Delhi High Court
Smt. Krihsna Devi & Ors. vs Shri Mohan Lal Chugh & Ors on 8 April, 2009
Author: S. Ravindra Bhat
Bench: S. Ravindra Bhat
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve : 16.01.2009
Date of Judgment : 08.04.2009
CS(OS)No.842/1982.
SMT. KRIHSNA DEVI & ORS. ..... PLAINTIFFS
Through: Mr. Pankaj Kumar, Advocate with Plaintiff in person.
versus
SHRI MOHAN LAL CHUGH & ORS. ..... RESPONDENTS
Through: Ms. Vandana Khurana, Advocate.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
1. Whether the Reporters of local papers
may be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be
reported in the Digest? Yes
S. RAVINDRA BHAT, J.
*1. The plaintiffs in the present suit for partition seek an order for rendition of accounts, partition in respect of certain immovable properties and for a mandatory injunction against the defendants for returning certain movable properties.
2. The plaintiffs are the widow, son and minor daughter of the on Late Sh. Krishan Lal Chug (hereafter 'the deceased') who died on 18.5.1979 leaving behind the plaintiffs as his legal heirs. The fourth defendant is the mother of the deceased, the fifth defendant the sister and the first, second and the third defendant the brothers of the deceased. It is averred by the plaintiffs that CS(OS)No.842/1982 Page 1 a house bearing no. 1046, Phatak Muftiwalan, Tiraha Bahram Khan, Daryaganj, New Delhi was purchased in the name of the father of the deceased and on his demise, his widows, sons and daughter inherited the said house. Therefore, the plaintiffs claim that they have stepped into the shoes of the deceased and therefore, they became joint owners in respect of the said house along with the defendants. They also aver that they were in actual possession of the first floor of the said house and also of one room in the ground floor during the lifetime of the deceased and for a period of one year thereafter.
3. The plaintiffs also contend that a partnership deed dated 1.4.1971 was executed amongst the first, second, eighth, ninth, tenth defendant and the deceased, to carry on business under the name and style M/s Shakti Refrigeration Company, the sixth defendant. Each partner had 1/6th share in the firm and accounts were to be closed on the 31st of March every year. It is alleged that the firm purchased property bearing No. 48, Old Rajinder Nagar, New Delhi, from its previous owners by Sale deed registered as document no. 6054 in Additional book no.1, Vol.1, no. 2975, pp 150-54, on 13.9.1971 (4.9.1972). The firm also purchased plant, machinery, raw materials, goods and articles. It is further stated that the deceased was also a partner along with the first ad second defendant, each holding 1/3 rd share in the profits and loses of the firm in the trade name ad style M/s Mohini Restaurant, which was later renamed as Mohini Sweet House at shops no. 914 and 916, Kamra Bangash, Darya Ganj, New Delhi (the eleventh defendant). It is alleged that the defendants have not rendered the accounts of the said business and also not have paid anything to the plaintiffs on account of earnings and profits. It is claimed that the plaintiffs are entitled to share in the profits from the CS(OS)No.842/1982 Page 2 date of the dissolution of the partnership, i.e., from the date on which the deceased passed away-18.5.1979.
4. The plaintiffs claim that in order to avoid litigation, efforts were made to resolve these disputes outside the court. In these efforts, it is alleged that first defendant played a prominent role along with Panchas and members of the "biradari". It is also alleged that the said persons were, from time to time obtaining signatures of the first plaintiff on settlements, which the defendants never intended to implement. The plaintiffs state that all these efforts were delay tactics adopted by the defendants to deny the plaintiffs their legitimate rights.
5. The plaintiffs allege that funds of M/s Shakti Refrigeration Company were diverted from its account No. 1260 with the Central Bank of India to the account of M/s Sudershan Engineering Works, the seventh defendant, and also to the personal accounts of the defendants in order to conceal them from the plaintiff. Further, it is alleged that the bank officials colluded with the defendants to allow the diversion of the funds from the account of the said firm. The plaintiffs also notified the Bank about the diversion of the funds, requesting the Bank not to allow transactions in relation to the account of the sixth defendant firm and to submit accounts of the sixth defendant's account.
6. The plaintiffs contend that through communication dated 5.4.1980 the Bank informed them that the concerned defendants had forged certain documents claiming to be the Dissolution Deed dated 30th April 1979, the effect of which was to deny the plaintiffs any claim in the profits or in the firm itself. They also aver that during the course of negotiation and purported settlements, the first defendant had prepared certain bank drafts from the Oriental CS(OS)No.842/1982 Page 3 Bank of Commerce, Daryagnaj, New Delhi being pay order no.233797/252/80 dated 19.2.1980 for Rs. 13,000 and no. 233594/50/80 dated 12.2.1980 for Rs. 18,975.58, favouring the first plaintiff but the same were encashed by the first defendant himself. Again, it is alleged that this was done with a view to cheat the plaintiffs.
7. The plaintiffs apprehend that after the death of the deceased, the defendants substituted and manipulated the books of account, to deprive them of their due share. It is alleged that in the garb of mutual settlement the first plaintiff was made to sign an agreement dated 14.4.1980, to which the first and the fourth defendant were also signatories. It is stated that defendants along with their friends and associates had been misleading the first plaintiff and her brothers and did not even act upon that agreement. The agreement inter alia contained the following terms:
"That the first party (namely the plaintiffs herein) have been paid Rs. 38,000/- in cash regarding the share of the deceased Krishan Lal Chugh in the business; That half portion of the shop No. 916 situate at Kamra Bangash, Darya Ganj, New Delhi would be given to the plaintiffs and tenancy rights thereof shall be got transferred with Municipal Corporation of Delhi in their favour;
That the plaintiffs would be given a 1/3rd share in house No. 1046, situate at gali Shakti Mandir, Tiraha Behram Khan, Darya Ganj, New Delhi and till the time the partition is not effected in accordance with law, the plaintiffs would keep on holding an enjoying first floor of the said property;
That in respect of articles of the two canteens and Restaurants and Shakti Refrigerations, Rajender Nagar, those would be made to Sh. Mohan Lal (first defendant) and other assets and liabilities would belong to him;
That if there be any personal recoveries of Sh. Krishan Lal against any third persons, Smt. Krishana Devi (first plaintiff) would be entitled to recover the same;
CS(OS)No.842/1982 Page 4 That physical possession of ½ portion of the shop No. 916, Kamara Bangash, Darya Ganj, New Delhi, would be handed over to the Smt. Krishana Devi (first plaintiff) within three months"
8. The plaintiffs also submit that the sum purported to have been paid in cash, as per the above terms was not at all paid to the plaintiffs. On the contrary only a bank draft for a sum of Rs. 26,975.58/- drawn on Oriental Bank of Commerce, New Delhi bearing no. 283013/462/80 dated 21.3.1980 was handed over to her. It is also stated that movables including juice machines, coffee machines, crockery items etc, worth Rs.50,000/- were taken away by the defendants. Further, the defendants were not even willing to effect partition of the residential property and give separate and effective possession to the plaintiffs, as per the terms of the settlement arrived at between them. The plaintiffs further state that though the settlement is not binding on them, they are willing to give up other rights if the terms of the settlement were adhered to. In the alternative, they seek partition of the immovable properties mentioned above, a share in the goods and profits of the sixth defendant firm as well goods and materials in the canteens run by the deceased in IP College for Women, Delhi and Janki Devi Mahavidyalaya, New Delhi. They also seek rendition of accounts in relation to the sixth and eleventh defendants.
