Allahabad High Court
Ghanshyam Das Agrawal And 4 Ors. vs Shyam Bihari Gutpa And 2 Ors. on 11 April, 2018
Author: Siddharth
Bench: Siddharth
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved on 8.3.2018 Delivered on 11.04.2018 Case :- CIVIL REVISION No. - 534 of 2013 Revisionist :- Ghanshyam Das Agrawal And 4 Ors. Opposite Party :- Shyam Bihari Gutpa And 2 Ors. Counsel for Revisionist :- Pankaj Agarwal Counsel for Opposite Party :- Nipun Singh Hon'ble Siddharth,J.
Heard Sri Pankaj Agarwal, learned Counsel for the revisionist and Sri Nipun Singh, learned Counsel for the opposite parties.
This Civil Revision has been filed by the defendants-revisionists against the order dated 07.11.2017, passed by Civil Judge (Senior Division)/Additional District Judge, Court No.9, Saharanpur, in Original Suit No.325 of 2010, dismissing the application of the defendants-revisionists under Order-7, Rule-11 C.P.C., Paper No.111-Ga and seeking rejection of plaint of the Original Suit.
The plaintiffs-opposite parties instituted an Original Suit No.325 of 2010 against the defendants-revisionists seeking relief of partition of the property described at the foot of the plaint claiming 1/6th share each in the suit property. It was alleged that plaintiffs and defendants are doing joint business in the name of G.D. Agrawal Associate and the property in question of which partition has been sought, namely, " Sai Sadan" has been purchased by three different sale deeds from the funds of business of M/S. G.D. Agarwal Associates. The construction over the said land was also raised from the fund of business of M/S. G.D. Agrawal Associate and the payment of taxes were also made from the said firm. Parties to the suit are residing in the said property according to their convenience and suitability and are using the same as such. As the families of all the parties have now grown and they feel inconvenience in residing in the said joint property and despite repeated request defendants failed to partition the said property compelling institution of the present suit for partition of the firm's property.
The defendants filed their written statement denying the plaint averments. They categorically asserted that the firm M/S. G.D. Agrawal Associate is a registered partnership firm constituted vide their registered partnership deed dated 11.03.1983, having 6 partners, viz. Ghanshyam Das Agarwal, Shyam Bihari Gupta, Kunj Bihari Agrawal, Avadh Bihari Lal, Rohtash Bihari Agrawal and Ravindra Agrawal. The property was purchased out of the fund of M/S. G.D. Agarwal Associate and was in the name of firm and plaintiff has no right and title over the said property in its individual capacity. The partnership firm which was constituted through partnership deed dated 11.03.83 stood dissolved and all the partners have been distributed their share in profits of the firm, including the property in question and in view of the said dissolution deed the property in question came exclusively into the share of Sri G.D. Agrawal, defendant no.1. The suit has been instituted by suppression of material facts. The plaintiffs-opposite parties concealed the fact that the partnership firm M/S. G.D. Agrawal Associate, was dissolved on 31.03.92 and all the assets and liabilities of the said firm was taken over by the defendant, G.D. Agrawal. There were several other partnership firm in which the parties herein were partners. The partnership firm in the name of "Ram Khandsari Udyog" was also dissolved since 31.3.92 and where after it was taken over solely by plaintiff no.1 Shyam Bihari Gupta. M/S. R.B. Carrier which was also a partnership firm went exclusively to Sri Rohtash Bihari Agrawal, plaintiff- opposite party no.3, M/S. Jai Kisan Filling Station went to Kunj Bihari Gupta, plaintiff- opposite party no.2, M/S. Keshav Ram & Sons Bargaon, Saharanpur also went to Sri Kunj Bihari Gupta, plaintiff- opposite party no.2. The entire exercise in this regard was held on the basis of a mutual settlement which took place in the presence of Kesho Ram, late father of the defendant and the plaintiff- opposite parties. He is also signatory to the dissolution deed along with Sri Anand Prakash Agrawal who is maternal uncle of the defendants and the plaintiff- opposite parties and is owner of Anand Motor Ltd., and various other business at Lucknow. The dissolution deed dated 31.03.92 was duly acted upon