Madras High Court
R.Janakiammal vs S.R.Somasundaram ... 1St on 23 November, 2011
Bench: K.Mohan Ram, G.M.Akbar Ali
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.11.2011
C O R A M
THE HONOURABLE MR.JUSTICE K.MOHAN RAM
AND
THE HONOURABLE MR.JUSTICE G.M.AKBAR ALI
A.S.Nos.281 of 2000 & 332 of 1999
& C.M.P.Nos.13167, 12013 & 12014 of 2004
& C.M.P.No.974 of 2011
R.Janakiammal ... Appellant in A.S.No.281 of 2000 &
7th respondent in A.S.No.332 of 1999
-Vs.-
1. S.R.Somasundaram ... 1st respondent in A.S.No.281 of 2000
& Appellant in A.S.No.332 of 1999
2. S.K.Kumaraswamy (died) ... 2nd respondent in A.S.No.281 of 2000
& 1st respondent in A.S.No.332 of 1999
3. K.Sundarambal ... 3rd respondent in A.S.No.281 of 2000
& 2nd respondent in A.S.No.332 of 1999
4. K.Kandavadivel ... 4th respondent in A.S.No.281 of 2000
& 3rd respondent in A.S.No.332 of 1999
5. S.K.Chinnaswamy ... 5th respondent in A.S.No.281 of 2000
& 4th respondent in A.S.No.332 of 1999
6. C.Kamalam ... 6th respondent in A.S.No.281 of 2000
& 5th respondent in A.S.No.332 of 1999
7. C.Senthilkumaravel ... 7th respondent in A.S.No.281 of 2000
& 6th respondent in A.S.No.332 of 1999
8. S.Saraswathy ... 8th respondent in both Appeal Suits
9. C.M.Kumaraswamy ... 9th respondent in both Appeal Suits
10. S.R.Shanmugavelayutham ... 10th respondent in both Appeal Suits
11. E.N.Sivaswamy ... 11th respondent in both Appeal Suits
12. E.N.Othiswamy ... 12th respondent in both Appeal Suits
13. E.N.Ramaswamy ... 13th respondent in both Appeal Suits
14. E.N.Palaniswamy ... 14th respondent in both Appeal Suits
15. S.Kamalam ... 15th respondent in both Appeal Suits
16. O.Rukmani ... 16th respondent in both Appeal Suits
17. R.Rajalakshmi ... 17th respondent in both Appeal Suits
18. P.Savithri ... 18th respondent in both Appeal Suits
19. K.Subbian ... 19th respondent in both Appeal Suits
20. Shri Mookambiga Spinning
Mills Ltd., ... 20th respondent in both Appeal Suits
21. 20th Century Finance
Corporation Ltd., ... 21st respondent in both Appeal Suits
22. Sri Vasudeva Textiles Ltd., ... 22nd respondent in both Appeal Suits
23. E.O.Sathishkumar ... 23rd respondent in both Appeal Suits
24. E.R.Elango ... 24th respondent in both Appeal Suits
25. P.Rukmani ... 25th respondent in both Appeal Suits
26. M/s. Sangeeth Textiles Ltd., ... 26th respondent in both Appeal Suits
27. S.Vasanthakumari,
D/o. Late Kumaraswamy ... 27th respondent in both Appeal Suits
28. R.Chitra Devi,
D/o. Late Kumaraswamy ... 28th respondent in both Appeal Suits
29. K.Santhalakshmi,
D/o. Late Kumaraswamy ... 29th respondent in both Appeal Suits
30. P.Krishnaveni,
D/o. Late Kumaraswamy ... 30th respondent in both Appeal Suits
(R-27 to R-30 brought on record as
Legal Representatives of the deceased,
S.K.Kumaraswamy, vide order of Court,
dated 13.02.2008 made in
CMP Nos.10793 & 10792 of 2005)
Prayer:- Appeal Suits filed under Section 96 of the Code of Civil Procedure against the judgment and decree, dated 30.09.1997, made in O.S.No.1101 of 1987 on the file of the Principal Subordinate Court, Coimbatore.
For Appellant in A.S.No.281 / 2000 : Mr. S.Parthasarathy, Sr. Counsel, for,
Mr. J.Ramakrishnan
For Respondents in A.S.No.281 /2000: Mr. Srinath Sridevan, for R-1
Mr. T.R.Rajagopalan, Sr. Counsel, for,
Mr. T.R.Rajaraman, for R-2 to R-4
Mr. T.R.Mani, Sr. Counsel, for,
Mr. K.R.A.Muthukrishnan, for R-7
Mr. S.Thangavel, for R-8
Mr. M.S.Krishnan, Sr. Counsel, for,
M/s. Sarvabhavman Associates, for,
R-11 to R-20 & R-22 to R-26
Mr. T.R.Rajagopalan, Sr. Counsel, for,
Ms. Pushpa Sathyanarayanan,
for R-27 to R-30
No Appearance : R-5, R-6, R-9, R-10, R-21.
- - -
For Appellant in A.S.No.332 / 1999 : Mr. Srinath Sridevan
For Respondents in A.S.No.332 /1999: Mr. T.R.Rajagopalan, Sr. Counsel, for,
Mr. T.R.Rajaraman, for R-1 to R-3
Mr. T.R.Mani, Sr. Counsel, for,
Mr. K.R.A.Muthukrishnan, for R-6
Mr. S.Raghavan, for R-7
Mr. S.Thangavel, for R-8
Mr. M.S.Krishnan, Sr. Counsel, for,
M/s. Sarvabhavman Associates, for,
R-11 to R-26
Mr. T.R.Rajagopalan, Sr. Counsel, for,
Ms. Pushpa Sathyanarayanan,
for R-27 to R-30
No Appearance : R-4, R-5, R-9, R-10.
- - -
C O M M O N J U D G M E N T
The plaintiff and the seventh defendant, being aggrieved by the judgment and decree, dated 30.09.1997, passed in O.S.No.1101 of 1987 on the file of the Subordinate Court, Coimbatore, have filed A.S.Nos.332 of 1999 and 281 of 2000, respectively.
2. For the sake of convenience, the parties to the appeals are referred to as per their ranking in the suit.
3. The case of the plaintiff in O.S.No.1101 of 1987 is as follows:-
Late Rangasamy, Kumarasamy, the first defendant and K.Chinnasamy, the fourth defendant are the sons of late Kandasamy Gounder. They constituted a Hindu Joint Family which possessed ancestral properties, which are shown as Item Nos.1 and 2 of plaint Schedule 'A'. Inspite of a Deed of Partition, the brothers continued to live jointly and carried on business jointly, led by elder brother Rangasamy, the brothers jointly ventured into several businesses like running a rice mill, match factory, sizing unit, power looms etc., the brothers were also carrying on business in timber and had taken coup contracts. The ancestral lands and enormous income there from contributed the capital and nucleus for the aforesaid businesses. From the income and profits derived by joint exertion from the aforesaid businesses and ancestral properties, numerous investments were made and several properties were acquired in Karumathampatti, Poomalur, Samalapuram, Veerakeralam, Coimbatore, Coonoor and other places by the family. In 1954, the brothers, purchased a rice mill named and known as 'Lakshmi Rice Mills', which was subsequently named as 'Lakshmi Rice Mills and Match Factory'. The premises was ultimately converted into a Spinning Mills (now known as Swamy Textiles) in the year 1977, which property is shown as Item No.1 in Schedule 'B'. Item No.2 in Schedule 'B' was purchased by the brothers from the joint income in the year 1958 in the name of all the three brothers. Item No.3 of Schedule 'B' was purchased in 1962-1963 in the name of all the brothers from the joint family income. In 1963 a site was purchased and a palatial construction was put up wherein the brothers continued to live jointly from 1964 and the same is shown as Item No.4 of Schedule 'B'.
4. The eldest brother Rangasamy was the President of Karumathampatti Town Panchayat for ten years and Chairman of Sulur Panchayat Union for five years. He was a successful businessman. He was killed in a motor accident on 27.05.1967, when he was only 44 years, leaving behind a widow, the seventh defendant. The seventh defendant was not much educated beyond the school level. The plaintiff and the tenth defendant are the sons of Rangasamy and the seventh defendant. The eighth defendant is their daughter. At the time of the death of Rangasamy, the plaintiff was aged about 11 years and studying in school and the tenth defendant who was then aged 19 years was was undergoing training at National Defence Academy at Kadakavalsa at Pune. All the properties, assets and businesses came into the hands of the first defendant. The heirs of late Rangasamy left themselves and their properties under control and protection of the first defendant in utmost faith, reposing trust and confidence in him. The plaintiff looked upon the first defendant as their protector and guardian and obeyed his instructions and directions without any question or demur. A sum of Rs.1,00,000/- received from the Life Insurance Corporation on the demise of Rangasamy was handed over to the first defendant which was also ploughed into the assets and business of the family. The said amount was mainly responsible in the growth and development of the business and the properties. In 1968, the plaintiff took up an LIC Policy for Rs.25,000/- wherein he has designated the first defendant as the nominee. The seventh defendant was taken as a partner in the place of Rangasamy.
5. In 1969, a land was purchased and a factory was put up wherein a sizing unit in the name of 'Sri Ranga Vilas Warping and Sizing Factory' is functioning, which is shown as Item No.5 of Schedule 'B'. In 1972, a Tea Estate popularly known as 'High Field Estate' in the name of defendants 1, 4, 10 and plaintiff was purchased and the same is shown as Item No.6 of Schedule 'B'. A private limited company, known as Swamy and Swamy Plantations (P) Ltd., was promoted and the company purchased Spring Field Estate and High Field Tea Factory. The share holdings in the company are shown as Item No.7 of Schedule 'B'. In 1975, 50 acres of lands were purchased in Vedapatti Village, in Coimbatore, in the names of defendants 1, 4 and plaintiff which is shown as Item No.8 of Schedule 'B'. In 1975-1976, about 6 acres of agricultural lands were purchased in Samalpuram Village in the name of the second defendant out of the joint family funds, which is shown as Item No.9 of Schedule 'B'. In 1978, a palatial bungalow was purchased in Tatabad, Coimbatore, which is shown as Item No.10 of Schedule 'B' and the same was acquired with the funds of joint family and for the benefit of the family.
6. All the aforesaid acquisitions and businesses continued to be under the dominant control of the first defendant. The tenth defendant was unable to get a transfer from Kashmir and he resigned from the defence services only on the advice of the first defendant. In 1973, he was married at Muthugoundanpudur. The plaintiff completed graduation in 1979 and came and settled down at Coimbatore. The plaintiff and the tenth defendant were living under the shelter and domination of the first defendant. The plaintiff had utmost trust and confidence on the first defendant and hence he obeyed all his decisions and directions. The first defendant used to take the signatures of the plaintiff in several documents, blank papers and blank stamp papers under the pretext and representations that they are required for tax purposes and for administrations of the properties and several partnership firms which are constituted for the purpose of tax concessions and benefits. The partnership firms were only intended for tax benefits and concessions and there is no change either in the attitude and intentions of parties, who continued to live jointly treating all the properties, assets and businesses as joint family property.
7. The first defendant with an enormous cash and resources on hand took over sick units to revive them and took advantage on the taxation side. Sri Vasudeva Industries Limited was one such unit, which had never seen a bright day nor made profits at any time from its inception. The said Industry went into liquidation in 1967. The first defendant took it on lease from the Official Liquidator of Madras High Court and he managed to acquire a seizable shares which are worthless and redeemed the company from liquidation by siphoning the family funds. The name of the company was changed to 'Sri Vasudeva Textiles Limited' in 1984. The company continued to work only on loss. The shares of the company are worthless. In 1973, the first defendant moved to Coimbatore from Somanur for the purpose of educating his children and moved into Item No.10 of Schedule 'B' in 1978. The fourth defendant continued to live in Somanur house. The plaintiff and the tenth defendant began to live in a rented house in Saibaba Colony in 1984. As the first defendant never denied the plaintiff's right to 1/3rd share in all the properties, assets, income and business of the family, he did not suspect him. The plaintiff was always treated and recognised as co-owners and they are in joint possession of the properties.
8. In 1983, the first defendant arranged to secure a loan from Punjab National Bank for 'Sri Vasudeva Industries Limited'. The defendants 1 and 4 and the plaintiff and the tenth defendant were the Directors on the Board of the Company. At the directions of the first defendant, the plaintiff and the tenth defendant signed the documents of personal guarantee to the Punjab National Bank in 1983. The entire administration and management of Sri Vasudeva Industries Limited continued to be in the hands of the first defendant, though the proceedings are shown to be at the instance of the Managing Directors.
9. In the beginning of 1984, the first defendant represented that since the plaintiff and the tenth defendant have given personal guarantee to the Bank for the loans of several lakhs, it would be risky and not expedient to have the family properties in the names of the plaintiff and the tenth defendant and it would be advantageous and safe to keep off the names of the plaintiff and the tenth defendant on records as owners. Thereagain, they did not question the direction and wisdom of the first defendant. The first defendant represented that the entire family properties would be kept in the name of defendants 1 and 4 for the purpose of record and to avoid the risk of any bank claim and he assured that this arrangement would not affect or extinguish the legitimate share of the plaintiff and the tenth defendant in the properties. The first defendant arranged to file a suit in Sub Court, Coimbatore, through the family lawyer. It was a collusive suit and a mere make believe affair. There was no misunderstanding or provocation for any one of the members of the family to go to a court of law for partition.
10. The suit in O.S.No.37 of 1984 on the file of the Sub Court, Coimbatore, was filed by the sixth defendant, who is the son of the fourth defendant. He was aged 21 years and he was a bachelor and was a college student at Madras. He sought for partition of joint family properties. The plaint was infact prepared at the instances and instructions of the first defendant. Even the schedule of properties were not complete. The plaintiff and the tenth defendant did not go to any lawyer nor took step to assert their claim for partition and they did not file any written statement in that case. The first defendant, represented that O.S.No.37 of 1984 is intended only to preserve and safeguard the family properties from any possible risk or danger from the claims of the creditors of a defunct and sick textile unit.
11. On 06.08.1984, the first defendant took the plaintiff to the Court, his signature was taken and made to stand before the Presiding Officer and say that he is accepting the contents of the compromise petition. The plaintiff obeyed the directions of the first defendant, but he had not gone to any lawyer independently nor gave any instructions to represent him in the above suit. The plaintiff learnt that lawyers of the same office have signed and filed a compromise petition into court and secured a decree thereon on 06.08.1984. The entire proceedings in O.S.No.37 of 1984 was a collusive one and the entire proceedings is a make believe affairs. The first defendant has abused the process of the Court. The entire proceedings and the decree secured from the court is a fraud played not only on the plaintiff, but also against the Court. The decree is void as per Section 44 of the Evidence Act also. The plaintiff never even thought of relinquishing or giving up his rights in valuable properties. The so called decree obtained from the court confers only the worthless shares in a defunct company which had not seen any profit ever since its inception. Inspite of the so called decree and compromise all the properties, assets, investments and business continued to be in the hands of the first defendant. The compromise decree which was intended only to secure and safeguard the properties is sham and nominal besides being fraudulent. There is a change in the attitude of the first defendant, who is giving a go by to this assurance and want to press the compromise decree against the plaintiff to deprive his legitimate share in the estate. The illegal and irregular nature of transactions can be assessed from the fact that the family members who did not have any share in the property were allotted properties and that too disproportionately by allotting negligible and useless shares to the plaintiff's mother who was a sharer and allotting substantial immovable properties to defendants 2 and 5 who were not even sharers.
12. The plaintiff has come to know recently that some alienations have taken place with regard to the portions of joint family properties at the instance of the first defendant and the same are not strictly binding on the plaintiff and hence the plaintiff is seeking for relief of accounting in respect of the alienation. The first defendant is refusing to give proper accounts. There is vast disparity in the value allotted to each group and no member in his sense would have accepted. A perusal of the extent of properties allotted to each branch of the joint family will show huge disparity in the allotment. The plaintiff's group is allotted no shares in immovable properties and only shares in the sick / public limited company, which are unmarketable alone have been allotted to them. The disparity in value is so great and the division is so unfair on the face of it and that the decree could not have been a real transaction seriously intended to be operative. The compromise decree came into existence on account of collusion on suggestion by the first defendant. Hence the plaintiff is obliged to come forward with this suit claiming a partition in respect of the entire suit properties into three equal shares and for allotment of one such share.
13. Late Rangasamy was entitled to an 1/3rd share in the entire properties, in which the plaintiff is entitled to 1/9th share. The remaining 1/9th share of late Rangasamy has devolved on the plaintiff, their mother and sister. The remaining 2/9th share has devolved on the tenth defendant, seventh defendant and the eighth defendant. The mother and sister of the plaintiff have expressed their desire not to take any share. Hence the plaintiff is entitled to 1/3rd share. The plaintiff is seeking for dividing the entire suit properties into three equal shares and for allotment of one such share to the plaintiff and the tenth defendant. The plaintiff is also seeking a declaration that the decree passed in O.S.No.1101 of 1987 on the file of the Sub Court, Coimbatore, is ultra vires, collusive, invalid, unsustainable and unenforceable.