9. The defendants, in the written statement, aver that after the death of Krishan Lal his share was inherited by his wife and two children and mother Smt. Laxmi Devi and not by the plaintiffs alone. Therefore, the plaintiffs and fourth defendant would each be entitled to 1/4 th of the deceased's 1/6th share in the suit. It is averred that the plaintiffs are in possession of two rooms on the first floor only and that neither the plaintiff nor Krishan Lal was or is in actual CS(OS)No.842/1982 Page 5 physical possession of the one room on the ground floor of the said house as alleged. The defendants do not deny that Partnership Deed dated 1st of April, 1971 was executed amongst defendants 1,2,8,9 and 10 and the deceased, and that the business was being carried on in the name and style of M/s Shakti Refrigeration Company. However, they state that the said partnership was dissolved with effect from 31st of March, 1979 though the dissolution deed was executed on the 30th of April, 1979 with retrospective effect from 31 st of March, 1979. It is submitted that the accounts were settled and the partners signed the dissolution deed. It is submitted that as per the said dissolution deed the deceased retired from the firm with effect from 31st of March, 1979 and therefore, the present suit for rendition of accounts is not maintainable and is liable to be dismissed.
10. As far as the claim to machinery and plants is concerned, it is submitted that the defendant firm while carrying on business had been purchasing plants and machinery; but the plaintiffs have no right or interest in any of the things including the immovable property as the deceased had retired from the said business and thereby relinquished his rights in all these properties. The defendants contend that the plaintiffs have no locus standi to file the present suit for the rendition of accounts. It is submitted that the plaintiffs have no right or interest in the property bearing No. 48, Old Rajinder Nagar, New Delhi in view of the retirement of the deceased from the said business.
11. It is not denied that the deceased was a partner in M/s Mohini Restaurant/Sweet House, which was being carried on in Shop No. 916, Kamra Bangash Ganj, New Delhi but the tenancy of the said premises was of Mohan Lal Chugh exclusively and the partnership firm had nothing to do with the property. As far as property No. 914, Kamra Bangash, Darya Ganj, New Delhi is CS(OS)No.842/1982 Page 6 concerned it is specifically stated that no business of Mohini Sweet House was being carried out in the said premises and the plaintiffs have no right or interest in the same. It is further submitted that the question of rendition of accounts of M/s. Shakti Refrigation does not arise at all as the same had been duly settled during the lifetime of the deceased. However as far as Mohini Restaurant/Mohini Sweet House is concerned the same would have to be gone into but the plaintiffs are not entitled to 1/3rd share as the deceased's mother would also be entitled to her share.
12. It is submitted by the defendants that they made efforts to get the matter settled amicably, but it is the first plaintiff and her paternal relations who have been coming in the way and trying to throttle the compromise. The allegations made against the defendants, in particular against first defendant, are not only false but also concocted. It is first defendant who has been trying all along to see that the matter is settled within the family itself and as such the question of destroying any evidence or creating false evidence does not arise. It is denied that the first plaintiff is working. It is claimed by the defendants that no funds of the sixth defendant firm with the Central Bank of India, Darya Ganj, New Delhi were diverted to the account of Sudarshan Engineering Works, seventh defendant, with ulterior motive to conceal the same from the plaintiffs and it was wrong to suggest the defendants have been diverting the funds of the same from the plaintiffs. The allegations of diversion of funds in collusion with the officials of the Central Bank of India, Darya Ganj, New Delhi were countered by denying the same and submitting that the allegations are false and it was reiterated that the deceased had retired from the business with effect from 31st of March, 1979.
CS(OS)No.842/1982 Page 7
13. The allegation that the dissolution deed dated 30th of April, 1979 was a forged document was denied. The contents of communication, dated 5.4.1980 by the Central Bank of India to the plaintiffs are stated to be correct. It is submitted that a sum of Rs.38,000/- had been given to the plaintiffs in full and final settlement of all accounts between the plaintiffs and the defendant in respect of all matters in which the deceased had a share besides 1/6 th share in the property bearing No. 1046, Phatak Muftiwalan, Tiraha Behram Khan, Darya Ganj, New Delhi and ½ share in shop No.916, Kamra Bangash Darya Ganj, New Delhi in full and final settlement of the plaintiffs' claim against all the defendants but the plaintiffs themselves backed out of the same with an ulterior motive. It is submitted that a sum of Rs.26,975/- was given by a bank pay order bearing No.283017/462/80 dated 21st of March, 1980, which was cleared by the first plaintiff through Canara Bank, Kamla Nagar, New Delhi and besides this a sum of Rs.11,024.42/- was paid in cash to the first plaintiff acting for all the plaintiffs. The two bank drafts dated 19th February, 1980 and 12th of January, 1980 were prepared as a compromise had been assured but the plaintiffs backed out of the same and the said pay orders were surrendered to the bank and payment was received. Thereafter, the parties arrived at a settlement that the plaintiffs shall be paid a sum of Rs.38,000/- in the full and final settlement of the accounts of all partnership business and other business affairs besides 1/6 th share in the property bearing No.1046, Phatak Muftiwalan, Tiraha Behram Khan, Darya Ganj, New Delhi and half share in the shop No.916, Kamra Bangash, Darya Ganj, New Delhi.