since 1 April, 1992, M/S. G.D. Agrawal Associate became sole proprietorship firm of the defendant, defendant- revisionist no.1, subsequently entered into a partnership deed with his two sons for doing business in the name of M/S. G.D. Agrawal Associate, while continued to be the sole owner of the building in question. Till 31.03.92, when the defendant- revisionists and plaintiff- opposite parties were partners in the firm M/S. G.D. Agrawal Associate, the income derived from the said business was duly shown in the Income Tax Return of the firm. After dissolution of the firm and its reconstitution, the income tax return shows that income of the firm is being distributed amongst the defendant and his two sons and none of the plaintiff- opposite parties have any concern with it. All the plaintiff- opposite parties are income tax assesses since before the dissolution of the firm on 31.03.92. They have been duly submitting their Income Tax Returns. Prior to 31.03.92, they were clearly showing income derived from M/S. G.D. Agrawal Associate in their individual income tax return. After 31.03.92, they have not shown any income from the firm M/S. G.D. Agrawal Associate in any of the returns filed by them thereafter. This conclusively proves that the firm M/ S.G.D. Agrawal Associate was dissolved on 31.03.92 and defendant- revisionist no.1 took over entire assets and liabilities and the plaintiff- opposite parties were left with not right, title or interest in the said business or any of the assets of the said firm ( including the suit property).
The defendants-revisionists moved an application under Order-7, Rule-11 C.P.C., praying for rejection of the plaint repeating the averments made in their written statement and stating that the suit instituted by the plaintiffs- opposite parties seeking partition of one of the property of the partnership firm is not maintainable and barred by various provisions contemplated under Indian Partnership Act, 1932 and in view of specific provision under Section-48 thereof for settlement of account between the partners.
The learned Trial Court by the order dated 07.11.2013, passed by the Civil Judge (Senior Division)/Additional District Judge, Court No.6, Saharanpur dismissed the application of the defendants- revisionists under Order-7, Rule-11 C.P.C., hence this Revision.
The argument of the learned Counsel for the defendants-revisionists is that the court below has failed to consider that the suit property is the property of Partnership Firm and no suit for partition of the same is maintainable. Only a suit for rendition of account could have been instituted by the plaintiff claiming his share in the profit of the firm. He has further argued that the court below has not been able to consider the scope of an application under Order-7, Rule-11 C.P.C. and it does not extends beyond the pleadings in the plaint. The view taken by the court below that the validity of dissolution deed dated 31.03.1992 is yet to be decided, which is possible only after leading of the evidence by the parties for which suit can proceed, is manifestly erroneous, since there is provision of settlement of accounts between partners under Section-48 of the Partnership Act.
He has relied upon the Judgment in the case of Narasu's Coffee Company etc., & others Vs. R.P. Sarathy & others, 2014 (5) MLJ 710, wherein the Madras High Court has held as follows, " It is a well settled proposition of law that if it is not possible for any partner, to continue the partnership firm, he can seek dissolution of the firm and rendition of accounts. Having admitted the fact that the suit properties were the properties of ''Narasus Coffee Company', a partnership firm and also the alleged retirement of the first respondent/ plaintiff and other respondents from the firm and receiving the consideration for the shares, including sale deeds executed in favour of the first respondent/ plaintiff, for filing a suit, seeking partition in the year 2009 with the alleged cause of action, which is not legally sustainable. The plaintiff has alleged that he had demanded partition on 01.03.2009 at Salem and in other places, as it was not possible, he filed the suit, seeking partition. The plaintiff has categorically admitted that the suit properties, were the properties of the firm, hence, he cannot file the suit for partition, contrary to Indian Partnership Act."