14. As per the orders passed in I.A.No.191 of 1991, the ninth defendant, who was the party in O.S.No.34 of 1984, has been impleaded as a party to the suit. As I.A.Nos.129 and 214 of 1996 filed by the defendants were allowed, the defendants 11 to 26 have been impleaded as defendants in the suit in order to have an effective adjudication of the disputes involved in the suit, though strictly speaking they are not necessary parties.
15. It is false to state that the impugned decree was acted upon. It was only the first defendant, who was dealing with the shares alleged to have been allotted to the plaintiff and his branch even after the so called alleged partition. The plaintiff has included shares allotted to the first defendant also in compliance with the directions of the High Court. On account of some bonus shares issued and alienation effected by some of the defendants the share holding pattern has undergone a change and the share holding position as on date have been separately furnished by defendants 1 to 3 in Item No.13. The Wealth Tax Returns for the years 1983-84, 1984-85 and 1985-86 show that the shares held by the plaintiff and the tenth defendant in M/s. Sri Vasudeva Textiles Limited has no value whatsoever and the said Wealth Tax Returns has been accepted by the Wealth Tax Department.
16. Recently the plaintiff's elder brother, Sri S.R.Shanmuga Velayudham has entered into some sort of arrangements with the first defendant and therefore he is no longer interested in the suit and hence he has been transposed as tenth defendant, as per the orders passed in I.A.No.89 of 1993. Pending the suit, defendants 1 and 2 have effected certain alienations, which are shown as Item No.6 (a). The aforesaid alienations are hit by doctrine of lispendense.
17. On the aforesaid pleadings, the plaintiff sought for the following reliefs:-
(a) Declaring that the decree passed in O.S.No.37 of 1984 on the file of the Sub Court, Coimbatore, is sham and nominal, ultravires, collusive, unsustainable, invalid, unenforceable and not binding on the plaintiffs.
(b) Granting a decree for division of the entire schedule mentioned properties by dividing the suit properties into three equal shares and allotting one such share to the plaintiff.
(c) Directing the first defendant or such of those defendants who are found liable to furnish true and proper accounts to the plaintiff with regard to the income from the joint family properties and ascertain the amount payable to the plaintiff.
18. As the plaint underwent number of amendments, the defendants 1 to 3, besides filing a written statement, have also filed additional written statements, inter-alia contending as follows:-
The suit is false, frivolous, vexatious and unsustainable both in law and on the facts. The allegations in paragraph 3 of the plaint are not true and correct. Only till 1960, Late Rangasamy, the first defendant and the fourth defendant were members of a joint family. Even when they were members of a joint family and even during the life time of their father Kandaswami Gounder, the three brothers had begun to do business in partnership and had also acquired properties jointly. On 07.11.1960 the three brothers became divided from one another by a registered deed of partition in and by which they divided all their family properties, but they continued to do business in partnership as before. Thus from and after 1960 they were not members of the joint family, but only partners. All acquisitions subsequent to the date were acquired by them only as co-owners and not as members of a joint family.
19. The allegations in paragraph 4 to 4 (d) of the plaint are not wholly correct. The properties were purchased in the names of all the three brothers, but it is not correct to state that they lived jointly from the year 1964.
20. The allegations in paragraph 5 of the plaint are not correct. All the three brothers took an equal part in the conduct of the business. The allegation that on the death of Rangaswami all the properties, assets and businesses came into the hands of the first defendant is untrue. It is also not true to state that the heirs of the late Rangaswami left themselves and their properties under the control and protection of the first defendant and they obeyed the instructions of the first defendant without question or demur. The plaintiff's mother though not well educated is a capable lady and she was taken in as a partner in the business. It is incorrect to state that the Life Insurance amount was handed over to the first defendant, but the amount was credited in the name of the seventh defendant in the firm. The allegation that the said amount was mainly responsible for the growth and development of the business is not true and not correct.
21. The allegations in paragraph 6 of the plaint are not wholly true. Item No.10 of Schedule 'B' was purchased by the first defendant in an auction and the amount necessary for payment of the price was drawn by the first defendant from Swamy & Company and the amount was debited against him in the accounts of Swamy & Company. The building is not a palatial building. The first defendant has made additions and improvements after the purchase. The first defendant was contesting all legal proceedings for his own properties. The said property, being a separate property of the first defendant, nobodyelse has got any share.
22. The allegations in paragraph 7 of the plaint are denied. The fourth defendant was in management of the business in Somanur. It is false to suggest that the first plaintiff resigned from the Defence Services on the first defendant's advice. It was only at the instance of the seventh defendant, he resigned his job. Neither the plaintiff nor his mother or brothers were living under the domination of the first defendant. The first defendant never dominated them and they were not gullible youngsters obediently acting according to the directions or orders of the first defendant, but they were acting on their own without any directions or domination of the first defendant. The further allegations in paragraph 7 of the plaint that the first defendant used to take the signatures of the plaintiff in several documents, blank papers, etc., as pleaded in the plaint are totally false. The partnership firms were not constituted for tax concessions and benefits as contended by the plaintiff. The first defendant had at no point of time taken the signatures of the plaintiff in blank papers or documents or blank stamp papers. There was no joint assessment and the plaintiff's signature was never necessary for the assessment of the first defendant. The plaintiff's properties were not administered by the first defendant.
23. One M.C.Shroff has taken on lease Vasudeva Industries Limited, which was under liquidation from the Official Liquidator. He did not have enough funds to run the Mill and therefore, he approached the fourth defendant to become a partner to run the mill and to pay the lease amount. Permission of the High Court was sought for and obtained for inducting the fourth defendant and the tenth defendant as partners along with M.C.Shroff. The plaintiff was first admitted to the benefits of the partnership and after he become major, he elected to become a partner and was taken as a partner. The first defendant was not the partner. The partnership continued till the joint properties were divided and allotted as stated infra. It is false to state that all the properties and assets of the business were treated or enjoyed as joint family properties. The properties were enjoyed in co-ownership and tax assessment was also separate.
24. The allegations in paragraphs 8 and 9 of the plaint are incorrect and misleading. The fourth defendant, who was keen on taking the Textile Mill joined M.C.Shroff as a partner and the plaintiff who was studying in the Engineering College was anxious to acquire interest in the mill. There was no enormous cash and resources with the first defendant as alleged. The first defendant has nothing to do with the taking on lease of Vasudeva Industries Limited. It is false to state that worthless shares were acquired by syphoning family funds.
25. Further the shares of Vasudeva Industries Limited were not worthless shares. From the running of the mill as lessees, it was found that the mill could be revived and run profitably having regard to the extent and nature of Mill the machinery and extent of the land and buildings. The plaintiff and the tenth defendant were keen on acquiring the mill and the first defendant only assisted them. The shares were purchased at a cheap rate. The creditors were willing to show substantial concessions in respect of the debts due to them. Therefore the plaintiff, defendants 1, 4 and 10 acquired the shares of the company in their individual names. The debts were discharged except an amount of about 4 or 5 lakhs due to near relatives of the first defendant and the fourth defendant. These amounts were transferred to the accounts of Swamy & Company, on an application filed seeking permanent stay of the liquidation proceedings. The High Court directed meetings of the creditors and the share holders to be held for ascertaining their view and as they also unanimously agreed to the proposition put forward and on a consideration of the same, the High Court stayed the liquidation proceedings permanently and Official Liquidator was directed to hand over the Mills to the Directors elected by the share holders.
26. From 1973 the plaintiff was looking after the estate in Coonoor and he was residing there. The firm Swamy & Company who were lessee's of the Mill designated the first defendant as General Manager and gave him a Power of Attorney to manage the mill and accordingly he was staying at Coimbatore and managing Vasudeva Industries Limited. The fourth defendant was looking after the business and the lands in Somanur. When the first defendant was managing the mill he was running it efficiently and he was in management till 1981. After the plaintiff took his B.Tech degree he began looking after the mills. Some time later the plaintiff and the tenth defendant stated that they are not interested in agriculture and the plaintiff wanted to settle down in industry. Since several items of properties were held in co-ownership in various places and the parties were partners in several business the plaintiff and the tenth defendant felt that it would be more convenient if the co-ownership was put an end to by suitable changes in the ownership and properties in one place were given to one party for exclusive ownership and enjoyment. The matter was discussed and the properties and businesses were valued. The Mill, Vasudeva Industries Limited, was got valued by SITRA who valued the machinery at Rs.32 lakhs. The land of about 16 acres and buildings of about 30,000 square feet were also valued. The plaintiff and the tenth defendant wanted the textile mill exclusively for them. Therefore the agricultural lands in Veerakeralam and the estate in Coonoor were taken over by the first defendant. At that time there was a threat of acquisition of the Veerakeralam lands for housing purposes. There was no disparity in the value as alleged in the plaint. It was agreed that the first defendant should pay Rs.4 lakhs to the fourth defendant and that the plaintiff and the tenth defendant should pay Rs.7 lakhs to the fourth defendant to equalise the values. This arrangement which envisaged a final deed being executed pursuant to the terms mentioned therein was reduced to writing on 08.03.1981 embodying these terms and signed by all the parties. The original agreements are with the plaintiff and the defendants 4 and 10. The arrangement was also given effect to immediately. The tenth defendant who was looking after the estate in Coonoor till 1981 came to Coimbatore. He and the plaintiff took over the management of Vasudeva Industries Limited. The tenth defendant went to Coonoor and took over the estate and the fourth defendant took over the properties and businesses in Somanur. The allegation that the plaintiff and the tenth defendant were always treated and recognised as co-owners and that they are in joint possession of the properties is absolutely false.
27. The allegations in paragraphs 10, 11 and 12 of the plaint are all incorrect and misleading. In 1983 when the loan was taken from Punjab National Bank, the plaintiff and the tenth defendant were in management and therefore guaranteed payment of the loan. The allegation that they signed the documents at the directions of the first defendant is false. The first defendant had nothing to do with the Mills or its Management after 1981. There was no representations by the first defendant as alleged in paragraphs 12 and 13 and there was no need for any such representation. There was no representations or assurances of any sort by the first defendant as alleged in paragraph 14 of the plaint. The arrangement to put an end to the co-ownership had been arrived at even in 1981 and separate ownership had been agreed upon and hence there was no need for any representation or assurance as alleged.
28. There was some delay in the proper documentation giving effect to the change in ownership and also in the payment of the amounts due to the fourth defendant. The tax angle and the nature of the documents to be executed had to be considered. Whether capital gains tax was leviable had to be considered. All these took time. On account of this delay and when the matter was under consideration and the tax experts were being consulted the fourth defendant filed the suit O.S.No.37 of 1984 through his son as he wanted to effect a partition between him and his son also. After the suit, the first defendant got ready the amount payable by him, and paid the amount to the fourth defendant by two demand drafts dated 20.03.1984 and 19.04.1984 for Rs.2 lakhs each.
29. The plaintiff and the tenth defendant were not able to raise the amount. In order to avoid further delay and complication the plaintiff and the tenth defendant obtained a loan of Rs.7 lakhs viz., Rs.2 lakhs from the first defendant's daughter, Vasanthakumari, Rs.3 lakhs from the first defendant and Rs.2 lakhs from Chithra, daughter of the first defendant, to enable them to pay the same to the fourth defendant. These amounts were handed over to the plaintiff and the tenth defendant by demand draft on 31.07.1984 and plaintiff and the tenth defendant have executed promissory notes in their favour on 02.08.1984 for the respective amounts. The fourth defendant has received the amounts from the plaintiff and the tenth defendant.
30. There was no collusion and no need for any collusion. It is not correct to state that the plaintiff signed according to the first defendant's dictates. The suit was filed and the decree was passed in the aforesaid circumstances and not as alleged in paragraphs 13 and 14 of the plaint.
31. The allegations in the plaint in O.S.No.37 of 1984 were made by the plaintiff in that suit to suit his case. The defendant has denied his case by filing a written statement. The allegations that on 06.08.1984 the first defendant took the plaintiff and the tenth defendant to the Court, that their signatures were taken and that they were made to stand before the Presiding Officer and say that they were accepting the contents of the compromise and that the plaintiff and the tenth defendant obeyed and acted on the directions of the first defendant are all absolutely false. It is also false to state that they have not gone to any lawyer independently or gave instructions to represent them in the suit. As the entire terms had been already agreed upon, reduced to writing and acted upon there was no conflict among the parties and therefore lawyers whom all he parties knew were engaged. The plaintiff and the tenth defendant attended the lawyer's office and signed the compromise. The plaintiff and the tenth defendant came to court independently and were not taken to court by the first defendant. The allegation that the entire proceedings in O.S.No.37 of 1984 were collusive and was a make believe affair is false. It is false to state that it is an abuse of the process of Court and no fraud was played on the court as alleged in the plaint.
32. The compromise decree in O.S.No.37 of 1984 was perfectly valid. The compromise is in accordance with the arrangement or agreement already arrived at and acted upon by the parties. The allotment of properties is also fair and proper. The plaintiff and the tenth defendant got a controlling interest in a valuable textile mill and exercised control over it from 1981. They have accepted the decree and acted upon it. The plaintiff and the tenth defendant became Managing Directors of the company, raised the share capital, issued fresh shares and took various proceedings exercising full and absolute control over the Mills. It was only on account of their mismanagement they have incurred debts on behalf of the Mills. The plaintiff and the tenth defendant have started new units and obtained financial assistance for them showing the Mill properties as collateral security.
33. The allegation that the plaintiff and the tenth defendant only on the assurance of the first defendant that their legitimate share in the properties would never be denied to them acted according to the direction of this defendant is wholly false and no such assurance of any kind was given by the first defendant. It is false to state that inspite of the compromise all the properties, investments and assets continued to be in the hands of the first defendant. The fourth defendant has also acted upon the compromise. The fourth defendant has also sold an item of property allotted to him and has also obtained financial facilities showing the properties allotted to him as collateral security. The allegation that there is now a change in the attitude of the first defendant is false.
34. The reasons alleged in paragraphs 16 and 17 of the plaint for impeaching the validity of the compromise in O.S.No.37 of 1984 are all untrue, baseless and invalid. It is meaningless to suggest that useless share in a defunct company were allotted to the plaintiff and the defendants 7 and 10. It is not correct to state that the compromise is inequitable, unfair and unenforceable. The plaintiff, who wanted the assets to be allotted to them, got it allotted, accepted the allotment and acted upon it, and hence he cannot now contend that the compromise is unfair. The plaintiff is estopped from questioning the compromise. The further allegation that the properties alienated are joint family properties is also false. The plaintiff is not entitled to dispute the alienations. They have no right, title, or interest in the alienated properties. The plaintiff and the tenth defendant are not entitled to accounting and the first defendant is not bound to render any accounts in respect of either alienation or any other transaction.
35. The plaintiff is not entitled to any partition of the suit properties as the same are not liable to be divided. The plaintiff is not entitled to any share in the suit properties and the share claimed is incorrect. The plaintiff is not entitled to any declaration as claimed in paragraph 18 of the plaint. The decree is not collusive, invalid, unsustainable or unenforceable. The decree is binding on the the plaintiff and the tenth defendant. The relief of declaration without seeking to set-aside the decree to which they are parties is not maintainable. The plaintiff and the tenth defendant, who are not immature or illiterates persons and who are adults and well educated compared to the first defendant, and who were living separately had been independently looking after the properties. The first defendant had never dictated or directed the plaintiff to carry out his directions. The very fact for three years after the decree they did not choose to question it but accepted it, shows their malafide ulterior motive. The plaintiff seeks to question the decree after a lapse of three long years only because they have sustained loss due to their mismanagement and they also became emboldened as the first defendant and his daughters did not take any proceedings to recover the amounts due to them on the promissory notes stated supra, not because the partition or the compromise decree is unfair or inequitable. It is significant to note that the plaintiff has not offered for division of the shares held by the plaintiff and the tenth defendant in Vasudeva Industries Limited, thereby making it clear that they are retaining the property allotted to them. The description of the property and their valuation are not correct.
36. Since the plaintiff and defendants 4 and 10 have accepted that Item No.10 of Schedule 'B' belongs to the first defendant and they were not purchased with joint family funds, the same is not available for partition. Item No.9 of Schedule 'B' belongs to the second defendant separately as she has purchased them under the sale deeds, dated 10.06.1976, 10.06.1976 and 12.12.1975. The second defendant agreed to have them allotted to fourth defendant because other properties were allotted to her in the compromise. The suit is not properly framed or valued and proper court fee has not been paid. The plaintiff and the tenth defendant must seek to set-aside the compromise decree and pay court fee on the market value of the properties comprised in the decree. The suit is an abuse of process of Court.
37. An additional written statement, dated 12.02.1990, was filed by the first defendant and the same has been adopted by the defendants 2 and 3. In this additional written statement, it is contended by them as follows:-
Item No.11 of Schedule 'B' was purchased by M/s. Swamy & Swamy Plantations Private Limited long after the compromise decree in O.S.No.37 of 1984. The plaintiff and the tenth defendant have nothing to do with M/s. Swamy & Swamy Plantations Private Limited or to the properties belonging to it. The person who has right over Item No.11 of Schedule 'B' is not brought on record and as such the plaintiff and the tenth defendant cannot claim any right over the said property. The plaintiff and the tenth defendant have also severed their connection with M/s. Swamy & Swamy Plantations Private Limited.
