Andhra Pradesh High Court - Amravati
Sri Varalakshmi Jute Twine Mills ... vs Grandhi Naveen Babu on 12 May, 2023
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HON'BLE SRI JUSTICE D.V.S.S.SOMAYAJULU
and
HON'BLE SRI JUSTICE V. SRINIVAS
APPEAL SUIT No.321 of 2020
ORDER:(per D.V.S.S.Somayajulu, J) At request of Sri P. Veera Reddy, learned Senior Counsel appearing for the appellant the issue of maintainability of the suit and the appeal was taken up.
2) Sri Gudapati Venkateswara Rao, learned counsel appearing for the respondent No.1 and Sri Papudippu Sashidar Reddy, learned counsel appearing for the respondent Nos.4, 5, 8, 10 and 15 to 22.
3) The factual background necessary for deciding this case is as follows:
i) The present appeal is filed by the appellant after securing leave of this Court to challenge the judgment and preliminary decree dated 17.12.2019 in O.S.No.39 of 2014 on the file of Special Judge for Trial of Cases under SCs & STs (PoA) Act-cum-IV Additional District Judge at Srikakulam.
ii) The suit in O.S.No.39 of 2014 is filed for a partition of a vacant site measuring 4452 Sq.yards. The 2 plaintiff claims to have acquired a share in a partnership firm through four sale deeds executed on 08.01.2013, 12.03.2013, 30.03.2013 and 20.05.2013. It is also mentioned that the firm purchased the property through a sale deed dated 26.03.1985 and another sale deed dated 06.03.1986.
Thereafter, a theater known as Vasavi Theater was constructed thereon. The Firm became defunct thereafter, and no business was being carried on. Hence, the suit was filed for partition of the property into 100 shares and to allot 15 shares to the plaintiff.
iii) Basing upon a Memo of compromise filed and after considering the material on record, a preliminary decree was passed on 17.12.2019 dividing the plaint schedule property into 100 shares and allotting 15 shares to the plaintiff. The other shares were allotted to the other defendants.
iv) The appellant on coming to know of this applied for the leave of the Court, as mentioned earlier. His contention is that the plaint schedule property belongs to a partnership firm. The appellant joined in the firm on 19.11.2018 by virtue of a Deed of Reconstitution and is a 20% 3 shareholder of the firm. The judgment is challenged on the ground that the suit for partition does not lie as the property belongs to a firm. Other legal and factual issues are also raised.
4) Questioning the maintainability of the suit and the decree passed, arguments were advanced. During the course of hearing Sri P. Veera Reddy, learned Senior Counsel relied upon a Division Bench judgment of this Court reported in Ketineni Chandrasekhar Rao and Ors., v Boppana Seshagiri Rao and Ors.,1 to argue that the suit for partition does not lie in case of partnership property. At best the partner can seek a decree for dissolution of the partnership and rendition of accounts etc., for his share in the firm. Therefore, it is submitted that the entire suit is misconceived, as the property has lost its characteristic of individual property and is a property of the firm. Sri P. Veera Reddy also points out that this judgment is based upon the judgment of the Hon'ble Supreme Court of India in Addanki Narayanappa and Another v Bhaskara Krishtappa and 1 AIR 2017 AP 30 4 13 others2. Learned senior counsel points out that despite being aware of this Reconstituted Partnership Deed, dated 19.11.2018, the other defendants also have kept quiet and have not brought this fact to the notice of this Court, as a result of which the decree was passed in the said manner. He, therefore, submits that the decree should be set aside or in the alternative the matter should be remanded to the trial Court for a fresh decision in accordance with law since the judgment is contrary to the law and Her also submits that the conduct of the respondents/defendants in suppressing the facts amounts to a fraud on the Court.
5) In reply to this, Sri G.Venkateswara Rao argues the matters and states that the petitioner's locus itself is an issue. It is his contention that the petitioner has not filed the Deed dated 19.11.2008, under which he claims a share in the Firm. He points out that despite a direction given the said Deed is not produced. Therefore, he contends that the petitioner has no locus standi, to question the said judgment and it is the affected parties like other defendants, who could have questioned the same. He also submits that since there 2 AIR 1966 SC 1300 5 is a compromise leading to the preliminary decree this Court should not interfere and / or decide the issue of maintainability. Learned counsel relies upon the judgment of the Hon'ble Supreme Court of India reported in Baldev Singh v Surinder Mohan Sharma and others3 to support his contentions.