Further reliance has been placed upon the Judgment in the case of Ketineni Chandrasekhar Rao Vs. Boppanna Seshagiri Rao and others, 2017, AIR (Hyderabad) 30: 2017 (1) ALT 715: 2017(3) Andh LD 224, in support of the argument that even if it is accepted that the suit property had been a joint family property, even then once it becomes property of the partnership firm, it can not be partitioned, only the profits arising out of the property can be shared. He has placed reliance upon paragraph no.21 and 22 of the aforesaid decision which are as follows, " 21.............................. Section 14 of the Act postulates that subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, and unless the contrary intention appears, property and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm. Therefore, once a partnership is formed, all the properties brought into the stock of the firm by the partners become the part of the firm's properties.
22. Once the plaintiff is not entitled to passing of a preliminary decree for partition, all that he can seek in the suit is passing of a decree for dissolution of the partnership and rendition of accounts as per the existing partnership deed. This view of ours is fortified by the judgment of the Supreme Court in Addanki Narayanappa, AIR 1966 SC 1300, wherein it was held that the provisions of Sections 14, 15, 29, 32, 37, 38 and 48 of the Act make it clear that whatever may be 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 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 the property, and upon dissolution of the partnership to a share in the money representing the value of the property. Admittedly, the plaintiff being a partner can not claim partition of his original share and he may be entitled to a share in the partnership assets calculated in terms of the money or otherwise in the pending suit."
The learned Counsel for the revisionist has also relied upon the Judgment in the case of Sopan Sukhdeo Sable Vs. Asstt., Charity Commr., reported in (2004) 3 SCC 137, wherein, it was held by the Hon'ble Apex Court that plaint could be rejected under Order 7, Rule 11 (a) CPC, when the plaint does not disclose a cause of action. The cause of action should be a cause of action, as per law for the relief sought for in the suit. Stating something against law cannot be construed as cause of action to maintain a suit.
The learned Counsel for the revisionist has also place reliance upon Azhar Hussain Vs. Rajiv Gandhi, AIR 1986 SC 1253: 1986 (Supp) SCC 315: LNIND 1986 SC 153, the Hon'ble Supreme Court has held as follows:
"The Court has power to reject an election petition summarily under the provisions of the CPC. The purpose of conferment of such power is to ensure that a litigation, which is meaningless and bound to prove abortive should not be permitted occupy the time of the court and the concerned litigants are relieved of the psychological burden of the litigation so as to be free to follow their ordinary pursuits and discharge their duties. There is greater reason why in a democratic set up, in regard to a matter pertaining to an elected representative of the people which is likely to inhibit him in the discharge of his duties towards the nation, the controversy is set at rest at the earliest if the facts of the case and the law so warrant. Since the Court has the power to act at the threshold the power must be exercised at the threshold itself in case the court is satisfied that it is a fit case for the exercise of such power and that exercise of such power is warranted under the relevant provision of law. It is therefore, not possible to accept the contention that the powers to dismiss or reject an election petition or pass appropriate orders should not be exercised except at the stage of final judgment after recording the evidence even if the facts of the case warrant exercise of such powers, at the threshold."
The learned Counsel for the plaintiffs- opposite parties has argued that the plaintiffs have instituted the suit for partition of the suit property claiming themselves to be co-owners of the same. Unless, the evidence comes, this claim can not be proved. The suit for partition can not be rejected only on the basis of the averments of the defendants in the written statement.
The learned Counsel for the plaintiffs- opposite parties has relied upon the Judgment in the case of B.Janardhan Gupta (died) and another Vs. B.Padmanabha Gupta, 1993 (2) ALT 419, which was a case wherein 2 brothers entered into a partnership and later it was dissolved at the instance of the plaintiff in the year 1967. The defendant claimed that he has enjoyed the property for over the statutory period peacefully, openly and to the knowledge of plaintiff, therefore he has acquired the rights by adverse possession. The suit for partition and separate possession filed by the plaintiff was stated to be not maintainable on the ground that the properties were the assets of the partnership firm, the plaintiff argued that after the dissolution of partnership, as there are no liability of the firm, the property that remained as assets of the firm have to be divided between the partners. The Court held the Suit of the plaintiff for partition of the undivided properties of the dissolved firm maintainable on the ground that there were not debts and therefore the suit was maintainable.