38. The third defendant filed an additional written statement, dated 03.09.1990, which has been adopted by defendants 1 and 2. In this additional written statement, it is contended as follows:-
The plaintiff and the tenth defendant are bound by the decree in O.S.No.37 of 1984. The partition of the year 1960 brought about the disruption of the joint family status between the defendants 1, 4 and the father of the plaintiff and the tenth defendant, late K.Rangaswamy. Their subsequent association could not be in the capacity of members of joint family. As the partition of the year 1960 had been acted upon by all the three brothers, the plaintiff and the tenth defendant cannot challenge the partition of the year 1960. The compromise decree in O.S.No.37 of 1984 cannot be challenged by way of a separate suit and if at all challenged, it could be challenged only in the very same proceedings and hence the suit is not maintainable.
39. It is not correct to state that the compromise decree was not fair and proper. The plaintiff and the tenth defendant were effectively running the Mill from March 1981, after M/s.Vasudeva Industries was taken over from the Liquidator. Later it was changed as M/s. Vasudeva Textiles Limited. The plaintiff and the tenth defendant were the Managing Directors of the Company. As Managing Directors, they had control and management of the company's affairs and they had substantial powers to deal with the company and its properties. The share holding interest of the plaintiff and the tenth defendant far exceeded 2/3rd of the total subscribed share holding interest and these factors were considered in valuing all the properties acquired. It will also be clear from the fact that the plaintiff and the tenth defendant agreed to give Rs.7 lakhs to the fourth defendant to equalise the shares, that, what was allotted to them was not less than what they were entitled to. It was only at their existence the Textile Company was allotted to them. It is not correct to state that the shares allotted to them were worthless. It was learnt by these defendants that the plaintiff and the tenth defendant with their family group have parted with their substantial share holding and the control and management of the company in 1988-89 for enormous amount of Rs.2 crores. As on date, the properties and machineries of the company are worth more than Rs.2 crores. There is no liability to be discharged to Punjab National Bank.
40. If the compromise decree is to be set-aside, it is necessary that the shares allotted to the plaintiff and the tenth defendant and the subsequently acquired shares in their names, their family members and their close relatives and along with the attached rights of control and management of the Mills and its properties should be made available for being divided. Having divested themselves of their rights to the above properties, it is not open to them to attack the decree in O.S.No.37 of 1984. After the decree, the defendants 1 to 4 have dealt with their properties allotted to them and have secured huge amounts by mortgaging the properties and giving personal guarantees and have also sold some of the properties allotted to them. The position of the parties at the time of the compromise viz-a-viz the properties allotted to them, has become, irreversible and therefore the plaintiff and the tenth defendant cannot sustain the claim. The plaintiff and the tenth defendant are estopped from questioning the compromise decree by contending that the decree is sham and nominal. The suit is barred in view of the provisions of the Benami Transactions (Prohibition) Act, 1988. The plaintiff cannot retain the benefits obtained under the decree and at the same time cannot question the decree.
41. Another additional written statement, dated 07.08.1991, was filed by the first defendant, which has been adopted by the defendants 2 and 3 and in this additional written statement it is contended that the ninth defendant is the maternal uncle of the plaintiff and the tenth defendant, being the brother of the seventh defendant. He does not have any interest in any of the suit properties and hence he is neither a necessary party nor a proper property.
42. Another additional written statement, dated 17.09.1993, has been filed by the first defendant, which has been adopted by the defendants 2 and 3 in which the following contentions are put forth:-
The allegations in the amended plaint and also in the written statement filed by the seventh defendant are incorrect and are denied by these defendants. S.R.Shanmugavelayutham, the first plaintiff, who has been transposed as tenth defendant has stated reasons in the Memo for not pressing his claim in the suit and therefore the allegations that S.R.Shanmugavelayutham has entered into some sort of arrangement with these defendants is false. The allegation that the defendants 2 to 5 who were not sharers have been allotted substantial properties, etc., are unsustainable.
43. The allegation in paragraph 19(a) regarding alienations and misleading are untenable. There is no schedule 6(a) or 6(e) in the copy of the plaint served on these defendants. Only a small portion of the property in Coonoor village was sold, which absolutely belonged to the first defendant. The Tatabad house belongs to the first defendant, having been purchased by him in the Court auction sale.
44. The present suit was filed on 03.08.1987 for declaration that the compromise decree in O.S.No.37 of 1984 is invalid. On the eve of expiry of limitation, the seventh defendant appeared through counsel and the vakalat was filed on 16.02.1998 in the suit. In the connected proceedings also, the seventh defendant had appeared through counsel. The seventh defendant was taking time for filing written statement till 20.10.1989 when she was set exparte. The seventh defendant has not taken any exception to the claim of 1/3rd share of the plaintiff. The seventh defendant is a party to the compromise decree and she had not taken any steps to set aside the compromise decree. Almost nine years after the compromise decree she has filed the written statement challenging the compromise decree and hence her claim is hopelessly barred by time. Therefore she is not entitled to claim any relief without seeking to set-aside the compromise decree. The seventh defendant has been set up by the plaintiff to drag on the proceedings. The contentions put forth in the written statement of the first defendant regarding the 1960 partition has been reiterated in this additional written statement. It is contended that after 1960 partition, there was no joint family and there was no joint family property. They never lived as joint family. The partnership businesses were not that of the joint family.
45. The allegation that Lakshmi Rice Mill was started with joint family funds, that it was converted in 1976 into Swami Textiles, that there was enormous income from match factory, slate factory, saw mill, timber business and power looms, that M/s. K.Rangasamy and Brothers was 'staged' for availing tax concessions, is denied. The joint family nucleus and funds were not used for the construction of the Bungalow at Somanur. The LIC policy amount of Rs.1,03,000/- was not handed over by the seventh defendant to the first defendant and the same was not invested for starting other businesses as contended by the seventh defendant.
46. Any business carried on or property purchased by the three brothers after 1960 partition were done in their individual capacity or in partnership among themselves or with others. Such businesses were not done by the brothers as joint family members. The valuation of the properties and the business is highly exaggerated and the claim of the seventh defendant are devoid of merits. The seventh defendant has not even referred to the value of M/s. Vasudeva Textiles as on date. As on date, the textiles mills is worth more than Rs.10 crores.
47. The valuation of the joint family properties by the seventh defendant and the net income claimed by the seventh defendant are all false. The first defendant was not in control of the properties and income there from. It is not correct to state that the seventh defendant and the tenth defendant implicitly obeyed and acted to the directions of the first defendant. There was no joint family, joint family properties, joint family business, joint family funds or joint family income as alleged by the seventh defendant. The allegation that the seventh defendant never gave up her rights or share that she is entitled to 1/12th share, that she is a sharer in joint possession and that her rights or shares were never denied at any time are all misleading and are incorrect and untenable.
48. The allegation that in 1987 since seventh defendant demanded partition and on that the first defendant was hurt, that the seventh defendant was reluctant to antagonise the first defendant are all false. The allegation that the plaintiff had settled his claim receiving whatever paid by the first defendant is incorrect. The allegations concerning the suit in O.S.No.37 of 1984 and the compromise decree therein are all distorted and are false. In that suit, the seventh defendant was properly represented by a counsel engaged by her and her sons, who has also filed a special vakalat to admit the compromise. The compromise itself was the result of an arrangement that came into being in 1981.
49. The textile mill consisted of 16 acres of land on Mettupalayam Main Road, building of an area of 30,000 sq.ft. and valuable machineries. The seventh defendant sons were exclusively managing the mills and they have acquired more than 90% of shares. They started new concerns by name Nithya Doublers and Anitha Doublers in the mills premises and offered the properties of the mills as security to the Bankers and Financial Institutions, exercising the right as Managing Director of the Mills. They have also started another unit M/s. Somanur Textiles (P) Ltd., out of the mills. The seventh defendant has totally suppressed the aforesaid facts. She has also suppressed the fact that her sons and her family members have sold their controlling share holding interest in M/s.Vasudeva Textiles allotted to them in the compromise decree for about 2= crores and have parted with the control and management of the mills to third parties. As on date the mills and its properties are worth more than Rs.10 crores.
50. The allegation that the seventh defendant was not a party to any compromise talk, that there was no negotiations, that she has not met any advocate, nor gave vakalat or instructions to represent her in compromise proceedings in court, that she had not signed any special vakalat etc., are all false. The reasons stated by her as to why the compromise decree is not binding her are all false. The further allegation that the compromise decree was sham and nominal, secured on a misrepresentation, that it is not acted upon, that it was not even read out, discussed with nor accepted in the family or before the Court are all false. The allegation that the shares allotted to her are worthless and the shares were not transferred to her are all false. The allegation that except signing the papers she did go to any lawyer or court nor engaged nor instructed any lawyer to act on her behalf are all false, misleading and are denied by the first defendant.
51. The allegation regarding the properties allotted to the second defendant are all misleading. The second defendant was impleaded as the defendant in O.S.No.37 of 1984 and some of her properties were included in the suit and only because of that the second defendant came to be allotted to different property instead of the property held by her. The allotment of properties made to the second defendant under the compromise decree is fair and valid. The allegation that the entire proceedings in O.S.No.37 of 1984 is not binding on her and that she is entitled to ignore the same are all incorrect and untenable. A payment of Rs.100/- as court fee by the seventh defendant 37(3) of the Court Fee Act is untenable. Her claim is barred by limitation. Further, without seeking to set-aside the compromise decree, she is not entitled to claim any share in the properties.
52. Yet another additional written statement, dated 07.10.1996 has been filed by the first defendant, which contains the following contentions:-
The plaintiff has no right to challenge the compromise decree and make a claim for partition. Pursuant to the compromise decree, the controlling shares of the 22nd defendant company were allotted to the plaintiff's branch. The plaintiff and the tenth defendant became the Managing Directors of the Company and were in control and management of the textile unit.
53. The annual return of the 22nd defendant company filed on 19.04.1983 shows that the total paid up share capital was 81,675 shares at the face value of Rs.10/- per share. O.S.No.37 of 1984 was filed on 19.01.1984 and the compromise decree is dated 06.08.1984 which shows that under G, H and J Schedules, the plaintiff's branch were allotted totally 81,084 shares in the 22nd defendant company, representing more than 95% of the total paid up shares of the company. As far as the shares held by the first defendant prior to the decree are concerned, he gave necessary transfer forms to the plaintiff and the tenth defendant for effecting transfer in their favour. The annual return of the 22nd defendant company filed on 27.07.1984 shows that the total paid up share capital is 1,56,775 shares at the face value of Rs.10/- per share. The company had only four Directors viz., the plaintiff, defendants, 1, 4 and 10, who held 1,41,436 shares which was 90.21% of the total paid up equity share capital. The annual return of the 22nd defendant company filed on 17.07.1985 shows that the total paid up share capital of the company was raised to 3,10,000. The plaintiff and his brother, tenth defendant, were shown as the Managing Directors of the Company. The Directors and their relatives share holding was 2,78,820 which is more than 90% of the total paid up equity share capital. The annual return also shows the number of shares held by the plaintiff and his branch and the details of which have been set out in the additional written statement. The annual return of the 22nd defendant company filed on 29.08.1986 shows that the Directors and their relatives share holding was 2,78,820 which is more than 90%. The suit in O.S.No.1101 of 1987 was filed on 03.08.1987 and on that date, the plaintiff's branch was having the control and management of the 22nd defendant company and the textile unit by having more than 90% of the total paid up equity share capital of the company. After the suit, the said 90% controlling shares in the company have been admittedly alienated by the plaintiff's branch after the suit. None of the above named persons now hold shares as stated above. The first defendant ceased to hold any share in the company. The controlling shares now stand in the name of the purchasers from the plaintiff's branch.
54. The 81,084 shares allotted under the compromise decree constitutes at that time more than 95% of the issued, subscribed and paid up capital of Sri Vasudeva Textiles Limited. Thus under the compromise decree, the shares allotted to them carried with it the controlling interest and right to the management of the undertaking of the said company. In effect and substance it was the undertaking itself comprising of the mills with all its assets that were allotted through the modality of allotting the controlling shares. What was allotted was not therefore bare shares as mere investment in the share capital of Sri Vasudeva Textiles Limited. The compromise decree cannot be questioned unless the plaintiff can restore the status quo ante by bringing in all the shares as also the controlling interest which the shares carried for division. The first defendant never took part in the business of the 22nd defendant company in any manner. He did not attend any Board Meeting or General Body Meeting of the said company, nor had any right or share in the said company, after his shares were allotted to the plaintiff's branch.
55. In the order passed in I.A.No.135 of 1996, the Court ordered that all shares and properties should be included, but the plaintiff has not included the immovable and movable properties belonging to the 22nd defendant company. Therefore, the amendment is not complete. The description of the immovable and movable properties belonging to the company are furnished as Schedule in the additional written statement.
56. The allegations in paragraphs 18-B and 18-C of the amended plaint are denied. The plaintiff cannot approbate or reprobate. If any documents are available there to show that the first defendant was dealing with the shares, the same could have been created only by the plaintiff and his partisans with a view to buttress his claim and the plaintiff is colluding with the alienees and is attempting to create documents. The allegations in paragraph 18-D of the amended plaint are not admitted. While the plaintiff added shares in Item Nos.12 and 13, the same has not been properly valued. The prevailing value of the shares of the company is Rs.80/- per share and the same has not been properly valued and proper court fee has not been paid.
57. Having sold the properties allotted to his branch, the plaintiff is prosecuting a false, frivolous and vexatious suit to harass this defendant and during the pendency of the suit, the controlling shares have been transferred by him. Therefore the suit is liable to the dismissed.
58. The sixth defendant has filed the written statement, dated 21.08.1997, contending as follows:-
The suit is false, frivolous, vexatious and unsustainable both on law and on facts of the case. This defendant does not admit any of the allegation made in the plaint except those which are specifically admitting by him. This defendant pays a court fee of Rs.100/- for dividing his 1/6th share in the suit properties. The decree obtained in O.S.No.37 of 1984 is sham and nominal, besides being collusive and unenforceable. This defendant was the plaintiff in the said suit and the same was filed at the instance of the first defendant. The first defendant suggested that such a decree would safeguard the interest of all the members of the family in view of the risk factor involved in the new business venture which has been taken up by the family. Sri Vasudeva Textiles Limited was managed by the first defendant only as a Manager and head of the family. All the members of the family carried out the instructions of the first defendant only. No proper share was allotted to the plaintiff, tenth defendant or the seventh defendant under the compromise decree. As the said decree was never intended to be acted upon and as a matter of fact it has not been acted upon. The shares allotted to the plaintiff, tenth defendant or the seventh defendant were not transferred to them. The house property at Somanur still stands in the name of all the three brothers.
59. The seventh defendant has filed a written statement in April 1993 inter-alia contending as follows:-
Rangasamy Gounder, Kumarasamy Gounder and Chinnasamy Gounder are the sons of late.Kandasamy Gounder and they constituted a Hindu Joint family. They had an ancestral house at Sedapalayam and ancestral lands in Poomalur and Samalapuram Villages and they were living jointly and carried on business jointly. The income was enormous and several properties were acquired jointly. The source for all the businesses were only from the joint family properties and the income therefrom. As far as the starting of running of various business, the seventh defendant has reiterated the contentions put forth by the plaintiff. The sixth defendant received a sum of Rs.1,03,000/- from the LIC on the death of her husband and the entire amount was handed over to Kumarasamy Gounder and Chinnasamy Gounder who represented that they are investing the same to improve the business.
60. With the Insurance amount, a sizing unit in Ramanathapuram was purchased in the year 1968 and the machineries were brought to Somanur and installed the same, constructed a new factory building and the business was named as 'Ranga Vilas Warping and Sizing Factory'. The business is yielding enormous income. The entire income and investments were in the hands of the first defendant, who was acting for and on behalf of the joint family.
61. The same allegations and averments contained in the plaint regarding the acquisition of various properties at various places is reiterated in the written statement. She is entitled to 1/12th share in the joint family properties and she is sharer in joint possession and her right or share were never denied at any time.
62. In 1987, the sons of this defendant wanted to have a partition and the first defendant was hurt at the demand and took a different stand which defendant was reluctant to antagonise the first defendant and she waned her sons to go slow and have an amicable settlement. The sons have filed the above suit for partition. The first defendant is not willing or ready to settle the claim of the heirs of Rangasamy Gounder collectively. The plaintiff had settled the claim whatever paid by the first defendant. The other son is prosecuting his claim in receiving whatever paid by the first defendant. The other son is prosecuting his claim in the above suit. The right of sixth defendant is independent and she never gave up the same. The alleged compromised decree in any way affect her right, as she was not a party to any compromise talks. She has not met any advocate nor gave valakat or instructions to represent her in any compromise proceedings in Court. This defendant was not present nor admitted any compromise in Court and she has not signed any special vakalat and no counsel also filed any such vakalat. This defendant is not a party to the proceedings on 06.08.1994 and she is not bound by the alleged compromise decree and hence she ignores the entire compromise proceedings and the decree. The entire compromise proceedings were collusive and a mere make believe affair. The entire compromise proceedings have been stage managed by the first defendant. It transpires that the suit was filed to keep the properties, off the names of the plaintiff on record, who were to give guarantee to bank for the loans availed for the sick mills. It is now sought to be used to deprive the legitimate share of one branch and it is a fraud on the heirs of late.Rangasamy Gounder. The compromise decree was sham and nominal one secured on a misrepresentation and it was only a matter of record for a particular purpose. The decree was not acted upon nor binding on this defendant. Even the 200 shares allotted under the compromise decree to this defendant is worthless shares and the same have also not been transferred to her. The signature of this defendant were used to be taken as a matter of course representing that they are for tax or business purposes. This defendant was never appraised of any facts and the first defendant's wife as usual came and took her signature in English written papers stating that it was for bank purposes. This defendant does not know to read English nor the contents were read and explained to her. She did not go to any lawyer or court nor engaged or instructed any lawyer to act on her behalf.