6) This Court, after considering the submissions, notices that the petitioner is before this Court is stating that he has become a partner of the firm Grandhi Enterprises, which is the owner of the suit schedule property. It is his specific case that he has become a member of the said firm by virtue of a deed of reconstitution of partnership, dated 15.11.2008. A photocopy of the said deed is on the file, however, the original is not produced. But interestingly in this appeal itself G.V.Ramana Murthy, who is the defendant No.4 in O.S.No.39 of 2014 and respondent No.5 in the Appeal, has filed an affidavit clearly mentioning therein that the appellant became a partner in the partnership firm by virtue of the reconstituted deed of partnership, dated 19.11.2008. It is also clearly asserted that as on the date of the affidavit the 3 (2003) 1 SCC 34 6 appellant has 20% shareholding in the firm. He reiterates that all the reconstituted deeds were executed legally and signed by all the parties from time to time. Hence the objection raised by the learned counsel for the respondent that the deed is not produced need not deter this Court, because the defendant in the suit has admitted that the Deed was entered into and the appellant is a shareholder. If it is the property of the firm the appellant's rights will be affected and so he is a party affected. He has the locus to file this appeal.
7) What is, however, interesting is that the deponent of this affidavit G.V.Ramana Murthy, who has filed a written statement in the suit O.S.No.39 of 2014 does not mention this fact of reconstitution on 19.11.2008 in his pleading. On the other hand, he takes a plea that the share of late Mangaraju devolved upon his granddaughters as per a family settlement. The written statement is silent about the reconstitution. Similarly an examination of the deed filed before this Court some of the defendants in the suit are also parties to this deed of reconstitution. Their conduct in the trial court also has to be seen vis-a-vis the deed of reconstitution, dated 7 19.11.2008 since none appear to have taken the plea that the property belongs to the firm and that a suit for partition does not lie.
8) The law on the subject is also very clear. The judgment relied upon by the learned senior counsel reported in Ketineni Chandrasekhar Rao case (1 supra) is applicable to the facts. It is clearly mentioned that once the property is thrown into the partnership stock it becomes the property of the firm and the partner is only entitled to a share of the profits accruing to the partnership firm or upon dissolution of share in the money representing the value of the property. It is clearly held that the plaintiff being a partner cannot claim a partition or demand his share of the property. To the same effect is the judgment of the Hon'ble Supreme Court of India reported in Addanki Narayanappa case (2 supra) in paragraph-7 the following is held:
"7. It seems to us that looking to the scheme of the Indian Act no other view can reasonably be taken. The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done whatever is brought in would cease to be the trading asset of the person who brought it in. It would be the trading asset of the partnership in which all the partners would 8 have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated, his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities and prior charges. It is true that even during the subsistence of the partnership a partner may assign his share to another. In that case what the assignee would get would be only that which is permitted by Section 29(1), that is to say, the right to receive the share of profits of the assignor and accept the account of profits agreed to by the partners."
9) It appears none of the defendants has taken a clear plea about the status of the property. To effect a partition of the property it must first be concluded that it is capable of being partitioned. If it is partnership property it cannot be "partitioned" in view of the law. Along with the status of the property (joint family/partnership etc) the conduct of the defendants has to be examined to decide if there was suppression of facts etc. 9
10) This Court is, therefore, of the opinion that this is a fit case which should be remanded back to the trial court with a direction to enquire threadbare into the issue and then decide if the suit itself is maintainable or not based on the status of the property. The matter requires evidence before a final conclusion is to be reached.
11) With the above observation the Appeal Suit is allowed. The preliminary decree, dated 17.12.2019, in O.S.No.39 of 2014 on the file of Special Judge for Trial of Cases under SCs & STs (PoA) Act-cum-IV Additional District Judge at Srikakulam, is set aside. The matter is remanded to the trial Court to conduct a de novo enquiry. If the present appellant files an application for impleadment, the same shall be considered on its own merits and decide. It is made clear that the opinions expressed in the course of this judgment are for the disposal of the appeal in this Court, particularly, as the issue of maintainability is the core issue. The Trial Court should, after giving opportunity to all the parties, decide the matter in accordance with law without being influenced by the fact that this Court passed an order. There shall be no order as to costs.
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12) Consequently, pending Miscellaneous Applications, if any, shall stand closed.
__________________________ D.V.S.S.SOMAYAJULU, J ________________ V. SRINIVAS, J Date:12.05.2023.
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