Addl.City Civil & Sessions Judge, Bengaluru.
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