63. The second defendant had been allotted the valuable High Field Estate consisting of 20.78 acres of plantation with a bungalow in Coonoor. She was also given 1050 shares in Swamy and Swamy Plantations. A posh modern bungalow which is easily worth about Rs.20 lakhs has not been disclosed in the compromise proceedings or decree. The value of the properties allotted to the second defendant will be more than Rs.4 crores, though she had no legal right at all to secure so much properties in the collusive decree. Similarly, the fifth defendant, who is the wife of the fourth defendant, has been allotted with vast properties to which she has no legal right. The second and fifth defendants have no right to seek partition to the joint family properties and therefore the allotment in their favour is void.
64. This defendant who is entitled to 1/12th share as a matter of right has been allotted with only 200 worthless shares of a defunct company. There is not even a provision for maintenance. The alleged compromise and decree and the allotment of properties are wholly irregular, illegal, fraudulent and not at all binding on this defendant. This defendant pays a fixed court fee of Rs.100/- under Section 37 (3) of the Tamil Nadu Court Fees Act and prays that all the properties and assets and business set out in the written statement be ordered to be divided into twelve equal shares by metes and bounds and allot and deliver one such share to this defendant.
65. The ninth defendant has filed a written statement on 09.08.1991 inter-alia contending as follows:-
The ninth defendant herein was the twelfth defendant in the earlier suit O.S.No.37 of 1984. In that suit he was added as a alienee of certain items of properties. When this defendant enquired the first defendant, as to why he has been impleaded as a party in the suit, the first defendant assured him that the suit itself was for some taxation purposes and the real contention between the parties was not to be decided in the suit. Hence this defendant left the matter at that sage, there being not need to contest. Now it appears that one of the parties to the above alleged compromise is trying to thrust the compromise decree on all the other parties, denying the legitimate shares and rights. This defendant was a partner in High Field Tea Factory and he is entitled to 1/3rd share in the same and that right will have to be worked out in the suit for general partition. The earlier decree is only a 'make belief' decree and if the decree is set-aside, this defendant's 1/3rd right in the said Tea Factory may be declared, determined and allotted to him.
66. The tenth defendant filed a written statement on 08.10.1996 inter-alia contending as follows:-
The suit is not maintainable both in law and on facts of the case. In the partition, dated 23.09.1953 between Kandasamy, Sennimalai Gounder, Rangasamy, Kumaraswamy and Chinnaswamy, the sons through the second wife, viz., three brothers, (Rangasamy, Kumarasamy and Chinnasamy) were jointly allotted certain agricultural dry lands. The said Kandasamy Gounder died in January 1960. Under a Registered Partition, dated 07.11.1960, the three brothers, viz., Rangasamy, Kumarasamy and Chinnasamy divided their joint properties, and thereafter there was no joint family between them. Under the said partition three items of properties were kept in common in co-ownership, each brother being entitled to 1/3rd share. The other properties were allotted exclusively to each brother.
67. The three brothers though had been living separately, did partnership business and also individual business. Rangasamy died on 26.05.1967 and at that time, this defendant was in Indian Army. In the partnership business, his step mother, Smt. Janakiammal was inducted as a partner after the demise of the father. When this defendant got discharged from Indian Army in 1972, he was also inducted as a partner. Subsequently the properties in Coonoor were purchased in the names of D1, D4, D10 and the plaintiff by separate sale deeds and the properties in Veerakeralam village were purchased in the joint names of the said persons. The controlling shares in M/s.Vasudeva Textiles were acquired in the names of the said persons and also in the names of female members in the respective families. In 1978-79, the plaintiff completed his Engineering Course B.Tech., in Textile Technology and naturally he was associated in the running of the textile mills. This defendant had reiterated the contentions of the first defendant that there was an arrangement dated 08.03.1981 between the parties and contends that the copy of the arrangement is with the plaintiff.
68. It is contended by the tenth defendant that till 1981, there was no registered document executed between the parties and the amount of Rs.11 lakhs was not paid to the fourth defendant and hence he became restless, because he had to receive Rs.11 lakhs money from other parties. In such circumstances, his son, the sixth defendant, filed a suit in O.S.No.37 of 1984 claiming that there was re-union between the three branches after the registered partition, dated 07.11.1960, that all the properties standing in the names of the male members and female members in the three branches were joint family properties and that he was in joint possession of the suit properties. The defendants 1 to 3 herein filed a written statement contesting the suit stating that there was no re-union after 07.11.1960 partition. Few months after the filing of the suit, at the instance of mediators and well wishers, the suit was compromised and parties were allotted properties in accordance with the earlier arrangement and decree was passed in terms of compromise. This defendant and the plaintiff who had to pay Rs.7 lakhs to the fourth defendant, borrowed money and paid to him before the compromise decree. Similarly, the first defendant also paid Rs.4 lakhs to the fourth defendant.
69. All the parties to the suit in O.S.No.37 of 1984 before the Sub Court, Coimbatore, have signed the compromise petition with full consent and were quite aware of the contents of the same. This defendant, his brother, the plaintiff, their mother, Smt.Janakiammal, the seventh defendant and their sister, Smt. Saraswathi, eighth defendant and as well as their counsel Sri.P.R.Thirumalnesan, Advocate, Coimbatore, have signed the compromise petition. This defendant, his brother-plaintiff, their paternal uncles-D1 and D-4 and the plaintiff in the suit appeared in Court, accepted and admitted the terms of compromise petition and prayed for decree in terms of compromise petition. The female members, including D7, who was represented by their respective counsel on special vakalat, admitted and accepted the compromise and requested the court to pass decree in terms of the compromise petition signed by them. The parties were also put in possession of the properties allotted to them and they have been dealing with the same. This defendant's branch was allotted the controlling shares in the Textile Mills and the entire controlling interest of the mills was vested with them. The shares allotted to this defendant's branch along with transfer deeds signed by the parties were handed over to this defendant's branch. After the decree since this defendant and the plaintiff were in complete control and management of the mills without any objection from anybody, they did not deem it necessary to have the shares in the names of defendants 1, 4 and 5 to have transferred to their names immediately. They were holding more than 90% shares and as such, they were in exclusive management of the company and its properties. The share capital of the company was raised and the plaintiff's branch was holding majority of controlling shares. The mill properties consists of 16 acres of land at Mettupalayam Road, Coimbatore, 30,000 sq.ft. building and valuable textile spinning machineries. This defendant and the plaintiff also started new business in partnership consisting of their respective family members within the mill premises. During the course of their management, they have borrowed loans for running the mills and also gave the mills properties as collateral security for loans obtained for starting new business.
70. About two years after the compromise decree there was slump in the textile industry and due to labour problems, the textile mills could not be profitably run. A portion of the mills property was occupied by a thirty party / tenant and legal proceedings were initiated for evicting the tenant, which went up to Supreme Court. As the Managing Directors of the Textile Mills, they engaged the lawyer. At this stage, the plaintiff and the this defendant, expressed that they suffered loss in running of the mills got under the compromise decree and they were advised to resort to legal proceedings to get over the decree. That was how the two suits i.e., these proceedings and O.S.No.827 of 1987 came to be filed. To get over the effect of compromise decree, the real and intrinsic value of the controlling shares were not taken into account.
71. During the pendency of the suits, after receiving valuable consideration, this defendant, the plaintiff, the seventh defendant and their other family members transferred the controlling share holding interest of the textile mills in favour of third parties. This defendant and the plaintiff have acquired new properties by investing the sale proceeds of the textile mills. The plaintiff is even now having Somanur Textiles at Annur, which was started after the sale of the 22nd defendant mill. This defendant and the plaintiff ceased to be Managing Directors and ceased to have any interest in the properties of the mills. Now the defendants 11 to 20 and 23 to 26 are in management of the textile mills and its properties by virtue of transfer of controlling shares in their favour. As the compromise decree has been acted upon by this defendant, the plaintiff and the seventh defendant and their family members and the properties allotted to them have been transferred, this defendant was advised that he cannot successfully maintain the suit and hence he did not press his claim.
72. The first defendant is in the position of grandfather for the children of this defendant and because of the litigations, the grand children were not presented with any gifts by the first defendant and therefore, the first defendant gave Rs.2.50 lakhs by fixed deposits receipts to each of this defendant's children for their education and marriage expenses. The plaintiff's allegation that this defendant has entered into some sought of arrangement with the first defendant is false and is denied. The plaintiff's allegations are without any basis and untrue.
73. The eleventh defendant filed a written statement and the same has been adopted by defendants 12 to 20 and 22 to 26 inter-alia contending as follows:-
The suit is frivolous, vexatious and unsustainable in law. The contentions and allegations in the plaint are not admitted. These defendants are neither necessary nor proper parties to the suit and they have been unnecessarily dragged to Court. These defendants are not concerned with the interse disputes between the plaintiff and the first defendant. The shares of M/s.Sri Vasudeva Textiles Limited were standing in the names of defendants 1, 4, 10, the plaintiff and 89 other persons. The plaintiff, D1 and D10 were the Directors and the company was run under the control and guidance of the first defendant. The company was under heavy loss and had ceased to function since 1987. As on 31.03.1989, the company had an accumulated loss of Rs.41,64,215/- and a liability of Rs.27,84,504/-, as against the assets of Rs.16,97,944/-. It was at this juncture these defendants came forward to purchase the said shares. After negotiating with the first defendant, they purchased 2,13,875 shares in Sri Vasudeva Textiles from third parties. The purchases were made only through the first defendant. The first defendant delivered the singed transfer forms and the original share certificate to these defendants. Thus they became the majority share holders and the control and management of the company vested with them. At that time, these defendants did not acquire any share standing in the name of either the plaintiff or defendants 1 to 10.
74. These defendants then invested substantial amount of money and revived the mill. From 1993 the mill is running on a profit. In 1994 these defendants contacted the plaintiff to produce his shares, but he declined to part with his shares. The first defendant agreed to sell 53,070 shares provided a letter in the format given by him were duly signed and delivered by these defendants. Being not aware of the interse dispute between the plaintiff and the first defendant, such a letter was given.
75. Subsequently when the plaintiff wrote to these defendants expressing his shock over the letter, dated 19.09.1994, executed by this defendant, this defendant then clarified the position setting out the facts, vide his fax, dated 13.09.1995 sent to the plaintiff. The letter, dated 19.09.1994, was not voluntarily written by this defendant, but the same was executed as per the format given by the first defendant. The increase in shares in 1992, 1993, 1994 has nothing to do with the earlier holding of the share holders. The claim that the shares also form part of the joint family holding of the first defendant and his family members is untenable. The acquisitions made by these defendants in the textile mills cannot be questioned or disputed either by the plaintiff or by the first defendant or any of the other defendants. Without prejudice to the above contentions, in the event of this Court passing any decree affecting the acquisition of shares and the rights of these defendants in M/s. Vasudeva Textiles Limited, the purchases and acquisitions made by these defendants may be confined under principle of equity.
76. The plaintiff filed a reply statement, dated 19.09.1990, interalia contending as follows:-
The plaintiff denied the averments made in the written statement and in the additional written statements. It is not correct to state that the compromise decree is binding on the plaintiff and the tenth defendant. It is not correct to state that the partition of the year 1960 was brought about by disruption of the joint family status. It is not correct to state that the subsequent association was not in the capacity as members of the joint family. It is not correct to state that the partition has been acted upon and that each brother dealt with the properties allotted to him without reference to the other brothers and the alleged 1960 partition was a final one. It is not correct to state that the compromise decree must be challenged in the same proceedings.
77. The allegations made in paragraph 5 of the additional written statement are untrue and untenable. It is false to state that the plaintiff and the tenth defendant acquired unfettered rights over the company before passing of the decree and that the share holding interest of the plaintiff and the tenth defendant exceeded 2/3rd of the total subscribed share holding interest. It is equally false to state that the plaintiff and the tenth defendant agreed to give Rs.7 lakhs to the fourth defendant to equalise the share and that the intention was to give absolute control to the plaintiff and the tenth defendant over the company.
78. The allegations made in paragraph 6 of the additional written statement are false. The plaintiff and the tenth defendant have not parted substantial share holdings for an enormous amount of Rs.2 crores. It is incorrect to state that the defendants 1 to 4 have acquired irreversible title and the plea of estoppel is also false. The provisions of Benami Transaction (Prohibition) Act are not applicable to the facts of this case. The shares are still in the names of the plaintiff and the tenth defendant in the books of the company. The Mill was closed on 27.04.1987 due to paucity of funds and D1 was refusing to cooperate and the Government was planning to take over the mill in the year 1989. The plaintiff and the tenth defendant attempted to open the mills between April and August 1989 but could not succeed. In the meantime, a family at Annur holding majority of shares took over the management of the company and it was beyond the control of the plaintiff and the tenth defendant and they have no monetary benefits. The first defendant has converted about 15 acres out of 200 acres, which came into control by the fraudulent decree and obtained more than Rs.1.5 crores. The first defendant is attempting to syphon off the assets of the family by making use of the sham and nominal decree. The first defendant is fully aware of the circumstances which prevailed in 1960 due to the land ceiling law and as to why certain transactions were brought out. The transactions are tainted by undue influence and misrepresentation made by the defendants. The plaintiff in O.S.No.37 of 1984 was a student in Vivekananda College and he came over to Coimbatore as directed by the first defendant without even consulting his father.
79. On the aforesaid pleadings, the following issues were framed by the trial court:-
(i)Whether the plaintiff is entitled for a declaration declaring the decree passed in O.S.No.37 of 1984 on the file of the Sub Court, Coimbatore, as fraudulent, invalid, unenforceable and not binding on the plaintiff?
(ii)Whether the plaintiff is entitled to 1/3rd share in the suit properties?
(iii)Whether the plaintiff is entitled to the relief that the defendants should submit accounts?
(iv)Whether the relief sought for in the suit has been properly valued and proper court fee has been paid?
(v)To what relief the plaintiff is entitled to?
The following additional issues were framed:-
(i)Whether the suit for partition is maintainable without including the shares of M/s.Sri Vasudeva Mills, allotted to the plaintiff's father and uncle?
(ii)Whether the suit is barred by the provisions of the Benami Transactions (Prohibition) Act, 1988?
On 11.10.1993, the following additional issues have been framed:-
(iii)Whether the plaintiff and the defendants 1 to 4 are the members of the Hindu Joint Family?
(iv)Whether the relief of partition sought for by the seventh defendant is barred by limitation?
(v)Whether the seventh defendant has filed proper court fee?
(vi)Whether the suit is not maintainable in view of Order 23 Rule 3 (A) of the Code of Civil Procedure?
80. During trial, on the side of the plaintiff, five witnesses have been examined and Exs.A-1 to A-55 have been marked. On the side of the defendants, four witnesses have been examined and Exs.B-1 to B-104 have been marked. Exs.X-1 to X-27 have been marked through the witnesses. Exs.C-1 to C-4 have been marked as Court documents. On a consideration of the oral and documentary evidence adduced before it, the Trial court dismissed the suit and being aggrieved by that, the plaintiff in the suit, namely, S.R.Somasundaram, has filed A.S.No.332 of 1999 and the seventh defendant, namely, R.Janakiammal, has filed A.S.No.281 of 2000.
81 Pending the said appeals, (i) CMP No.13167 of 2004 has been filed by the appellant in A.S.No.332 of 1999 to receive the order in Tho.Mu.Na.B5/110/2001, dated 02.08.2001, issued by the Deputy Tahsildar, Coonoor, as additional evidence in the appeal and mark the same as Ex.A-56; (ii) CMP No.12013 of 2004 has been filed by the appellant in A.S.No.332 of 1999 to permit the petitioner / appellant to raise the additional grounds in the above appeal; (iii) CMP No.12014 of 2004 has been filed by the appellant in A.S.No.332 of 1999 to amend the plaint in the manner described in the schedule to accompanying petition and (iv) CMP No.974 of 2011 has been filed by the third respondent in A.S.No.332 of 1999 to receive the documents listed in the said petition as additional evidence.