14. This agreement, say the defendants, contemplated settlement of all disputes against all the defendants. This agreement was entered in to basically to resolve the controversy between the parties, although the firm Shakti Refrigation had been dissolved during the lifetime of the CS(OS)No.842/1982 Page 8 deceased. It is submitted that this payment of Rs.38000/- was made in the presence of witnesses besides the scribe Teju Ram, and an entery to that effect has been made in the register of the scribe duly signed by the plaintiff. It was averred that the plaintiffs are attempting to take undue advantage of a typographical error in the said document, whereby their share was typed as 1/3rd in place of 1/6th, this error stands established from the entry in the register of the scribe at serial no. 302 dated 14.4.1980 where the share the share of the plaintiffs has been shown as 1/6th and not 1/3rd in property bearing no. 1046, Phatak Muftiwala, Tiraha Behram Khan, Darya Ganj, New Delhi. Further when the deceased himself did not hold a 1/3rd share, the plaintiffs cannot possibly be entitled to the same. It was also stated that only the first and the fourth defendants signed the agreement, and the signatures of the other co- owners were not obtained; as such it could not be concluded that the said signatories had any authority to relinquish the rights of the other co-owners.
15. It was further stated that the value of the property bearing no. 48, Old Rajinder Nagar, New Delhi and trolleys is Rs. 2,00,000 and Rs. 1,00,000, respectively. It was submitted that there was no truth in the allegations that the defendants had fabricated or manipulated the books of accounts after the demise of Krishan Lal. It was reiterated that the first plaintiff avoided the settlement whereas the defendants tried to help her. It was denied that any sort of influence was exercised over the first plaintiff to make her sign the agreement, dated 14.4.1980. It was contended that the plaintiffs, after having received the promised sum i.e. Rs. 38,000/-, are trying to now back out of the settlement and misconstrue the terms of the agreement to their benefit, restating that there is no rationale behind demanding 1/3rd share in the residential property. Further, it would be unjust to say that the defendants, under the garb CS(OS)No.842/1982 Page 9 of the agreement, took all valuables or that the value of the said articles was Rs. 50,000/-, it would also be wrong to suggest that the concerned defendants are not interested in partition of the residential property.
16. It is submitted that the plaintiffs had no right or interest, whatsoever, in Shop. No. 914 and 916, Kamra Bangash, Darya Ganj, New Delhi or in property bearing no. 48, Old Rajinder Nagar, New Delhi, also there existed no right with the plaintiffs to the goods and materials, and the said articles did not belong to the deceased. The value of the items of I.P. College Canteen was stated to be Rs. 3000/- and the same were taken on the specific instructions of the first plaintiff and the Janki Devi Mahavidyalaya Canteen, was shut by the deceased during his lifetime, in 1978. Thus, the suit for rendition of accounts in respect of these articles is not maintainable and liable to be dismissed.
17. The allegation that the first, second and the third defendants had, in collusion, concealed various documents and bank accounts and transactions of the deceased was denied and neither is the same being used by the said defendants to their benefit and to cause any financial harm or injury to the plaintiffs. It is denied that the partnership of the defendants stood automatically dissolved on the day of the demise of Krishan Lal, as the same had already been dissolved during his lifetime and as such the suit is not maintainable, besides also being time barred. It was also stated that the there was no cause of action in favour of the plaintiffs.
18. It was submitted that the suit did not fall within the pecuniary jurisdiction of this court and also that the suit was bad for mis joinder of parties. It was submitted that the valuation of the suit in respect of the relief of rendition of accounts for the purposes of court fee and CS(OS)No.842/1982 Page 10 jurisdiction was wrong and the plaintiffs have given different values and as such the plaintiffs are they are liable to pay ad valorem court fee on the jurisdictional value. In respect of relief of partition, was stated that the valuation for the purposes of the court fees and jurisdiction has to be same and as the same is valued differently, the plaint is liable to be rejected. Further, the jurisdiction value cannot be Rs. 130/- as the plaintiff has sought recovery of movable articles, they have to pay ad valorem court fee on the market value of the goods. The suit is not properly valued for the purposes of the court fee and jurisdiction.
19. During the pendency of the suit, the first defendant died in February 1992 and his heirs were brought on record on 5.12.1996. The second, third and fifth defendant died in 1982, 1989 and 1985 respectively and their heirs were brought on record on 29.11.1983, 24.1.1989 and 18.12.1985 respectively.
20. The following issues were framed by the Court on 23.10.1984:
(1) Whether the suit had been properly valued for the purposes of court fee and jurisdiction?
(2) Whether the partnership in respect of Shakti Refrigeration Company was dissolved with effect from 31.3.1979 on the basis of the alleged dissolution deed dated 30.4.1979?
(3) Who is the accounting party regarding Shakti Refrigeration Company?
(4) What are the shares of the parties in the properties in question?
(5) Whether the plaintiff is entitled to a relief of mandatory injunction as alleged?
(6) Whether the funds of Shakti Refrigeration Company were diverted to the accounts of M/s Sudershan Engineering Works?
CS(OS)No.842/1982 Page 11 (7) If the above issue is affirmed whether M/s Sudarshan Engineering Works are not liable to reimburse and refund the amount of Shakti Engineering Company to the accounts of M/s Sudershan Engineering Works?
(8) Relief. Discussion on Issues Issue No.1.
21. During the proceedings, learned counsel for the defendants had given up the preliminary objection which lead to framing of this issue. Therefore, it is not necessary to decide the same.Issues Nos. 2 - 3
Whether the partnership in respect of Shakti Refrigeration Company was dissolved with effect from 31.03.1979 on the basis of the alleged dissolution deed dated 30.04.1979 and who is the accounting party regarding Shakti Refrigeration Company?