After considering the Judgments in the case of Narasu's Coffee Company (supra) and Ketineni Chandrasekhar Rao Vs. Boppanna Seshagiri Rao and others (supra), it is clear that a suit for partition of the property of a dissolved firm is not maintainable. In view of the mandate of Sections 14, 15, 29, 32, 37, 38 and 48 of the Partnership Act, which make it amply clear that whatever may be character of the property which is brought in the fold of partnership firm or is acquired in the name of partnership firm, it becomes property of the firm and the partners upon dissolution can only share in the assets of the firm calculated in terms of money. It is further clear from the Judgment in the case of Sopan Sukhdeo Sable Vs. Asstt., Charity Commr. (supra) and Azhar Hussain Vs. Rajiv Gandhi, (supra). It is well settled that for rejecting the plaint, as per the said provisions of law, the Court has to decide the same, based on the whole pleadings of the plaint and not based on the defence raised in the written statement filed by the defendants. The Hon'ble Apex Court has categorically held that while deciding an application filed under Order 7, Rule 11 of the Code, the averments in the plaint are germane, the pleas taken by the defendant(s) in the written statement would be wholly irrelevant at this stage.
The argument of the learned Counsel for the plaintiffs- opposite parties is that the finding of the trial court that the dissolution of the firm is yet to be proved by leading evidence and suit and therefore the suit is required to be proceeded with.
There is no pleading in the plaint that the Partnership Firm has been dissolved, all dates and liabilities of the Firm have been discharged and therefore, the Partners, who are living in the joint property of the Firm are entitled to get their separate shares. It has been held in Sonu Ram Vs. Seva Ram, AIR 1938, Lah 259, that after dissolution of the Partnership Firm, the rights and obligations of the Partners continue in all things necessary for winding up the business of the Partnership. Until the accounts of the Partnership Firm are completely settled, individual partners can not sue for their share of any separate part of the partnership assets.
In Alasyam Ramappa Vs. Panyam Thirumalappa, AIR 1939 Madras, 884, it has been held that up to the time of dissolution, the partners must be regarded as joint owners of the properties, but they are not entitled to specific shares and the rights which they possessed are subject to the liabilities of the partnership firm on dissolution. Until an account has been taken and provision has been made for discharge of liabilities, no partner can claim definite share in a particular asset. If after making provision for the firms debts, the remaining assets include in moveable properties, it does not follows that the partners will take the immoveable properties in equal shares, even if they have equal rights in the Partnership. What each partner receives, will depend on the circumstances and the nature of assets which remain from division. A partner for instance, may have overdrawn his account and disentitled himself to equal division.
There is no such averment in the plaint that the partnership firm in dispute has been dissolved, debts and liabilities have been settled and nothing remains towards the liability of the firm to be settled. Therefore, the reliance of the Counsel for the plaintiffs- opposite parties on the Judgment in the case of B.Janardhan Gupta (died) and another (supra) is not correct, since in that case there was clear averment that after the dissolution of the partnership and settlement of all liabilities of the firms, the Suit for partition of the undivided properties of the dissolved firm was found maintainable. In the present case, no such averments have been made. Since the defence of the defendants-revisionists are not to be considered, even on the bare perusal of the plaint averments, the Suit is not maintainable, in view of the provisions of Section-46 and 48 of the Partnership Act.
The law as discussed in Narasu's Coffee Company (supra) and Ketineni Chandrasekhar Rao Vs. Boppanna Seshagiri Rao and others (supra), Sonu Ram Vs. Seva Ram, AIR 1938, Lah 259 and Alasyam Ramappa Vs. Panyam Thirumalappa, AIR 1939 Madras, 884, seems to be correct.
In view of the above discussion, the order dated 07.11.2017, passed by Civil Judge (Senior Division)/ Additional District Judge, Court No.9, Saharanpur, in Original Suit No.325 of 2010, dismissing the application of the defendants-revisionists under Order-7, Rule-11 C.P.C., Paper No.111-Ga, is hereby set aside, aforesaid application is allowed and the plaint of the Suit of the plaintiffs-opposite parties is hereby rejected as barred by law.
The Revision is allowed with costs.
Order Date :- 11.04.2018 Ruchi Agrahari