82. In the affidavit filed in support of CMP No.13167 of 2004 it is stated that in respect of the properties, which have been described as Item 8 in C Schedule and Item 6 in B Schedule to the plaint, the first defendant had applied for mutation of revenue records and got the mutations only on 17.08.1996 i.e., well after the trial in O.S.No.1101 of 1987 was underway. The copy of the order was obtained by the appellant only after filing of the above appeal. This document will prove that the said two properties, which belong to the appellant was never affected or intended to be affected by the decree in O.S.No.37 of 1984.
83. CMP has been filed by respondents 2 and 3 in the above appeal under Order XLI Rule 27 read with Section 151 of the CPC to receive the following documents as additional evidence:-
1.26.09.1997 Letter depositing the title deeds by the sixth defendant and his father fourth defendant to the Manager, Punjab National Bank, Coimbatore, for financial facilities limit of Rs.27.25 lakhs sanctioned to M/s. Swamy Textiles.
2.25.03.1998 Letter depositing title deeds by the sixth defendant and his father fourth defendant to the Manager, Punjab National Bank, Coimbatore, for Term Loan Rs.10 lakhs sanctioned to M/s. Swamy Textiles.
In the affidavit filed in support of the said petition it is stated that in order to prove the falsity of the appellant's stand and his reliance of the written statement of the sixth defendant it is necessary and proper to scrutinise the documents now sought to be produced as additional evidence which would clearly show that the sixth defendant has committed perjury and has been acting at the behest of the appellant. It is further stated that CMP No.14933 of 1999 was filed to send for the above documents from Punjab National Bank, Oppanakara Street, Coimbatore -1 and the same was allowed by order dated 19.12.2000 and consequently the Bank has produced the said documents before this Court. The said documents are important and necessary documents for proper decision in the appeal by this Court. It is further stated in the affidavit that the suit was dismissed by the trial court on 13.09.1997 whereas the Document No.1 is dated 26.09.1997 and Document No.2 is dated 29.03.1998, which is after the dismissal of the suit and therefore the said documents came to light only recently after the appeals have been filed and therefore the same could not have been filed before the trial court. It is further stated that even in 2001, the deceased first respondent had filed a petition to receive the additional documents, but the same is not traceable, hence the present petition has been filed. It is stated that the said documents are necessary to prove that the compromise decree has been acted upon by the defendants 4 to 6. The appellants in the above appeal have not filed any counter but the fourth respondent has filed the counter affidavit. In the counter affidavit it is stated that under what circumstances, the certified copy of the compromise decree was produced before the Punjab National Bank for obtaining loan. It is further stated that the additional documents now sought to be produced do not in any way advance the case of the respondents 2 and 3. The petition filed belatedly at the completion of the arguments is only intended to create prejudice and therefore is liable to be dismissed.
84. Heard the respective learned counsel on either side.
85. Mr. Srinath Sridevan, learned counsel for the plaintiff / appellant in A.S.No.332 of 1999 made the following submissions:-
The compromise decree itself is not a decree in the eye of law as it is a stage managed decree. The process of the Court was used to achieve the desired object. The plaintiff himself in the suit has stated that he has no animous to file the suit, but filed the same at the instance of the first defendant. The compromise decree is not at all a compromise decree in the eye of law as it is a collusive and a make believe affair and the process of the court was misused to achieve the ulterior object of the first defendant. The decree was obtained by playing a fraud on the court and hence the decree is void. The decree is contrary to the provisions of the Companies Act, as the shares of the Public Limited Company have been transferred without permission of the Company Law Board. The provisions of Order 23 of the Code of Civil Procedure have not been followed and hence the decree is not valid.
86. Learned counsel further submitted that in paragraph 13 of the written statement filed by the first defendant it is stated that the machineries of the Mill Vasudeva Industries Limited was valued by SITRA and SITRA valued the same at Rs.32 lakhs, but the machineries belonged to the lessee, Swami and Company. The first defendant filed an affidavit in Company Application No.320 of 1981 in Company Petition No.39 of 1966 and in that affidavit (Ex.A-44) he has stated that, 'it is now a viable unit because of the machineries installed by the lessees who are in a position to permit the company to make use of them'. The said averment in the affidavit itself will make it clear that the machineries have been installed by the lessee and it belongs to them and therefore the contention of the first defendant that the machineries are worth Rs.32 lakhs and the same belongs to him is not correct. Similarly in the affidavit (Ex.A-45), which is an affidavit filed by Mr.M.C.Shroff in Company Application No.124 of 1981 in Company Petition No.39 of 1966, he has stated that 'Lessees will allow, machineries installed by them to be used by the company on such terms and conditions which are mutually agreed to between the Lessees and the company. He has further stated that the lessees will also consider selling the machineries to the company on such terms as may be agreed upon. According to the learned counsel, the aforesaid averments in Exs.A-44 and A-45 will show that the machineries belongs to the lessees and not to the company. He further submitted that Ex.A-52 is the order, dated 22.01.1982 passed in Company Petition No.46 of 1981 permanently staying the order dated 27.04.1967 passed in Company Petition No.39 of 1966 ordering winding up of the company, but the alleged family arrangement pleaded by the first defendant was on 08.03.1981. According to the learned counsel, there would not have been a family arrangement in 1981 when the company was under winding up proceedings and the winding up order was permanently stayed only on 22.01.1982.
87. Learned counsel further submitted that in Ex.B-1, which is a plaint in O.S.No.37 of 1984 it has been stated by the plaintiff therein, who is the sixth defendant in this suit, that notwithstanding the purported partition, dated 07.11.1960, defendants 1, 4 and the deceased K.Rangaswamy continued to live jointly and did business jointly and the family is deemed to have reunited and that the three brothers constituted reunited joint family members. There is no mention in the plaint about the alleged family arrangement of 1981. In Ex.B-3, which is the written statement filed by the first defendant, Kumaraswamy in O.S.No.37 of 1984 which was filed on 05.07.1984, there is no mention about the alleged 1981 family arrangement, but in the present written statement, the 1981 family arrangement is mentioned and it is also mentioned that the same was given effect to by the compromise decree. In the application filed under Order 23 Rule 3 of the CPC in O.S.No.37 of 1984 also, the 1981 family arrangement has not been mentioned, but in Clause (3) of the said application, it is stated that for the reasons mentioned above, the parties agree to the following family arrangement and re-allotment of the properties, therefore, according to the learned counsel, the alleged 1981 family arrangement is not true.
88. Learned counsel submitted that as per Ex.A-12, which is an Annual Report of Sri Vasudeva Industries Limited, the value of the machineries have been mentioned only as Rs.20,12,611.18 in Ex.A-13, which is the Annual Report of the Mill for the year 1984-1985 the let loss for the said year has been shown as Rs.9,97,728.62. Similarly, in Ex.A-14, the Annual Report of the Mill for the year 1985-1986 the net loss is shown as Rs.5,48,431.46. In Ex.A-15, the wealth tax returns of the tenth defendant for the year 1983-1984 it has been mentioned that there is no value for the shares of Sri Vasudeva Industries Limited and the said return has been accepted by the Wealth Tax Authorities and no tax was levied. Similarly, in Ex.A-16, the wealth tax returns of the tenth defendant for the year 1984-1985 also shows that it is mentioned therein that there was no value for the shares and no tax was levied. In Ex.A-17 also, a similar statement is made and the same has also been accepted by the Wealth Tax Authorities. Therefore, according to the learned counsel, the case of the first defendant that the value of Sri Vasudeva Industries Limited was higher than the value of the shares allotted to the other defendants is not correct.
89. Learned counsel, by bringing to the notice of this Court Ex.C-1, which is a Vakalat filed in some other suit, submitted that all the counsel belong to the same office. By referring to Ex.A-45, the learned counsel submitted that the affidavit of Mr.M.C.Shroff was attested by Mr.C.P.Venkatraman and the affidavit of the first defendant was also attested by Mr.C.P.Venkatraman. From the aforesaid facts, the learned counsel submitted that it is clear that the learned counsels, who appeared for the parties in the suit in which the compromise decree was passed, were all appointed at the choice of the first defendant.
90. Learned counsel submitted that the first defendant represented that as the plaintiff and the tenth defendant have given personal guarantees to Punjab National Bank to save the properties of the family from creditors, the compromise memo was being filed and the said representation was believed by the plaintiff and the tenth defendant. According to the learned counsel, the total loan obtained by the plaintiff was about Rs.22 lakhs. He submitted that Ex.X-35 (xii), which is a letter, dated 17.06.1988 written by the Managing Director of Sri Vasudeva Textiles Limited refers to the personal guarantee to be given by the two Managing Directors and the fourth defendant. Ex.X-29, dated 18.11.1986 refers to the guarantee for the term loan for Sri Vasudeva Textiles Limited. Learned counsel submitted that in paragraph 15 of the written statement filed by the first defendant it has been stated that in 1983 when the loan was taken from Punjab National Bank the plaintiff and the tenth defendant were in management and therefore guaranteed payment of the loan.
91. Learned counsel, by referring to Ex.X-34 which is the operating statement of Vasudeva Textiles limited for the period from 1984 to 1989, submitted that in Ex.X-34, it is mentioned the Term Loan, DPG, C.C., and pledge have been secured by pledging of stock-in-trade and equitable mortgage of land and building and machineries and two directors have given personal guarantee for the loan, which will show that the plaintiff and the tenth defendant have given personal guarantee. He submitted that a perusal of Ex.X-35 (xviii) shows that the following statement is mentioned Personal guarantee of the Directors, if insisted upon by the Bank shall be obtained. But we feel that it is superfluous, since we are having the entire assets of the mill as collateral security, which at the market rate will easily fetch around Rs.75 lakhs.
92. Learned counsel submitted that in Ex.X-35 (xiii), which is a letter, dated 08.02.1988, sent by the Managing Director of the Textiles Mill to Punjab National Bank, it is mentioned that the two Managing Directors have already given their personal guarantee for all loans.
93. Learned counsel submitted that after the compromise decree the textile mill suffered loss. Ex.A-31 is the amended plaint in O.S.No.827 of 1987 which was a suit filed by the minor sons of the tenth defendant for partition. Ex.B-8 is the affidavit filed by Smt.S.Sigamani, wife of the tenth defendant, as the guardian of the minor plaintiffs in O.S.No.827 of 1987 seeking leave of the Court to withdraw the suit. On the basis of the said affidavit, the suit was allowed to be withdrawn and accordingly dismissed. According to the learned counsel, only pursuant to some arrangement entered into between the tenth defendant and the first defendant, the suit came to be withdrawn. The contention of the learned counsel is that the parties did not go to Court by filing O.S.No.37 of 1984 to get the disputes settled through Court, but it is a stage managed affair and a fraud played upon the Court to achieve the object of the first defendant and the entire show was stage managed by the first defendant. The filing of the suit was only a make belief affair. The inequity in the distribution of shares in the properties itself will show that the parties would not have signed the compromise with an intention to give effect to it, but it was only at the direction of the first defendant the plaintiff has signed the compromise memo and appeared before the Court and he acted in good faith. He submitted that in paragraph 5 of the additional written statement filed by the first defendant, on 07.10.1996, it is stated as follows:-
5. ... In effect and substance it was an undertake itself comprising of the Mills with all its assets that were allotted through the modality of allotting the controlling shares. What was allotted was not therefore bare shares as mere investment in the share capital of Sri Vasudeva Textiles Limited. Learned counsel submitted that simply because the majority of shares have been allotted to the plaintiff and his branch, it does not mean that the assets of the company have been allotted to them. In support of the said contention, the learned counsel based relied on a decision of the Apex Court reported in AIR 1955 SC 74 = (1955) 1 SCR 876 = (1955) 27 ITR 1 = (1955) 25 Comp. Cases 1 (CB) (BACHA F.GUZDAR v. COMMISSIONER OF INCOME TAX, BOMBAY) . In the said decision, the Apex Court, in paragraph 7, has observed as follows:-
7. ... It is true that the shareholders of the company have the, sole determining voice in administering the affairs of the company and are entitled, as provided by the Articles of Association to declare that dividends should be distributed out of the profits of the company to the shareholders but the interest of the shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the company which owns the property and not the shareholders....
94. Learned counsel submitted that it is the stand of the first defendant that after 1981, he had nothing to do with the mill, but it is not true. Ex.A-48 the Minutes of the Annual General Body Meeting of Sri Vasudeva Textiles Limited held on 29.08.1986 shows that the meeting was chaired by the first defendant. Ex.A-49, dated 20.06.1984, which is the Minutes of the Annual General Body Meeting shows that the first defendant was present in the Annual General Body Meeting. Therefore, according to the learned counsel, the contention of the first defendant that he was nothing to do with the Mill after 1981 is false, but the first defendant in his cross-examination has denied his participation in the Board Meeting of the mills held on 03.02.1982, 12.04.1982, 28.06.1982, 22.11.1982, 10.01.1983, 20.01.1983, 19.03.1983, 22.03.1983, 10.06.1983, 11.08.1983, 26.09.1983, 12.12.1983, 30.03.1984, 20.06.1984, 27.07.1984, 22.08.1984, 1986 and 1987. He has deposed that his signatures would have been obtained from his house. In the written statement filed by the eleventh defendant it has been clearly stated that defendants 11 to 20 and 23 to 26 negotiated with the first defendant, who was incharge of the affairs and purchased 2,13,875 shares in the mills. It has been further stated therein that it was the first defendant who was in control and custody of the said shares, though standing in the name of the third parties. It has been further stated therein that the first defendant only negotiated, finalised and delivered the shares with the corresponding transfer forms, though standing in different names. Therefore it is clear that the contention of the first defendant that he has nothing to do with the Mill after 1981 is false. He further submitted that though none of the defendants (D11 to D20 and D23 to D26) have been examined as witnesses in the Court, the averments in the written statement filed on behalf of the aforesaid defendants is confirmed by the correspondences exchanged between the first defendant, plaintiff and these defendants in Exs.B-12, A-3 and A-4. The aforesaid facts clearly establish that nothing moved without the direction of the first defendant. According to the learned counsel, the share transfer forms (3 numbers) signed by the first defendant were not handed over to the plaintiff or his brother, the tenth defendant, but were handed over to the eleventh defendant. As evident from Ex.A-1, the share holder list of the textiles, even on 30.09.1994, 11,258 shares stood in the name of the first defendant. Similarly, 13,262 shares stood in the name of the fourth defendant. As per the terms of the compromise decree the shares allotted to the plaintiff and the seventh defendant were not transferred.
95. Learned counsel referred to the decision of the House of Lords reported in (1896) AC 199 (FRANK REDDAWAY AND FRANK REDDAWAY & CO., LIMITED v. GEORGE BANHAM AND GEORGE BANHAM & CO., LIMITED) which deals with a case of passing off. In the said decision, it is observed as follows:-
... But fraud is infinite in variety; sometimes it is audacious and unblushing; sometimes it pays a sort of homage to virtue, and then it is modest and retiring; it would be honesty itself if it could only afford it. But fraud is fraud all the same; and it is the fraud, not the manner of it, which calls for the interposition of the Court. In principle and in substance I can see no difference between the present case and Montgomery v. Thompson (1891) AC 217. Learned counsel submitted that the attendant circumstances should be considered to find out whether a fraud has been played upon the Court. Learned counsel relied upon a decision of the Apex Court reported in (2010) 3 Supreme Court Cases 251 (SANTOSH v. JAGAT RAM). In the said decision, in paragraphs 24, 25 and 26, the Apex Court has held as follows:-
24. ... We are fully convinced that this was nothing, but a towering fraud played upon an illiterate and helpless widow, whose whole inherited property was tried to be grabbed by Daya Ram and/or the respondents herein.
25. Very unfortunately, all this has escaped the notice of the High Court, who passed a very casual judgment without being bothered about these glaring facts. We are of the firm opinion that the whole Suit No. 253 of 1985, decree passed thereupon on 26-3-1985 and the subsequent caveat proceedings were nothing but a systematic fraud. There cannot be a better example of a fraudulent decree. We are anguished to see the attitude of the Court, who passed the decree on the basis of a plaint and a written statement, which were filed on the same day. We are also surprised at the observations made by the appellate court that such circumstance could not, by itself, prove the fraudulent nature of the decree.
26. A fraud puts an end to everything. It is a settled position in law that such a decree is nothing, but a nullity. It has come in the evidence that when the respondents herein started disturbing the possession of the appellant and also started bragging about a decree having been obtained by them, the appellant chose to file a suit. In that view, her suit filed in 1990 would be absolutely within time. The casual observation made by the High Court that her suit would be barred by limitation, is also wholly incorrect. Basing reliance on the aforesaid decision, the learned counsel submitted that since fraud has been played upon not only against the plaintiff but also on the Court below, the present suit is maintainable in law.
96. Learned counsel based reliance on a Division Bench decision of this Court reported in AIR (29) 1942 Madras 632 (RAMANATHAN v. UNNAMALAI). In the said decision, the Division Bench of this Court has held as follows:-
Sections 2 (d) and 5 prevent S. 53 operating in the case of a transfer under an order or decree of Court. But where a person has obtained a transfer of property under an order of the Court as the result of a gross fraud, the Court is not powerless and can remedy the injustice caused without invoking S. 53 by applying the principles of common law for avoiding fraudulent conveyances which must guide the Court in administering law according to equity and good conscience. Consequently, it is open to the party aggrieved by the fraud to file a suit to have the transfer under the order of Court declared a nullity. Basing reliance on the said decision, the learned counsel submitted that in this case a clear fraud has been played upon the Court and the compromise decree has been obtained and therefore it is void and not binding on the plaintiff.