22. The plaintiffs claim that Shakti Refrigeration Company (hereinafter called as "the firm") was constituted through a deed on 01.04.1971 to which the deceased, the defendants 1, 2, 8, 9 and 10 were the partners. The firm was carrying on business at Shop No. 48 Old Rajinder Nagar Market, New Delhi. It is submitted that each partner had 1/6th share in the business and books of accounts were to be closed on 31st March of each accounting year. It is submitted that the firm's premises i.e. 48 Old Rajinder Nagar, was purchased out of the partnership funds; as also the plant and machinery, raw materials etc. The plaintiffs rely upon the sale deed registered as Document No.6054 in Additional Book No.1, Volume 2975 pages 150-154 on 13.09.1971 with CS(OS)No.842/1982 Page 12 the Sub-Registrar. The mutation was also effected in favour of the 6 th defendant firm, through all its partners including the deceased. A letter dated 01.08.1973 by the Assistant Settlement Commissioner, is relied upon.
23. The defendants in their common written statement, concede to execution of the partnership on 01.04.1971. However, they have set-up a case of dissolution of the firm by a deed executed on 30.04.1979, which put an end to the firm with effect from 31.03.1979. It is claimed that in terms of the said dissolution deed, the deceased retired from the business and the plaintiffs therefore do not have any right or interest to claim any share in the same. The plaintiffs deny the existence of such a deed and contend that the defendants are bound to account for the deceased's share. They challenged the dissolution deed (Ex. PW 2/D) as sham and bogus. It is claimed that mutual settlement signed by the plaintiffs and some of the defendants i.e. Ex. P-4 clearly states in Clause 2 that the business and properties of Late Shri Krishan Lal included the 1/6th share in Shakti Refrigeration Company; a specific reference was made to the premises at 48, Old Rajinder Nagar. This, contend the plaintiffs, completely falsifies the defendants' submission about the dissolution deed and dissolution of the firm.
24. It is further contended that even otherwise the dissolution deed in its terms states that by Clauses 3-5 that the retiring partner agreed to take back his capital within a year from the date of the deed and that the same would be treated as a loan to the firm. The plaintiffs say that if indeed the dissolution deed had been validly executed, the capital should have been returned by the firm; there is no material to suggest that such stipulation had been fulfilled. It is also argued that the sale deed whereby the premises were purchased specifically mentions the name of the deceased, the 6th partner who also signed it and therefore the share in the CS(OS)No.842/1982 Page 13 property could not have automatically vested in the firm, on the assumed basis of a dissolution or retirement of Late Krishan Lal Chug. It is also submitted there is a vital discrepancy between the amounts mentioned in the settlement deed Ex.P-4 and the dissolution deed, which also points to the letter not being a genuine document.
25. The defendants contend that plaintiffs cannot claim that dissolution deed is false or not binding. It was validly executed during the lifetime of Late Krishan Lal Chugh and therefore binds his legal heirs and representatives. It was further contended that the onus of proving that the firm existed as on the date of death of Krishan Lal Chugh was upon the plaintiffs who have failed to discharge it. Counsel contended that no expert's evidence was led to show that the signatures on the dissolution deed were false. He relied upon the recitals in the deed as well as in the settlement Ex. P-4 to say that the plaintiffs were satisfied and had actually received the amounts. It was submitted therefore that the claim in the firm or its properties or that anyone is liable to account to the plaintiffs, is not maintainable in law.
26. A joint reading of Ex. P-5, the partnership deed and the pleadings of parties would show that there is no dispute about the manner in which the partnership firm was formed. The dispute primarily revolves around the dissolution said to have taken place on 30.04.1979. The plaintiffs dispute this and the defendants, rely upon the deed PW-2/D-1 to say that no share in the firm or its properties can be claimed. Ex PW2/D1 states by Clauses 1-6 as follows:
"1. That the partnership firm is deemed to have been dissolved w.e.f. 31st March, 1979.
2. That the parties have looked into the accounts of the firm and in token of the acceptance the same has signed this deed.
3. That the retiring partner has agreed to take back his capital within a year from the date of the execution of this deed and such capital shall be treated as a CS(OS)No.842/1982 Page 14 loan to the firm. The retiring partner in consideration of having received his due share to which he was beneficially entitled in the running concern of M/s Shakti Refrigeration Co, has assigned to the continuing partners all his share and interest in the said partnership, the goodwill, fixtures, fittings, book and other debts, benefits of contract and all effects thereon.
4. That the containing partners will run the business in partnership with each other and they are at liberty to conduct the same in partnership with any other person they may choose to do so.
5. That the cash in hand and with bankers and other movable property passing by delivery has been delivered to the continuing partners worked either appropriated prices thereof.
6. That there said the retiring partner hereby irrevocably appoints the continuing partners as his attorney to demand, call in, and receive from all persons all and singular debts, credits and, money's and effects of the said partnership, to give effectual receipts and discharge for the same and to bring an institute proceedings against debtors of the firm and to compromise with them in any manner they may deem fit..."
27. The plaintiffs no doubt have not led any expert evidence to show that dissolution deed, whereby Late Krishan Lal Chugh is said to have retired, was not executed by him. However, both the first and the second plaintiffs, in their depositions, categorically deny his signatures on the said dissolution deed. They, rely upon Ex. P-4, which is a settlement deed to which the plaintiffs and defendants 1 and 4 are parties. Clause 2 of that mutual settlement or agreement, specifically states that 1/6th share in M/s Shakti Refrigeration Company, belonged to Late Krishan Lal Chugh. The said agreement has not been denied by the first defendant. This circumstance certainly casts a grave doubt on the genuineness of the defendant's claim that dissolution of the firm had taken place with effect from 31.03.1979. Another important circumstance, which casts a doubt about genuineness of the dissolution deed is that the document is executed on 30th April, 1979; yet it is supposed to have taken effect from 31th March, 1979 - from an anterior date. Though it is perfectly reasonable for parties to, by agreement, so arrange their affairs as to assume, or distribute liabilities even from anterior CS(OS)No.842/1982 Page 15 dates, yet the retrospective nature of this document, seen from the fact that it was executed just 18 days before the Krishan Lal Chugh's death, is an added circumstance which places it under suspicion. As far as oral evidence goes, DW-1, the eighth defendant testified that the deceased had executed the dissolution deed; PW-1, the first defendant, however denied the deceased's signatures in the deed. The second plaintiffs' evidence, however was not so forthright. He contradicted himself. Yet one cannot make too much about that fact, since at the time of his deposition, he was 40 years. This means that he was in his early twenties when his father died. The first plaintiff also denied any knowledge of the dissolution, or of accounts being taken. This went unchallenged by the defendants. They also did not produce any other document, in support of the stand that the deceased executed the dissolution deed; it contains the signatures of two witnesses; they were not produced. Similarly, no other document, to compare the signatures of Krishan Lal Chugh, were produced. Taking into consideration all these circumstances, the court concludes that the defendants, who set up the case of dissolution of the firm, failed to substantiate it.