97. Learned counsel submitted that it is the case of the first defendant that the compromise was arrived at only on the basis of 1981 family arrangement, but the said alleged family arrangement has not been proved by acceptable evidence and if 1981 family arrangement goes, the compromise decree also have to go, since it is the case of the first defendant that the compromise was arrived at only on the basis of 1981 family arrangement. It is further submitted that when the company (textile mill) was under liquidation its properties / shares cannot be dealt with by anyone without the consent of the liquidator. Hence the dealing with of the shares of the company is illegal. In support of the said contention, the learned counsel based reliance on a decision reported in 1972 (Vol.42) Company Cases 401 (GULZARI LAL BHARGAVA v. OFFICIAL RECEIVER).
98. Learned counsel submitted that only when the family members have pre-existing rights in all the properties, then only in a partition or family arrangement, the family members can adjust their rights, but in this case, the family consists of defendants 1, 4, 7, 8, 10 and the plaintiff. In this case, Item Nos.4, 6, 7, 8(b), 8(c) and 8(d), 12, 14 and 15 have been allotted to persons who have no pre-existing right in them. Therefore the decree is not valid. But in this case, the persons who do not have pre-existing rights have also been allotted with shares in the joint family properties. According to the learned counsel, the compromise decree is a device to remove the property from the persons who are having the right in the natural course. The specific case of the plaintiff is that he was acting under the dictates of the first defendant and it was the mind and plan of the first defendant and the plaintiff was only an instrument. Therefore, the compromise decree is nothing, but sham and nominal and it has also not been acted upon. He further submitted that it is settled law that the decree obtained by fraud upon the Court will not bind anybody. The plaintiff has not acted upon the decree in any sense. In support of the said contentions, the learned counsel based reliance on a decision of the Apex Court reported in (1994) 1 Supreme Court Cases 1 = (1994) 1 Law Weekly 21 (S.P.Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and Ors.). In the said decision, it has been observed that a litigant, who approaches the Court is bound to produce all the documents executed by him which are relevant to the litigation and if he withholds a vital document in order to gain advantage on the other side, then he would be guilty of playing fraud on the court as well as on the opposite party. In the said decision, the Apex Court has held that the decree obtained by practising fraud on the court is a nullity. Learned counsel submitted that if it is held that the decree is a device to achieve an ulterior object, it will be a fraud on the court and hence void. Even if the decree is acted upon by some of the parties, it will not validate the decree. The plaintiff has not acted upon the decree at any time. Learned counsel further submitted that the plaintiff is not seeking to set-aside the compromise decree, but is only seeking a declaration that the decree is sham and nominal, etc., and therefore the suit is maintainable.
99. Learned counsel submitted that though Ex.B-2, compromise decree is dated 06.08.1984, the same was presented for registration only on 05.12.1984 i.e., on the last day by the first defendant. Every act was done only by the first defendant and even for registration of the decree, no one accompanied him. By referring to the affidavits, Exs.B-104, affidavit of the plaintiff filed in Company Application No.1741 of 1979 in Company Petition No.36 of 1966 and Ex.A-44, the affidavit of the first defendant filed in Company Application No.320 of 1981, the learned counsel submitted that the averments in both the affidavits are almost verbatim same, which shows that it is the mind of the first defendant behind the preparation of both the affidavits. According to the learned counsel, the entire legal proceedings in the Company Petition was looked after only by the first defendant.
100. Learned counsel submitted that the suit O.S.No.37 of 1984 was filed in January 1984. Exs.X-21 and X-22, the Demand Draft Application Forms, dated 20.03.1984 and 08.04.1984, respectively, show that the Demand Drafts were obtained on those dates. In July 1984, the written statement of the defendants 1 and 3 in the said suit was filed. In August 1984, the compromise decree was passed. The aforesaid dates and events will only suggest that the compromise decree was only a make belief affair and it was only a mockery of the process of the Court.
101. Learned counsel submitted that since the plaintiff was acting as per the directions of the first defendant and he was under the total control of the first defendant he had to agree for the compromise decree and he had not voluntarily and willingly accepted the compromise. In support of the said contention, the learned counsel based reliance on a decision reported in (1861-1873) All ER Rep Ext 2294 (Atkinson v Denby). In the said decision, it has been held that where one person has it in his power to dictate terms, and the other has no alternative but to submit, it cannot be said that a payment of money under such circumstances is voluntary. He also relied upon a decision of the Apex Court reported in AIR 1980 Supreme Court 193 = (1980) 1 Supreme Court Cases 52 = (1980) 1 SCR 281 = 1979 (11) UJ 756 (SC) (S.B.Noronah v. Prem Kumari Khanna). In the said decision, the Apex Court, while considering Sections 14 and 21 of the Delhi Rent Control Act, 1958, has held that as between unequals the law steps in and as against statutes there is no estoppel, especially where collusion and fraud are made out and high purpose is involved. In the same decision, a passage from Halsbury's Laws of England, Vol. 16, Fourth Edition, paragraph 1553, has been extracted, which reads, thus, a judgment obtained by fraud or collusion, even it seems a judgment of the House of Lords, may be treated as a nullity.
102. Learned counsel based reliance on a decision of the Apex Court reported in 2011-5-Law Weekly 73 (Ramesh Kumar & Anr. v. Furu Ram & Anr. Etc.,) and submitted that if a party to the suit had adopted modes operandi to obtain title to the lands without a conveyance and without incurring the stamp duty and registration charges due in respect of conveyance by obtaining a sham and collusive decree, when there was no dispute, would be a fraud committed upon the Court. In this case, according to the learned counsel, when there was no real dispute between the parties to the suit in O.S.No.37 of 1984, the first defendant has adopted modes operandi of filing a compromise memo, so that the title to the lands could be transferred to the names of the persons, who do not have any right to the lands and where title can be transferred only by transfer inter-vivos. Therefore, the compromise decree is sham and collusive and the same has been obtained by playing fraud upon the Court and therefore the compromise decree is liable to be set-aside.
103. Learned counsel also based reliance on a decision of the Delhi High Court reported in 1994 (IV) AD (Delhi) 185 = 1994 (31) DRJ 205, 1995 RLR 20 (Anant Construction (P) Ltd., v. Ram Niwas) wherein it is laid down as follows:-
(26) ..... (5) Court would direct or permit replication being filed when having scrutinised plaint and written statement the need of plaintiff joining specific pleading to a case specifically and newly raised in written statement is felt. Such a need arises for the plaintiff introducing a plea by way of 'confession and avoidance.' (6) A plaintiff seeking leave of the court has to present before it the proposed replication. On applying its mind the court may grant or refuse the leave. (7) A mere denial of defendant's case by plaintiff needs no replication. The plaintiff can rely on rule of implied or assumed traverse and joinder of issue. Learned counsel submitted that the non-denial in the reply statement filed by the plaintiff about 1981 family arrangement pleaded in the written statement will not amount to admitting the same.
104. Learned counsel submitted that the oral evidence of the family arrangement of 1981 cannot be accepted. When even according to the first defendant, the family arrangement was reduced into writing and three copies were prepared, the trial court has erred in acting on the oral evidence regarding 1981 family arrangement. He further submitted that when there is no pooling or blending by the family members, there cannot be another partition or family arrangement. Therefore in 1981, there could not have been any family arrangement as there was no blending. He further submitted that the 1960 partition was not acted upon. If the same had been acted upon, there cannot be any family arrangement in 1981 as pleaded by the first defendant. The compromise decree is only a transfer inter-vivos.
105. Learned counsel further submitted that D.W.2 (first defendant) in his cross examination has stated as follows:-
mjpfhukpy;yhj iluf;luhf ,Ue;jpUf;fpnwd;/ But his case was that after 1981 he has nothing to do with the Mill. According to the learned counsel, Ex.A-48 has not been totally denied by the first defendant in his evidence. Only by Ex.A-20, dated 28.08.1989, the first defendant has resigned his Directorship in the Mill. Even then there is no complete withdrawal of the first defendant from Sri Vasudeva Textiles Limited in 1989 and the first defendant has not explained Ex.A-20 also.
106. Learned counsel submitted that for Ex.B-9 memo filed by the tenth defendant, who was the first plaintiff in the suit it is not necessary for the plaintiff to file any objections as contended by defendants 1 to 3. He further submitted that since court fee is a matter between the party and Court, the defendants cannot question the same. Having not filed any cross objection, the first defendant is not entitled to question the finding of the trial court regarding court fees. Further, the court below has in its judgment held that as the issue regarding court fee has already been settled by the order of the Supreme Court, it need not be gone into. Even if any cross objection is filed, the same is not maintainable. Learned counsel further submitted that Order 23 Rule 3 (A) of the CPC is not applicable to a case where fraud has been played upon the Court.
107. As far as the filing of CMP No.13167 of 2004 in A.S.No.332 of 1999 to receive the order in Tho.Mu.Na.B5/110/2001, dated 02.08.2001, issued by the Deputy Tahsildar, Coonoor, as additional evidence in the appeal and to mark the same as Ex.A-56 is concerned, the learned counsel submitted that the said document now sought to be produced as additional evidence is material for deciding the issue that arises for consideration in the above appeals.
108. Learned counsel reiterated the contents of the affidavit filed in support of CMP No.13167 of 2004 and submitted that the said document is a material document for deciding the issue that arises for consideration in the above appeal. He further submitted that no counter affidavit has been filed by the respondents.
109. Mr. S.Parthasarathy, learned Senior Counsel, appearing on behalf of Mr. J.Ramakrishnan, learned counsel for the seventh defendant in the suit who is the appellant in A.S.No.281 of 2000 made the following submissions:-
Rangaswamy Gounder, the husband of the appellant, died in an accident in 1967. A sum of Rs.1,03,000/- paid by LIC was handed over to the first defendant with a good intention that it will be used for the benefit of her family. The first defendant has not explained as to what happened to the aforesaid amount of Rs.1,03,000/-. The first defendant, as D.W.2, in his cross examination, has stated that the said amount was credited in partnership firm, but he has denied that the same was utilised for any business. The first Item of Schedule 'B' namely 32.6 acres in Poomalur Village was jointly owned by D1, D4, D7, D10 and the plaintiff, but under the compromise decree, the said property has been allotted to the defendants 4 to 6. Item No.2 of Schedule 'B', which was owned by the aforesaid defendants, have been allotted to the defendants 4 to 6. Thus, Item Nos.1 to 7, 12, 14 and 15 of Schedule 'B' have been allotted to the fourth defendant's branch, but the seventh defendant / appellant herein has been allotted only 200 shares in Vasudeva Textiles Mills Limited. Thus, it is clear that the seventh defendant has been fraudulently deprived of the immovable properties. Even the 200 shares allotted to her has not been transferred to her. The fourth and fifth defendants have been allotted with properties though they are not co-owners. There should be some pre-existing rights to get a share in the joint properties and therefore the very substratum of the first defendant's case goes. The family arrangement of 1981 pleaded by the first defendant itself is bad in law.
110. Learned senior counsel further submitted that though the written statement has been filed by the seventh defendant in 1993 challenging the decree, she can support the case of the plaintiff since as far as she is concerned, the compromise has not been acted upon. Since even the 200 shares allotted to the seventh defendant has not been transferred yet and as such the compromise decree has not been acted upon which will show that the decree is only sham and nominal. The value of the Tea Garden at Coonor as evidenced from guideline value was more and hence it cannot be said that it was a worthless property.
111. Learned senior counsel further submitted that the entire compromise rests on the family arrangement dated 08.03.1981 but in the written statement filed by the first defendant in O.S.No.37 of 1984, he has not mentioned anything about the said family arrangement. The fourth defendant did not file any written statement in the suit. There is no reference or denial by the plaintiff in his reply statement. In his written statement filed in present suit, the first defendant has stated that the family arrangement was reduced into writing on 08.03.1981 embodying the terms and the same was signed by all the parties and the original agreements are with the plaintiff and the fourth defendant, but in his evidence he has stated that three copies of originals were prepared. As per Section 91 of the Evidence Act, no oral evidence of the terms of family arrangement, which was reduced into writing, could be given, but the Court below has failed to keep in mind the provisions contained in Section 91 of the Evidence Act and has accepted the oral evidence. The compromise was only to save the properties standing in the name of the plaintiff and the tenth defendant from the creditors as they had given personal guarantee. The seventh defendant is entitled to seek partition of her 1/12th share. Whatever was brought to her by the first defendant was signed by her, but she was not aware of the contents of the compromise memo. Even after the compromise decree, it was the first defendant, who was administering the mill. The first defendant is not speaking the truth. When he deposed that after the decree, he has nothing to do with Vasudeva Textiles Mill, in his evidence, he has admitted that by Ex.A-20, he sent his resignation in 1985, but the date of Ex.A-20 is 29.08.1989. Therefore till 1989, he was in the administration of the Mill.
112. Learned senior counsel further submitted that the finding of the Court below that the suit is not maintainable in view of Order 23 Rule 3 (A) of the CPC is not correct. The suit has not been filed seeking to set-aside the compromise decree, but the suit has been filed only seeking a declaration that the decree passed in O.S.No.37 of 1984 on the file of the Subordinate Court, Coimbatore, is sham and nominal, ultra vires, collusive, invalid, unsustainable, unenforceable and not binding on the plaintiff and therefore the suit is not barred either by the provisions contained in Order 23 Rule 3 or by the provisions contained in Order 23 Rule 3 (A) of the CPC. When 1981 agreement is not there, there is no lawful agreement or arrangement and in the compromise decree there is no reference to 1981 family arrangement.
113. Learned senior counsel further submitted that it is the case of the first defendant that after 1960 there was no joint family. If so, it is not explained as to how shares were allotted to persons who are not co-owners. The transfer of the properties to the names of the non co-owners can only be by transfer inter-vivos and not under the compromise decree. In support of the said contention, the learned senior counsel based reliance on a decision of the Apex Court reported in (1990) 1 Supreme Court Cases 440 (JIRAJI TOLAJI BAGWAN v. SHAKUNTALA), wherein, in paragraph 7, the Apex Court has laid down as follows:-
"A partition of the property can only be among the parties who have a pre-existing right to the property. Under the Hindu law, a female, major or minor has no share in the ancestral property. A female is given a share either in the self-acquired property of the husband or the father, or in the share of the husband or the father in the coparcenary property after the property is partitioned. There cannot, therefore, be a partition and hence a family settlement with regard to the ancestral property so long as it is joint, in favour of either the wife or the daughter."
114. Learned senior counsel also based reliance on a decision of the Hon 'ble Apex Court reported in AIR 1992 SUPREME COURT 248 (1) = (1991) 4 SCC 584 (Union Carbide Corporation v. Union of India), wherein in paragraph 53, it is laid down as follows:-
"53. .....
It is, indeed, trite proposition that a contract whose object is opposed to public policy is invalid and it is not any the less so by reason alone of the fact that the unlawful terms are embodied in a consensual decree. In State of Punjab v. Amar Singh (1974) 2 SCC 0 at p. 90 (AIR 1974) SC 994 at p.1007, para 33 this Court said:
After all, by consent or agreement, parties cannot achieve what is contrary to law and a decree merely based on such agreement cannot furnish a judicial amulet against statutory violation .... The true rule is that the contract of the parties is non the less a contract, and subject to the incidents of a contract, because there is superadded the command of the Judge. Basing reliance on the aforesaid decision, the learned senior counsel submitted that the compromise decree is liable to be set-aside.
115. Learned senior counsel also based reliance on a decision of the Hon 'ble Apex Court reported in AIR 1956 SUPREME COURT 593 = 1956 SCR 451 (Nagubai Ammal v. B. Shama Rao), wherein in paragraph 15, it is laid down as follows:-
"15. Now, there is a fundamental distinction between a proceeding which is collusive and one which is fraudulent. Collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of a judicial tribunal for some sinister purpose. (Wharton's Law Lexicon, 14th Edn., p. 212).
In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties. But when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue, but that the claimant has managed to obtain the verdict of the court in his favour and against his opponent by practising fraud on the court. Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties. While in collusive proceedings the combat is a mere sham, in a fraudulent suit it is real and earnest."
Basing reliance on the said decision, the learned senior counsel submitted that the suit has been filed collusively to get over the personal guarantee given by the plaintiff and the tenth defendant and to safeguard the family properties from the claim of third party creditors.
116. Mr.T.R.Mani, learned senior counsel appearing on behalf of Mr. K.R.A.Muthurkrishnan, learned counsel for the sixth defendant, who is the seventh respondent in A.S.No.281 of 2000 as well as sixth respondent in A.S.No.332 of 1999, made the following submissions:-
The sixth defendant was the plaintiff in O.S.No.37 of 1984. In the present suit in O.S.No.1101 of 1987 he was set exparte originally, but at the time of arguments, the exparte order was set-aside and he filed a written statement and he paid court fee of Rs.100/- seeking partition of his share. In paragraph 4 of the written statement, he has clearly stated that the compromise decree has been collusively obtained and the same is unenforceable. As all the defendants in the suit for partition are treated as plaintiffs, he is entitled to claim partition in the suit properties. The sixth defendant has affirmed in the written statement the stand of the plaintiff. In the suit, I.A.No.646 of 1984 was filed under Order 23 Rule 3 CPC to record the compromise and the same was filed on 06.08.1984. A perusal of Ex.A-26, dated 06.08.1984, which is an application filed under Order 23 Rule 3 CPC shows that the defendants 3 and 7 in the suit were minors. Ex.A-6 is the order passed in I.A.No.646 of 1984, which shows that on 06.08.1994 itself the order has been passed. According to the learned senior counsel, a perusal of Ex.A-6 shows that it is mentioned therein that vakalat for defendants 8 to 13 and written statement of defendants 4 to 7 are not filed. Therefore, according to him, the procedure contemplated under Order 23 Rule 3 of the CPC has not been followed.
117. Learned senior counsel submitted that Ex.B-72 is the suit register extract in O.S.No.37 of 1984 on the file of the Subordinate Court, Coimbatore. Ex.B-73 is the copy of the I.A. Register Extract in the said suit. Ex.B-73 shows that petitions have been filed under Order 32 Rule 7 of the CPC on behalf of the minor defendants 3 and 7 seeking leave to compromise the suit and in those petitions, the only respondent is C.Senthil Kumaravel, the plaintiff in that suit and no others have been shown as respondents and it is not even stated that any counsel appeared on behalf of the other defendants, but the petitions have been allowed and closed on 06.08.1984 itself.
118. Learned senior counsel submitted that Ex.B-74 is the application filed by the first defendant seeking certified copy of the Vakalatnama filed by Mr.P.R.Thirumalnesan, Advocate, on behalf of the defendants 3 to 8 and Ex.B-75 is another copy application filed by the first defendant seeking certified copy of I.A.No.644 of 1984 and I.A.No.645 of 1984 in O.S.No.37 of 1984, but the same has been returned, but according to the learned senior counsel Ex.B-76 the certified copy of the suit register extract in O.S.No.37 of 1984 shows that Thiru.C.P.Venkatraman has appeared for the plaintiff and Thiru.K.N.Lakshmi Narayanan, has appeared for defendants 1 to 3, Thiru.P.R.Thirumalnesan, has appeared for the defendants 8 to 13 and Tmt.S.Raman Iyer has appeared for defendants 4 to 7, but in Ex.B-76, Interim Applications for leave to compromise have not been mentioned.
119. Referring to the aforesaid, the learned senior counsel submitted that the procedure contemplated under Order 23 Rule 3 of the CPC has not been followed. He submitted that in the judgment of the trial court in the suit, it is stated that as if the sixth defendant had been set exparte, whereas though he was originally set exparte, the exparte order was set aside and he had filed the written statement and had actually paid court fee.
120. Learned senior counsel submitted that the seventh defendant in her written statement has stated that she has not met any advocate or given any Special Vakalat. In his evidence, D.W.2 (first defendant) has admitted that Mr.C.P.Venkatraman, appeared for the plaintiff in O.S.No.37 of 1984 and the same counsel has appeared for the first defendant in the suit. Therefore, the learned senior counsel submitted that it is clear that there was collusion between the parties and their advocates. In support of the said contention, the learned senior counsel based reliance on a decision of the Apex Court reported in AIR 1992 SUPREME COURT 248 (1) = (1991) 4 SCC 584 (referred to supra). Learned senior counsel relied upon the same passage, which has been extracted supra and which was relied upon by Mr.S.Parthasarathy, learned senior counsel. Learned senior counsel further submitted that though the sixth defendant has encumbered and alienated some of the properties allotted to him under the compromise decree, it will not prevent him from contending that the compromise decree is sham and nominal. As there was necessity to raise loan the property allotted under the compromise decree was given as security. He further submitted that if the decree is ultimately set-aside, the property encumbered could be allotted to the sixth defendant.
121. Mr. M.S.Krishnan, learned senior counsel, appearing on behalf of M/s. Sarvabhavman Associates, for defendants 11 to 20 and 22 to 26 / respondents 11 to 20 and 22 to 26 made the following submissions:-
No relief is sought against defendants 11 to 22. They have purchased shares of Vasudeva Textiles Mills Limited from outsiders and some of the parties to the suit. The plaintiff has not claimed any right in the shares and therefore they are unnecessary parties and none of them have entered the witness box. He further submitted that even now the plaintiff holds shares in the Mill. Schedules 12 and 13 of the plaint relate to the shares of the mills. Exs.A-2, A-3, A-4, letters were sent by the eleventh defendant for the reasons stated in the written statement.
122. Mr.T.R.Rajagopalan, the learned Senior Counsel appearing for the respondents 1 to 3 in A.S.No.332 of 1999, who are also the respondents 2 to 4 in A.S.No.281 of 2000 made the following submissions:-
If, as contended by the appellants, the compromise decree is sham and nominal, it cannot be a collusive one. If it is collusive since all the parties to the suit are parties to the compromise, third parties alone can challenge the compromise decree as collusive. Fraud cannot be a ground to set aside the compromise decree. No details regarding fraud have been set out in the plaint. In paragraph 15 of the plaint, what is stated is as follows:-
" The plaintiff submits that the entire proceeding in O.s.No.37 of 1984 on the file of the Sub Court, Coimbatore, was a collusive one The entire proceedings is a mere make believe affairs. The first defendant has abused the process of Court. The entire proceedings and the decree secured from a Court is a fraud played not only on the plaintiff but also against the Court."
123. Learned senior counsel submitted that the averments in paragraph 3 of the plaint that there was no disruption in the joint family in spite of 1960 partition is false. The first defendant did not take Vasudeva Industries Limited on lease but it was one M.C.Shroff, a partner of the fourth defendant, who took it on lease. It is the case of the plaintiff that in 1983 at the direction of the first defendant, the plaintiff and the 10th defendant signed the documents of personal guarantee of Punjab National Bank; the first defendant represented that since the personal guarantee was given to the bank for the loan of several lakhs of rupees, it would be risky to have the family properties in the name of the plaintiff and the 10th defendant and it would be safe to keep off the names of the plaintiff and the 10th defendant on record as owners. But before 1984 no personal guarantee was given either by the plaintiff or the 10th defendant; there were no creditors at the relevant time as far as the Vasedeva Industries Limited is concerned; from the pleadings it is clear that in the beginning of 1984 itself the plaintiff was made aware of as to what is happening and only after knowing fully well the terms of compromise the parties including the plaintiff and the 10th defendant signed the compromise.
124. As far as the contention of the counsel for the appellant that there is disparity in the allotment of shares among the parties is concerned, the learned Senior Counsel submitted that in paragraph 18 of the plaint itself it is stated that the mother and sister of the plaintiff have expressed their desire not to take any share. The said averments have not been denied in the written statement filed by the 7th defendant, though the written statement was filed belatedly on 20.4.1993 only.
125. Learned senior counsel submitted that M/s. Vasudeva Industries Limited was not shown as an item of property in the plaint Schedule. But only at the instance of the first defendant, the same was included. At the instance of the first defendant, defendants 11 to 22 were impleaded. Subsequently, the plaintiff filed an application in I.A.No.322 of 1996 to include shares of the Mill and the same was allowed and the shares of the Mill were included in the plaint Schedule as items 12 and 13 of the 'B' Schedule. On 20.4.1988, the first defendant filed his written statement, wherein it is stated about the non inclusion of the Vasudeva Industries Limited.
126. Learned senior counsel submitted that though in the written statement filed by the first defendant, it is specifically stated that there was family arrangement on 8.3.1981, the same has not been denied in the reply statement filed by the plaintiff to the written statements and the additional written statements and paragraphs 13 to 15 of the written statement have also not been denied. Since the plaintiff had not denied the 1981 family arrangement in the reply statement, no issue was framed by the trial Court. The 7th defendant filed her written statement in 1993 after the filing of the reply statement by the plaintiff. In her written statement the 7th defendant had not denied the 1981 family arrangement. After the trial commenced in the suit and after D.W.4's evidence was completed on 13.8.1997, the 6th defendant filed his written statement on 21.8.1997 during the course of arguments. Even in the written statement of the 6th defendant, the 1981 family arrangement has not been denied. As early as on 9.10.1996 the plaintiff's evidence was over and for nearly 10 years, the 6th defendant has kept quiet and has filed the written statement during the course of arguments and even in his written statement, he has not questioned the share allotted to him. But he simply says that no proper share has been allotted to the plaintiff, 7th defendant and 10th defendant. The 4th defendant, who is the father of the 6th defendant, has not filed any written statement and he has not entered into the witness box. Only because the 1981 family arrangement was real and true, the same has not been denied by the plaintiff in his reply statement and the 6th and 7th defendants in their written statements. The 4th defendant has not even filed a written statement. The absence of such specific denial in the reply statement and the written statements will amount to admission on their part and therefore, according to the learned Senior Counsel, it is unnecessary for the first defendant to prove the admitted facts. In support of this contention, the decision of the Delhi High Court reported in AIR 1976 DELHI 328 (Abdul Hamid and another v. Nur Mohammad) is relied upon.
127. The learned Senior Counsel referred to and relied upon the following documents, namely, Date Exhibit Particulars 71160 X-5 Partition Deed 19.4.1963 B-62 IT Assessment order of Plaintiffs father for 1961-62 22.4.1968 B-63 IT Assessment order of D10 for 1967-68 30.7.1963 B-57 Income Tax return of D1 1962-63 19.4.1963 B-58 Income Tax return of D1 1961-62 20.4.1968 B-59 IT Assessment of Kumarasamy for 1967-68 20.2.1972 B-60 IT Assessment of Kumarasamy for 1971-72 28.3.1973 B-61 IT Assessment of Kumarasamy for 1972-73 1981-82 B-20 series Wealth Tax Returns of D10 for 1982-83 27.2.1971 B-53 Sale deed in favour of plaintiffs father D1 & D4 24.7.1972 B-54 Additional Grounds of appeal filed before Assistant Collector Excise Duty 21.8.1975 A-23 Sale deed by D4 in favour of D7 and D9 21.8.1975 A-24 Sale deed by D1 favouring Siva Natarajan 21.8.1975 A-25 Sale deed by D1 favouring D7 & D9 21.8.1975 B-4 Sale deed by Somu, D7 & D10 in favour of Chinnaiah Gounder & Sennimalai Gounder 5775 X-11 Letter by D1, D4, Plaintiff, D7 & D10 to Punjab National Bank 18.6.1992 A-33 Plaintiff's IT assessment order for 1990-91 & 1991-92 18.6.1992 A-34 Plaintiff's IT Assessment order for 1990-91 & 1991-92 30.3.1992 A-35 Copy of Acknowledgment by I.T.D. 28.6.1996 A-36 Copy of Acknowledgment by I.T.D. 7294 A-37 Plaintiff's I.T. Assessment order 1992-94 3195 A-38 Copy of Acknowledgment by I.T. 1994-95 7294 A-39 Plaintiff's I.t. Return 1992-93 30.8.1996 A-40 Acknowledgment (I.T) 1996-97 4286 A-15 Wealth Tax Return of D10 for 1983-84 along with Order 4286 A-16 Wealth Tax Return of D10 for 1984-85 along with Order 4286 A-17 Wealth Tax Return of D10 for 1985-86 along with Order 29.8.1989 A-19 Proceeding of the Board of Directors of Vasudeva Textiles 4388 B-82 Wealth Tax Return of D1 for 1986-87 25.3.1991 B-83 IT Assessment Order of D2 for 1986-87 31.5.1990 B-84 Wealth Tax assessment paid by D3 for 1986-87 25.3.1981 B-55 Statement submitted to issue Ration Card by Plaintiff, D7, D10.
and submitted that the above documents clearly establish that the partition had been effected among the three brothers on 7.11.1960 under Ex.X5 and the same had been acted upon.
128. Learned senior counsel submitted that apart from the aforesaid documents, the evidence of P.W.1 and D.W.2 also clearly established that 1960 partition was acted upon by the parties. From the aforesaid income tax assessment orders, wealth tax returns and assessment orders, it could be clearly seen that till Rangasamy was alive, the assessee's name was shown in the income tax assessment orders as M/s.K.Rangasamy, HUF (Ex.B62). After his death, for the assessment years 1967-1968 the name of the assessee was shown as Shanmuga Velayutham, HUF (one minor) (Ex.B63). In 1961, Rangasamy was the head of the family. During 1967-1968, the 10th defendant is shown as the head of the family. The plaintiff, who was a minor then, was shown as a coparcener. Ex.B57, dated 30.7.1963, which is the income tax return for the assessment year 1962-1963, the first defendant has been assessed in his individual status. Exs.B58 and B59 also show that the first defendant had been assessed as an individual. Ex.B60 shows that in the year 1971 and 1972, the status of the first defendant was HUF. Since D3 was born by then, Ex.B61 also shows that for the assessment year 1972-1973 the status of the first defendant was shown as HUF. Ex.B19, dated 4.3.1983, which is I.T. assessment order for the year 1975-1976, stands in the name of the 10th defendant. The 10th defendant was a partner in M/s. Rangasamy & Brothers. The Wealth tax assessment of the fourth defendant for the year 1984-1985 was shown as HUF ordinary.
129. According to the learned Senior Counsel, the aforesaid documents show that each of the brothers were individually assessed under the Income Tax Act and Wealth Tax Act. Ex.B54 is the additional grounds of appeal filed before the Assistant Collector, Excise Duty by the 7th defendant, wherein it is contended that a sum of Rs.1,03,524/- paid by the LIC has wrongly been treated as an individual asset of her deceased husband and she has prayed that from the said amount of Rs.1,03,524/- , Rs.50000/- may be exempted and the balance of Rs.53,524/- may be assessed as an asset belonging to the joint family. Therefore, the learned Senior Counsel submitted that the contention of the plaintiff and the 7th defendant that the said amount was entrusted by her to the first defendant and the same was utilised for the development of business is not correct.
130. Learned senior counsel submitted that the under Ex.A23 sale deed, dated 21.8.1975, the 4th defendant sold the property allotted to him in 1960 partition to D7 and her brother D9. Under Ex.A24, dated 21.8.1975, the first defendant sold the property allotted to him to one Siva Natarajan. Under Ex.A25, dated 21.8.1975, the first defendant sold another property allotted to him in 1960 partition to D7 and D9. Similarly, Under Ex.B4 sale deed 21.8.1975, the plaintiff and 7th defendant and 10th defendant have sold the property allotted to Rangasamy in 1960 partition to the third party. According to the learned Senior Counsel, the above said properties have been mentioned as ancestral properties and allotted to them under 1960 partition and all these properties have been sold to buy some other property. Under Ex.A22 dated 27.8.1975, 1/3rd of the property was purchased in favour of D1 and D4 each and 1/6th was purchased in favour of the plaintiff and the 10th defendant each. If there was a joint family in 1975, the property could have been purchased by the first defendant in his name, whereas each of the parties get specified separate share.
131. The learned Senior Counsel referred to and relied upon the following documents, namely, Date Exhibit Particulars 15.4.1981 A-47 Judges Summons in C.A.No.320/81 in C.P.No.39/66 19.4.1983 B-29 Annual Returns of Vasudeva Textile upto 19.4.1983(Related to Exs.B13& 14) 27.7.1984 B-30 Annual Returns of Vasudeva Textiles upto 27.7.1984 1983-84 A-12 Annual Report of Vasudeva 3781 B-17 Dissolution Deed of Swami & Co.
22.1.1982 B-92 Form No.32 of Vasudeva Textiles 51284 B-16 Dissolution Deed of Swami & Co.
51284 B-66 High Field Tea Factory Stock Register from 6/73 to 24.3.81 51284 B-67 High Field Tea Factory Stock Register from 25.3.1981 to 11/90 51284 B-68 High Field Tea Factor Gate Pass 1.1.1981 to 25.3.1981 51284 B-69 High Field Tea Factory Gate Pass 27.3.1981 to 22.6.1981 6381 B-70 Original Sale deed by D2, D5 & D9 20.3.1984 X-21 D.D application form of Union Bank of India, Coonoor 20.3.1984 X-22 D.D. Application form of Union Bank of India, Coonoor 2884 B-71 Demand Promissory Note by Plaintiff, D10 in favour of D1 2884 X-12 Pronote of plaintiff 3884 X-13 Pronote of plaintiff and D10 to D1's daughter (in favour of Chitra Devi) X-17 Statement of Accounts of D4 with PNB X-18 Statement of Accounts of Swamy & Co. with Punjab National Bank and also referred to the evidence of P.W.1, D.W.1 and D.W.2 and submitted that the aforesaid documents and the oral evidence show that the 1981 family arrangement had also been acted upon.