28. The Court is of the opinion that apart from the above consideration, there is another strong circumstance in the plaintiffs' favour. Even if the defendants' version was to be accepted that dissolution of the partnership had indeed taken place, they nowhere indicate, in terms of stipulation in Clause (3) regarding return of capital, to the plaintiffs, or that accounting took place. Further and more crucially, the defendants have not accounted, to the plaintiffs, the value of deceased Krishan Lal Chugh's 1/6th share in the immovable properties of the firm. Now it is a matter of record that the Old Rajinder Nagar property was purchased on behalf of Shakti Refrigeration Company by a registered sale deed dated 04.09.1972 (Ex. P-1) all six CS(OS)No.842/1982 Page 16 partners including the deceased were signatories as vendees. The mutation to that effect was also proved by PW-3. It is nobody's case that the concern was a registered firm or in any manner entitled to hold property or immovable property in its own right. Even Ex.P-1 does not say so. There is nothing in the provisions of Ex. PW-2/D1, the dissolution deed even remotely suggesting that the retiring partner divested himself all his title to 1/6 th share in the immovable property.
29. The question as to whether in the event of dissolution, the properties, used as trading assets for the business of the concern has to be divided or in the event of reconstitution would vest in only the existing partners of the exclusion of the retired or deceased partner was considered by the Supreme Court in Addanki Narayanappa V. Bhaskara Krishnappa, AIR 1966 SC 1300. The Court after considering the provisions of Section 48 of the Partnership Act and Lindley on partnership held as follows :
"From a perusal of these provisions it would be abundantly clear that whatever maybe the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing, to the partnership from the realization of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in cl. (a) and sub-cls.(i) and (iii) of cl.(b) of S.48. It has been stated in Lindley on Partnership 12th e. at p.375"
xxxxxxxxxx xxxxxxxxxxx
"What is meant by the share of a partner is his proportion of the
CS(OS)No.842/1982 Page 17
partnership assets after they have been all realized and converted into money, and all the partnership debts and liabilities have been paid and discharged. This it is, and this only which on the death of a partner passes to his representatives, or to a legatee of his share ........ and which on his bankruptcy passes to his trustee."
30. The above decision was followed by a three Judge Bench ruling of the Supreme Court in S.V. Chandra Pandian & Ors. V. S.V. Sivalianga Nadar & Ors., (1993) 1 SCC 589. It was held in said judgment as follows:
"8. The above provisions make it clear that regardless of the character of the property brought in by the partners on the constitution of the partnership firm or that which is acquired in the course of business of the partnership such property shall become the property of the firm and an individual partner shall only be entitled to his share of profits, if any, accruing to the partnership from the realization of this property and upon dissolution of the partnership to a share in the money representing the value of the property. It is well settled that the firm is not a legal entity, it has no legal existence, it is merely a compendious name and hence the partnership property would vest in all the partners of the firm. Accordingly, each and every partner of the firm would have an interest in the property or asset of the firm but doing its subsistence no partner can deal with any portion of the property as belonging to him, nor can he assign his interest in any specific item thereof to anyone. By virtue of the implied authority conferred as agent of the firm his action would bind the firm if it is done to carry on, in the usual way the business of the kind carried on by the firm but the act or instrument by which the firm is sought to be bound must be done or executed in the firm name or in any other manner expressing or implying an intention to bind the firm. His right is merely to obtain such profits, if any, as may fall to his share upon the dissolution of the firm which remain after satisfying the liabilities set out in the various sub-clauses (i) to (iv) of clause (b) of Section 48 of the Act."
31. This Court also in the judgment reported as Sushil Kumar Gupta Vs. Anil Kumar Gupta, 1991 (1) ILR Del 360 stated that unless there is an express agreement to the contrary, on the death of the partner, firm would stand dissolved and the assets of the partnership have to be sold and money so realized should be distributed amongst the parties according to their share, yet the position would be different if there is an agreement to the contrary vis-à-vis the assets.
32. In this case DW-2 in his deposition, stated that CS(OS)No.842/1982 Page 18 "it is correct that as per terms of the sale deed all the signatories had equal shares in respect of the said shop property namely No.48, Old Rajinder Nagar Market, New Delhi. All the aforesaid six persons were partners in the Shakti Refrigeration Company." The Court is of the opinion that the defendants have been unable to prove that the firm dissolved on 30th April, 1979, as alleged by them, with effect from 31st March, 1979. Even if the dissolution set up by the defendants is assumed, they have not satisfied the Court as to how the accounting in terms of Section 48 (b)(iv) as far as the immovable property and the deceased Krishan Lal Chugh's capital in the firm had ever taken place.
33. So far as the third issue regarding the question of accounting party is concerned, the Clause 7 of the partnership deed dated 01.04.1971 (Ex. P-5) reveals that the account of the partnership firm was to be opened and operated by the first and eight defendant. Now it is a matter of record that the first defendant Shri Mohan Lal expired and has been substituted by his legal heirs. However, defendant No.8 i.e. Shri Ved Prakash Butta in his deposition in these proceedings stated "luckily the business of Shakti Refrigeration Company flourished and is also till date. However, it is stated that this business is a seasonal one.... The said business used to be carried on in the supervision of Mr. Mohan Lal Chugh and myself. The accounts of the said business was kept by me and Mr. Mohan Lal Chugh both maintaining the account books, day book and ledgers. The said Shakti Refrigeration Company had an account in the bank also. The bank was Central Bank of India, Branch at Daryaganj, New Delhi. Any two persons out of the aforesaid six persons/partners could operate the bank account. The profit from the said business used to be settled by taking into consideration all the account books by me and Mohan Lal Chugh once in a year."
In view of Clause 7 of the partnership deed Ex. P-5 and the admission of DW-2 (i.e. 8th defendant) it is held that the accounting partners were defendants 1 and 8.
Issue No. 4: Share of the plaintiffs CS(OS)No.842/1982 Page 19
34. The plaintiffs submit that they are entitled to 1/6th share in the profits and assets of Shakti Refrigeration Company as on 17.5.1979. Relying upon the statement of one Mr. Ved Prakash Butta (DW2) regarding the partnership, it was stated that assets of the firm consisted of the water-cooling plant, machines and trolleys as also a fixed deposit of Rs. 80,000/- as shown in Ex-P2. The trolleys and machines were changed from time to time but the cooling plant remained there from the beginning, further the number of trolleys at the time of demise of the deceased was 14. It was also claimed that the plaintiffs had an equal share in the profits and assets of Mohini Restaurant/Sweet House as was held by the deceased at the time of his demise i.e. 1/3rd. The defendants in their written statement admitted their readiness to share to settle the accounts of this firm with the plaintiffs. Both defendant witnesses also mentioned about their readiness to settle the accounts in respect of the business of Mohini Sweets, but said that the premises were rented.
35. Regarding the share in immovable properties the petitioners state that as they are the legal heirs of the deceased they are entitled to his share in these immovable properties by virtue of inheritance. It is not denied by the defendants that house no. 1046, Phatak Muftiwalan, Tiraha Bahram Khan, Daryaganj, New Delhi is the property of Late Nand Lal and it devolved upon his legal heirs i.e. his widow, four sons (including deceased) and a daughter. Further as the widow of Lt. Nand Lal died during the pendency of this suit, therefore her share must devolve upon the other surviving legal heirs. Thus, the plaintiffs are entitled to an equal share as the defendants 1,2 and 3; sons of Lt. Nand Lal. The defendants have at no stage clarified their share in the said property, but they have merely asserted that the plaintiffs' share is limited to 1/4th share of 1/6th share of the deceased. This, they say, is because on the death of CS(OS)No.842/1982 Page 20 Krishan lal Chugh, his share in the house devolved on his legal heirs, i.e the three plaintiffs, and his mother, the fourth defendant.
36. It is alleged by the plaintiffs in relation to shops 914 and 916 in Kamra Bangash, Darya Ganj, Delhi, that the father of the deceased i.e. Late Nand Lal had heritable tenancy rights from Govt. authorities and it devolved upon the plaintiff along-with defendants 1 & 2 who were running the partnership business of Mohini Restaurant/Sweet House in the said premises. It is stated that the possession of shop no. 916 was illegally handed over to one Dr. Sarojini Chellam, to run a clinic in the namely, Kiran Clinic. As per the reply to I.A. No. 6816/86 it is clear that the first defendant initially allowed one J.S. Yadav to use ½ of this premises in partnership, who further, without consent of the first defendant, parted with the possession in favour of the said Dr. Sarojini Chellam. The other half of the shop was handed over to the widow of the third defendant. Thus, the first defendant and the widow of the third defendant are accountable for ½ share each of the said premises. As regards Shop no. 914, as opposed to the claim of the defendants that this shop was jointly allotted to the first defendant and Lt. Nand Lal, thus the deceased held a 1/12th share in tenancy rights, plaintiffs claim that the document (Partnership deed dated 11.9.1986 between the first defendant and one Mohd. Hayat) is a farce adverting to their stand in I.A. No. 6816/1986 that the possession had been handed over to the outsiders without authority for a sum of Rs. 2 Lacs, emphasizing that the matter being sub judice and the property being subject matter of litigation, the transfer is illegal.
37. It is stated that the value of other assets of Mohini Restaurant/Sweet House has also not been provided; they were seized by the first defendant and the same need to be evaluated for CS(OS)No.842/1982 Page 21 arriving at the share of the plaintiffs, who claim that their share in the assets should be 1/3rd and further claim 1/4th share in the tenancy rights in shops no. 914 & 916. The plaintiffs claim that the ownership of property, namely Shop No. 48, Rajinder Nagar, New Delhi, which is the self acquired property of the deceased, stands proved by Exhibit P-I (sale deed dated 4.9.1972), where the ownership of this property is shown jointly in the names of the deceased, first, second, eight, ninth and tenth defendants reliance is also placed on the statement of the eight defendant whereby he admitted that a sale deed was executed with regard to the said premises, and admitted the Exhibit P-I was the certified copy of the same. As per the terms of the said document all the six signatories had equal shares in the said property i.e. 1/6th each.
38. The plaintiffs allege that the first defendant took away goods and materials lying at the I.P. College, where the deceased was running a canteen, which fact is admitted in the written statement where the value of these goods was claimed to be Rs. 3,000/- and further it was stated that these items were taken on specific instructions of the widow of the deceased i.e. first plaintiff; the plaintiffs have however denied this.
39. The genealogy indicated in the suit shows that Nand Lal Chugh, Karta of family, had four sons i.e. Late Krishan Lal chugh, Shanti Lal Chugh - Defendant No.3, Mohan Lal Chugh- defendant No.8, Subhash Chander Chug - defendant No.2 and he was survived by his widow Laxmi Rani - 4th defendant and his daughter Smt. Raj Rani - 5th defendant. The plaintiffs are the heirs of Late Krishan Lal Chugh. The defendants do not deny that House No.1046, Phatak Muftiwalan, Tiraha Behram Khan, Daryaganj was purchased by Nand Lal who died in 1974. They also do not deny that Krishan Lal Chugh had 1/6th share in the said property or that the CS(OS)No.842/1982 Page 22 plaintiffs have share in the said property. However, they dispute that three plaintiffs are entitled to the whole 1/6 undivided share of the property. They submit that upon the death of Krishan Lal Chugh, his share had to be divided into four equal shares; one each devolving on the plaintiffs and the 4th share upon the 4th defendant, the mother of Krishan Lal Chugh i.e. Smt. Laxmi Devi. Besides, they say that the plaintiffs were given amounts of Rs.26,975/- and 1102.42/-, the former through a pay order and the latter in cash were given to the plaintiff on 21.3.1980. It was submitted that this was in view of the full and final settlement of accounts of the partnership business and other business affairs. It is contended that the final settlement was thus in respect of the plaintiff's property claims towards the 1/6 th share asserted in these proceedings as well as in respect of the business relationship which the Late Krishan Lal Chugh had with the other defendants.
39. The defendants have relied on the evidence of DW-1, 8th defendant & DW-2 Smt. Swarna Chugh, wife of the first defendant.
40. The first question to be addressed is whether the plaintiffs had received amounts as alleged by the defendants in full and final settlement of all rights in respect of Darya Ganj and other properties. The defendants' submission in this regard contained in para 15 of their written statement; they refer to a bank draft for Rs.26,975/- dated 21.3.1980 alleged to have been cleared through Canara Bank, Kamla Nagar Branch. A further amount of Rs.11024.42/- is alleged to have been paid in cash. The defendants admit that the reference to two latter bank drafts were prepared on the basis of a compromise assured by the parties but which the plaintiffs did not agree to; under this agreement, the amount of Rs.38,000/- had to be paid.
CS(OS)No.842/1982 Page 23
41. Now, so far as the allegation of acceptance of money partly in cash and partly through pay order is concerned, DW-2 deposes about this. The said witness is the widow of Late Mohan Lal Chugh. She does not reveal how and under what circumstances, she had personal knowledge about this transaction asserted to by the deceased defendant Mohan Lal Chugh in the first instance. Besides no particulars about the pay order or demand draft such as when was it cleared and from which Branch have been furnished; no certificate of the concerned banks has been produced. If one examines the matter further in the light of this situation, the allegation of having paid Rs.11024.42 is also without any details - nothing is mentioned about when the amount is paid and who received it. In the same breath, the defendants also talk about having negotiated a compromise whereby the plaintiffs were to be paid Rs.38,000/-, which had not been received by them since "backed out of it".
43. If the two statements are put together, what the defendants are asserting now is that the plaintiffs accepted about Rs.37,042/- in full and final settlement and later on agreed to accept the further amount of Rs.38,000/- but concededly did not enter into formal agreement. The effect of both the statements is that the latter assertion about the negotiated settlement having been arrived at, but which was not formalized, effectively nullifies the allegation that previously the sum of Rs.37,042/-was accepted in "full and final settlement". The defendants do not throw any light about why they agreed to pay similar amounts twice over in respect of what had been "fully and finally settled" when part of the amount was paid in cash and partly through bank draft. It is, therefore, concluded that the defendants have not established that there was any settlement which precluded the plaintiffs from claiming shares in respect of CS(OS)No.842/1982 Page 24 Darya Ganj property or in respect of other assets belonging to the family or other family business.
43. So far as the Darya Ganj property is concerned, it was acquired by the father of Late Krishan Lal Chugh. Concededly, Krishan Lal Chugh died, he had about 1/6 th shares. Normally, the defendants' contentions that the plaintiffs could have claimed only 1/4th share in this property, would have been correct since on the date of his death, he was survived by the three plaintiffs, his widow and two children and fourth defendant, his mother. The latter as Class-I heir (mother) was entitled to 1/4th share of Krishan Lal under Section 8 of the Hindu Succession Act. However, during the pendency of these proceedings, the said fourth defendant also died. There is no allegation that she bequeathed her share through a will or testamentary disposition. In these circumstances, her 1/6th share and right to receive 1/4th share (of Late Krishan Lal Chugh's 1/6th share) was also was liable to be divided inter alia amongst the other heirs. Thus, the fourth defendant's share opened up upon her death and the relevant provisions i.e. Section 15 & 16 entitle the two plaintiffs, who are children of Late Krishan Lal Chugh to an equal share along with her other children. Section 15 (1) to the extent it is relevant, reads as follows:
"15. General rules of succession in the case of female Hindus. - (1) The property of a female Hindu dying intestate shall devolve according to the rule set out in section 16, --
(a) Firstly, upon the sons and the daughters (including the children of any pre-deceased son or daughter) and also the husband;"
45. Section 16 states that those in one entry such as under Section 15 (1) (a) would take simultaneously. The net result of this is that the widow of Late Krishan Lal Chugh i.e. the CS(OS)No.842/1982 Page 25 Plaintiff No.1 is entitled to 1/24th Share of the said Darya Ganj property (i.e. 1/4th out of 1/6th share of Late Krishan Lal Chugh). The second and third plaintiffs are entitled to 1/24th share each i.e. 1/4th of 1/6th share of Late Krishan Lal Chugh). Besides this, on the demise of the fourth defendant (mother of Krishan Lal), they also become jointly entitled to a share in her property, claiming through their deceased father being her pre-deceased son, by virtue of conjoint reading of Sections 15 and 16 of the Hindu Succession Act. On the death of Krishan Lal, his 1/6th is divided in 4 equal parts-among his mother, wife, son and daughter - each getting 1/6 x 1/4 = 1/24. Further, the total share of the Mother of Krishan Lal being [1/6 + 1/24] 5/24, on her demise, got divided in 5 equal parts - 1 among 2 children of Krishan Lal, (claiming through their deceased father), 3 sons and 1 daughter. Thus, 5/24 x 1/5 = 1/24 being the share of each son and daughter, and joint share of the 2 children of Krishan Lal (Plaintiff No. 2 and Plaintiff No. 3, taking his share). The Combined share of the Plaintiffs will be: 1/24 (Plaintiff 1) + 1/24 (Plaintiff 2) + 1/24 (Plaintiff 3) + 1/24 (joint share of Plaintiff No. 2 and Plaintiff No. 3) = 4/24 = 1/6.
45. The plaintiffs claim shares in other properties and businesses; it is alleged that one business venture by the name "Mohini Restaurant" was being carried out. The plaintiffs have also claimed shares in respect of shop No.914 and 916, Kamra Bangash, Darya Ganj. It is alleged that during the life time of Krishan Lal Chugh, a business named of M/s Mohini Restaurant later re-named as Mohini Sweet House was being carried on, in which the defendant No.1 and defendant No.2 were partners. It is also asserted that upon death of Krishan Lal Chugh, the business was taken over by the said two defendants and that in 1986 by their private arrangement Shop No.916 was divided into two portions. One portion was given CS(OS)No.842/1982 Page 26 to M/s Kiran Clinic for Rs.1.60 thousands to carry on the health clinic and the other portion was given to second defendant exclusively for doing his business. It is further asserted that the said such portion is also being used by 2nd defendant's wife after his death.
47. The defendants in their pleadings as well as the suggestions put to the plaintiffs during evidence, suggest that shop No.914 and 916, Kamra Bangash, did not involve any interest of Late Krishan Lal Chugh. The defendants, in their evidence claim that Shop No.916 was under
tenancy of Mohan Lal Chugh and that Krishan Lal Chugh was a partner in that business.
However, it is alleged that the firm had nothing to do with the shop. DW-1 (defendant No.8) also denied that business known as "Mohini Sweet House" was ever carried in shop No.914, Kamra Bangash. The plaintiffs had sought to initially rely upon partnership deed dated 12.9.1969 in respect of the firm "Mohini Restaurant". That document was, however, later not placed on record, approved in evidence. The first plaintiff had issued notices dated 27.12.1979 (Ex.P/12); 30.3.1980 (Ex.P/13), 31.3.1980 (Ex.P.14) and Ex.P/21. This does not anywhere advert to shop No.914 and 916, Kamra Bangash in the manner claimed in the Suit. It is not asserted that this property belonged to Krishan Lal Chugh. In one or two of the notices, there is general allegation of business known as "Mohini Restaurant". Besides, the plaintiffs have been unable to show any documentary evidence that Late Krishan Lal Chugh had right to such property. Of course, DW-2 boldly and generally mentioned about the partnership having existed to which Late Krishan Lal Chugh was a party.
48. In the light of the above discussion, it is held that the plaintiffs are entitled to 1/3rd one third share in the business Mohini Restaurant, which was concededly carried on in Shop CS(OS)No.842/1982 Page 27 No.916, Kamra Bangash. However, the plaintiffs have been unable to establish anything in respect of Shop No. 914.
Issue No 5. Relief of Mandatory Injunction:
49. The plaintiffs, stating that there is no bar in law for grant of this relief, reiterated the prayer. However, they did not substantiate their entitlement to such relief. At the highest, in the present case, their entitlement is to the share of the deceased in the firm, its assets, and the family properties. However, they have not claimed - or established that as legal representatives or heirs of late Krishan Lal Chug, they were entitled to be admitted as partners. The firm, in law, stood dissolved on his death. In these circumstances, the plaintiffs have not shown how the relief of mandatory injunction can be given by this court. This issue is accordingly answered against the plaintiffs.
Issue Nos 6 and 7; Diversion of funds of Shakti Refrigeration Company to the accounts of M/s. Sudershan Engineering Works:
50. Placing reliance on Ex. P/2 (Statement of Account of Shakti Refrigeration Co.) the plaintiffs aver that a total amount of Rs. 63,000/- (Rs. 10,000/- on 26.7.1979, Rs. 20,000/- on 2.8.1979, Rs. 20,000/- on 13.8.1979, Rs. 10,000/- on 1.9.1979 and finally Rs. 3,000/- on 20.12.1979) had been withdrawn from the account of Shakti Refrigeration and then diverted to Sudarshan Engineering; the withdrawals had been carried out after the deceased's demise. M/s Sudershan Engineering Works is a partnership firm between the eight and the ninth defendants, according to the statement of the eighth defendant. Further it is also contended, that as the defendants have not controverted the statement of account, produced by the Central Bank of India; therefore, the withdrawals/ diversion of funds cannot be denied.
CS(OS)No.842/1982 Page 28
51. Ex. P/2 is an uncontroverted document; it is a statement issued by the Central Bank, Daryaganj, of Shakti Enterprises for the period 1978-1986; it is certified by the bank. It reveals, interestingly, that after the death of late Krishan Lal Chugh large amounts were disbursed to, or withdrawn by Sudershan Engineering. The eighth defendant admitted that Shakti Refrigeration was carried on, as an enterprise, after the first defendant's death, with his wife as a 50% partner; the other half share was equally distributed between himself and his brothers. According to him, Sudershan Engineering was a partnership in which he and his brothers were partners. Now, the evidence by way of Ex. P-2 demonstrates two things; substantial amounts, to the tune of Rs. 63,000/- were withdrawn by Sudershan Engineering. Two, a Fixed Deposit, for Rs. 80,000/- created in 1978, does not appear to have been reflected after its maturity. Since Ex. P-2 is not denied by the defendants, they are, in the opinion of the court, liable to account to the plaintiffs, to the extent of 1/6th share of deceased Krishan Lal Chugh, in regard to the said sums of Rs. 63,000/- and Rs. 80,000/-
Issue No. 8. Reliefs
52. The plaintiffs sought composite reliefs. On the one hand they sought division of family properties, for which a partition is necessary. On the other hand, they seek accounts in respect of the firm Shakti Enterprises; they also seek a share in the properties of the firm; for which a partition is necessary.
53. In view of the findings recorded in respect of the various issues, the following is hereby directed:
(1) The suit is decreed, declaring that the plaintiffs are entitled to 1/6 th share in House CS(OS)No.842/1982 Page 29 property No. 1046, Phatak Muftiwalan, Tiraha Bahram Khan, Daryaganj, New Delhi. A preliminary decree shall, accordingly be drawn.
(2) The plaintiffs are entitled to one sixth share in the property, being No. 48, Old Rajinder Nagar. A preliminary decree of partition, to such share, is hereby issued;
(3) The firm Shakti Refrigeration (of which the deceased was a partner) stood dissolved w.ef. 18.05.1979. The plaintiffs are entitled to 1/6th share of the deceased to which defendants are liable to accounts to them. A decree for accounts to that effect is therefore passed;
(4) Shri Rajiv Aggarwal, Advocate, Mobile No. 9811142757, is hereby appointed as commissioner to prepare a report on the question of partition of the properties mentioned in (1) and (2) above, and also examine the accounts, (including the amounts of Rs.63,000/- and Rs.80,000/- mentioned above) of the firm Shakti Enterprises, and report to the court, within 3 months from today. The commissioner shall be paid Rs. 50,000/- as fee, to be borne by both parties.
53. The matter shall be listed for directions, on 15-7-2009, to examine the commissioner's report, and pass appropriate orders. In the circumstances, the defendants shall bear the costs of the suit, quantified at Rs. 55,000/-; it shall be paid to the plaintiffs within six weeks.
April 08 , 2009 S.RAVINDRA BHAT
(JUDGE)
CS(OS)No.842/1982 Page 30