132. The learned Senior Counsel also referred to and relied upon the following documents, namely, Date Exhibit Particulars 1983-84 A-12 Annual Report of Vasudeva 1984-85 A-13
-do-
1985-86 A-14
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19.10.1984 B-15 List of shareholders of Vasudeva made upto 19.10.1984 19.4.1983 B-29 List of shareholders of Vasudeva made upto 19.4.1983 27.7.1984 B-30 List of shareholders of Vasudeva made upto 27.7.1984 17.9.1985 B-31 List of shareholders of Vasudeva made upto 17.9.1985 29.8.1986 B-32 List of Shareholders of Vasudeva made upto 29.9.1986 22.4.1987 B-46 Memorandum of the Executive Committee of TIIC with regard to Anitha Doublers 4788 X-4 TIIC loan application filed by Vasudeva Tex signed by plaintiff X-1 letter from Vijay Doublers and Anitha Doublers to Chief Manager, Punjab National Bank 8787 X-2 Lease Deed by Manickam in favour of Vijay Doublers 27.2.1987 B-90 Extract from Register of Firms M/s. Anitha Doublers 20.1.1988 B-23 Sale Deed by Rangasami & others favouring Anitha Doublers 20.1.1988 B-24
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X-35(4) Letter by D10 Director of Vasudeva to PNB to close account 8988 X-35(11) Letter by PNB to Vasudeva 11787 X-30 Title Deed deposit register by plaintiff, D10 depositing documents on behalf of Vasudeva Textile with PNB for loan extended to Vija Doublers and Anitha Doublers X-3 Specimen Signatures of D10 and plaintiff with PNB 22.1.1981 B-92 Form No.32 of Vasudeva Tex 29.5.1989 B-21 Memorandum of Association of Somanur Textiles 29.5.1989 B22 Articles of Association of Somanu Textiles 19.10.1984 B-15 List of shareholders of Vasudeva Tex.
15.6.1988 B-36 Order of High Court in CRP No.123 & 4343/87 17.1.1989 B.37 Interim Order passed in O.S.No.607/89 PDM, Coimbatore.
3389B-38 Order of the Special Deputy Collector in E.P.No.2/89 111290 B-39 Order in O.S.No.514/86 District Munsif Court, Coimbatore 24.4.1986 B-40 Plaint in -do-
17.4.1989 B-41 Plaint in O.S.No.607/89 District Munsif Court, Coimbatore.
23.3.1989 B-42 Summons in O.S.No.607/89 22.3.1991 B-43 Decree in O.S.No.607/89 3389 B-44 Possession Receipt 19.9.1994 B-12 Exchange of letters by E.N.Sivasamy (D11) & Kumarasamy Gounder (D1) B-35(4) Letter by D10 Director of Vasudeva to PNB to close account 30.9.1991 B-91 Form 23 of Vasudeva Tex 13.7.1990 B-45 Sale Deed by Venkatasamy & Others in favour of plaintiff & others 10293 B-9 Memo of the 1st plaintiff in O.S.No.1101/87 1996-97 B-35 Annual Report of Vasudeva Tex and submitted that the aforesaid documents clearly show that the 1984 compromise decree has also been acted upon by the plaintiff's branch.
133. The learned Senior Counsel referred to and relied upon the following documents, namely, Date Exhibit Particulars 14.12.1984 B-77 Current A/c Pass Book of D1 of Bank of Tamil Nadu 1485 B-78
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14.12.1997 X-26 Memorandum of Deposit of Title Deeds by D1 as Director of Swamy & Swamy Plantations with IOB 14.12.1997 X-27
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28.8.1989 A-8 Sale Deed by D2 in favour of Veena Prasanth 15.11.1989 A-9 Sale Deed by D1 in favuor of Merch George 13.12.1990 A-10 Lease Deed between D1 and Vasanthakumari 15.11.1989 A-11 Sale Deed by D1 in favour of Mercy George 9994 B-12 Exchange of letters between D11 and D1 4388 B-82 Wealth Tax Return of D1 for 1985-86 25.3.1991 B-83 IT Assessment Order of D2 for 1986-87 10283 B-85 Kist Receipts 6884 B-2 Registration copy of Decree in O.S.No.37/84, Sub Court, Coimbatore 4285 B-28 Letter from Land Acquisition Department Joint Secretary to D1 regarding Vedapatti land and submitted that the aforesaid documents clearly established that the compromise decree has been acted upon by the first defendant's branch also.
134. The learned Senior Counsel referred to and relied upon the following documents, namely, Date Exhibit Particulars 1985 X-14 Memorandum of Deposit of Title Deeds by D4 Branch to PNB 1983 X-15
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1997X-16
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101284 B-88 Sale Deed by C.Kamalam (D5) in favour of S.Chinnasamy 24.5.1990 B-89 Sale by Chinnasamy in favour of Prabakaran 21.1.1997 B-86 Patta of D4 81088 X-35(8) Letter by PNB 20.3.1984 X-21 DD application from Union Bank of India, Coonoor.
20.3.1984 X-22
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X-17 Statement of Accounts of D4 with PNB 4388 B-82 Wealth Tax Returns of D1 for 1985-86 30.3.1987 X-19 Wealth Tax Asssessment Order of D1's Daughter for 1984-85 31.1.1987 X-20
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and the oral evidence of P.W.1 and submitted that the compromise decree had been acted upon by the branch of fourth defendant also.
135. The learned Senior Counsel submitted that a perusal of Ex.B29, dated 19.4.1983 Annual Returns of Vasudeva Textile upto 19.4.1983 has been signed only by the plaintiff and the 10th defendant. Similarly, Ex.B30 Annual Returns upto 27.7.1984 shows that only the plaintiff and the 10th defendant have signed. A perusal of Ex.B30 shows that the first defendant held 9907 shares, the fourth defendant held 9851 shares, the 10th defendant held 51000 shares and the plaintiff held 49766 shares, whereas as per Ex.B29, the first defendant held 9907 shares, the fourth defendant held 4001 shares, the 10th defendant held 3900 shares and the plaintiff held 3316 shares. A comparison of Exs.B29 and B30 shows that there was increase in the shareholding of the plaintiff and the 10th defendant. Similarly, a perusal of Ex.B31, dated 17.9.1985, which is the annual return of the Mills upto 17.9.1985, show that the shareholding has been increased to 3,10,000. The 10th defendant was holding 97000 shares; the plaintiff was holding 96000 shares; Sihamani, who is the wife of the 10th defendant, was holding 11000 shares; Sathyavathi, who is the daughter of the fourth defendant was holding 10000 shares; the minor daughter of the 10th defendant was holding 10000 shares; the minor son of the 10th defendant was holding another 10000 shares and other relatives were also allotted shares. Thus the branches of the plaintiff and the 10th defendant totally held 2,94,320 shares. The plaintiff and the 10th defendant were the Managing Directors of the Mills and with their aforesaid controlling shares of 2,94,320 shares, they can take whatever the decision they wanted to take regarding the affairs of the Mills and its properties.
136. Ex.B104, dated 24.4.1979 is the affidavit filed by the plaintiff as a partner of Swamy and Company and in that affidavit, it has been averred that Mr.M.C.Shroff became the lessee of the Mills in the auction conducted by the Official Liquidator. The averments in paragraph 5 of the affidavit show that the Company Court had permitted the taking of partners to run the Mills, one of whom should be S.K.Chinnasamy of Somanur, who is the fourth defendant, who had to assign LIC policies in favour of of the Official Liquidator securing the payment of arrears of rent of Rs.1,01,800/- in instalments. Pointing out the same, the learned Senior Counsel submitted that the first defendant has nothing to do with the Mills as he was not one of the lessees. The said affidavit also shows that the machinaries were reconditioned and new machinaries were installed.
137. The learned Senior Counsel submitted that in Ex.A44 affidavit filed by the first defendant in C.A.No.320 of 1981 in C.P.No.39 of 1966 on 15.4.1981, i.e., after one month from the family arrangement, dated 8.3.1981, it is stated that the creditors are entitled to preferential claims for a sum of Rs.8000 and the unsecured liability was over Rs.15,00,000/-. In paragraph 20 the affidavit, it is stated that the lessess have invested in the Company by acquiring substantial share holdings from the contributories and also obtained assignment of their claims/debts from various creditors of the Company and the same have been duly recognised by the Company Court.
138. Learned senior counsel submitted that in paragraph 27 of the affidavit, it is stated that all the preferential claims have been settled by the Official Liquidator and they have been paid in full. It is stated that there are 250 claims amounting to Rs.11,94,767/- of unsecured creditors and out of that the said claims the first defendant and his associates have become entitled to a sum of Rs.7,00,000/- as unsecured creditors and an undertaking has been given that the creditors will be paid in full. In paragraph 28 of the affidavit it is stated that since the Company has in its possession of the large extent of land, the provisions of Tamil Nadu Urban Land Ceiling and Regulation Act will be applicable. It is further stated in paragraph 29 of the affidavit that now the company is a viable unit because of the machineries installed by the lessees, who are in a position to permit the Company to make use of them and because of that the Company would be in a position to run the mills and now that the position of the textile industry is not as bleak as it was during the earlier years. According to the learned Senior Counsel, the averments in the affidavit would clearly show that the company was in a healthy position to run.
139. The learned Senior Counsel submitted that Ex.B16, dated 5.12.1984 is the dissolution deed of the partnership firm , namely, M/s. Swamy and Co., in which D4, D7, D10 and the plaintiff were the partners with effect from 1.4.1984 and as per the dissolution deed, D4 and D7 have gone out of the firm. As per Ex.A52, the order passed in C.P.No.46 of 1981, dated 22.1.1982, the order of winding up of the Mills has been permanently stayed. The assets were handed over to the lessees by the Official Liquidator and the subsisting liabilities have been decreased. Some liabilities were taken over by the first defendant and M.C.Shroff. The liability was very negligible. It is not the case of the plaintiff that there was any claim from creditors. The plaintiff and his close relatives held 95% shares in the company. Therefore, the plaintiff and the 10th defendant wanted to have the Vasudeva Industries Limited as they knew that the company had substantial land holdings etc. and only the shares were transferred and not the assets. According to the learned Senior Counsel, the aforesaid facts clearly establish that the 1960 partition was given effect to and acted upon and similarly, 1981 family arrangement was also acted upon.
140. Learned senior counsel further submitted that Ex.A-48 dated 29.08.1986 is the minutes of the Annual General Body Meeting of the Mill; on 21.08.1997, P.W.1 was recalled and he was further examined in chief and only on that date, Exs.A-48 to A-51 were marked subject to the admissibility and the objection raised by the counsel for the first defendant; P.W.1 in his cross-examination has admitted that the originals of Exs.A-48 to A-51 were available in the company and he has also admitted that Exs.A-48 to A-51 are the xerox copies of the Minutes book. He further submitted that if the originals are available with the company, the same could have been summoned and marked, but the originals have not been marked. It is further submitted that Exs.A-48 to A-51 were not put to D.W.2 / D1, when he was in the witness box and as the first defendant had retired from Directorship in 1985 itself, Ex.A-48 cannot be true.
141. Learned senior counsel further submitted that on 19.09.1994, the 11th defendant wrote Ex.A-2, letter, to the first defendant informing him that the controlling shares in M/s.Sri Vasudeva Textiles Mills have been purchased by them through Mr.S.R.Shanmuga Velayutham (D-10), his brother, Mr. S.R.Somasundaram (plaintiff) and their family members; the control and management of the textile Mills with its land, buildings and machineries have been transferred to them for a consideration by the said two brothers; it is further stated therein that the plaintiff and the tenth defendant have handed over to them the relevant share certificates and among them share transfer forms were also signed by the tenth defendant, which has been signed by the first defendant on 22.05.1985; it is further stated therein that the first defendant ceased to have any right in the said shares held by him; relying on Ex.A-2, the learned senior counsel submitted that the contention of the appellant that the first defendant was in management of the Mills, even after the compromise decree, is not correct; in reply to Ex.A-2, the first defendant has written a letter, dated 21.09.1994, informing the eleventh defendant that he had ceased to have any interest in the shares held by him in M/s.Vasudeva Industries Limited as per the compromise decree, dated 06.08.1984 in O.S.No.37 of 1984 and he has handed over the share certificates and share transfer forms executed by him; the plaintiff and the tenth defendant have transferred the shares as per the said compromise decree; the first defendant has expressed his No Objection for transfer of shares that stood in his name; the said letter is marked as Ex.B-12 series; the share transfer forms signed by the first defendant have also been marked as part of Ex.B-12 series; the share transfer forms have been signed by the first defendant on 22.05.1985; in Ex.A-3, dated 28.08.1995, the plaintiff had requested the eleventh defendant with reference to the letters written by him to the first defendant, dated 19.09.1994, 21.09.1994, 22.09.1994 stating that the letter dated 19.09.1994 written by him is contrary to truth and it has put him to great hardship and untold mental agony and he will be grateful if he can let him know in writing the correct position of what actually happened in that regard. In reply to Ex.A-3, the eleventh defendant has sent a Fax, Ex.A-4, dated 13.09.1995 and in that fax, it has been mentioned that while the eleventh defendant was in the process of purchasing shares of the Mill, it was represented by the first defendant that if he was willing to issue a letter, as per the format provided by him, the eleventh defendant will be able to acquire his shares and without realising that it was meant to be used as evidence against S.R.Somasundaram in a court of law, he had given the letter.
142. Learned senior counsel further submitted that the evidence was started on 09.10.1996 and the plaintiff had manoured to get Exs.A-4 and some of the letters marked in Ex.B-12 series from the eleventh defendant. He further submitted that when the eleventh defendant has not been examined as a witness, neither the averments contained in his written statement nor the letters written by him to the plaintiff could be relied upon. Learned senior counsel further submitted that Ex.A-12, which is the annual return for the year 1983-1984 of Sri Vasudeva Industries Limited shows that the day-to-day affairs of the industry was being looked after only by the plaintiff and the tenth defendant; it further shows that the plaintiff and the tenth defendant were the Managing Directors and they were in total management and control of the industry; the fourth defendant was not the Director of the Company; a similar position is revealed from Ex.A-14 also; Ex.X-6, the annual return has also been signed by the plaintiff and the tenth defendant only. He further submitted that a perusal of Ex.X-14, which is a Memorandum of Deposit of title deeds of the fourth defendant to Punjab National Bank, which shows that defendants 4 and 6 had created an equitable mortgage in favour of Punjab National Bank for loans obtained by them in respect of the properties allotted under the compromise decree and the certified copy of compromise decree in O.S.No.37 of 1984 is shown as one of the title deeds; similarly, Ex.X-15 shows that in 1993 also, they have created an equitable mortgage in respect of the properties allotted under the compromise decree and the certified copy of the compromise decree is shown as one of the title deeds; Ex.X-16, dated 08.07.1987 shows that Punjab National Bank had sanctioned the limits under various headings to M/s.Swami Textiles and for that as security equitable mortgage has been created and a certified copy of the compromise decree in O.S.No.37 of 1984 is shown as one of the title deeds. According to the learned senior counsel, the aforesaid clearly establishes that the fourth and sixth defendant have accepted and acted upon the compromise decree; Ex.B-88, dated 10.12.1984, is the sale deed executed by the fifth defendant, the wife of the fourth defendant and in that, the compromise decree is referred to as the title deed under which she got the property sold under Ex.B-88; the compromise decree was registered on 06.08.1984 as Document No.1649/1984 and the registration copy of the compromise decree is Ex.B-2; subsequently under Ex.B-89, the purchaser under Ex.B-88 has also sold the property. Learned senior counsel submitted that a perusal of Ex.B-94 series, encumbrance certificates, reflect that the compromise decree has been relied upon as the title deed for various transfers.
143. Learned senior counsel further submitted that the additional documents filed by the first defendant show that after the sixth defendant filed his written statement on 21.08.1997, on 26.09.1997, defendants 4 and 6 have deposited the title deeds including the certified copy of the compromise decree with Punjab National Bank to obtain further limits and again on 25.03.1998 both of them have deposited title deeds along with the certified copy of the compromise decree for securing additional limits; thus the fourth defendant's branch had accepted and acted upon the compromise decree and benefited by it and hence the sixth defendant cannot contend that the decree is bad; even in his written statement, the sixth defendant has not stated that his right is affected in any manner by the compromise decree.
144. Learned senior counsel further submitted Exs.B-33, B-34, B-35, which are the annual returns of Sri Vasudeva Textiles Mills Limited for the years 1994-1995, 1995-1996 and 1988-1989 respectively, reveal that the tenth defendant was the Director of the Mill; it is further submitted that in the annual return, Ex.B-35 for the year 1988-1989, the first defendant has not been shown as the Director; it was contended by the learned counsel for the appellant that the first defendant had resigned as the Director only by his letter, Ex.A-20, dated 28.08.1989 and the plaintiff also resigned his Directorship under Ex.A-21, dated 21.08.1989; Ex.A-20 is not admitted by the first defendant and in his cross-examination, P.W.1 has admitted that the first defendant was not residing in the address mentioned in Exs.A-20 and A-21. According to the learned senior counsel, Exs.A-20, A-21 and A-48 are created by the plaintiff to suit his case; as the first defendant had already ceased to be the Director from 1985, Exs.A-20 and A-21 have been created only for the purpose of the case. Further it is submitted that it is not the case of the plaintiff that subsequently after 1985, the first defendant was inducted as the Director. He further submitted that Ex.A-19, dated 29.08.1989, which is said to be the proceedings of the Board of Directors of Sri Vasudeva Textiles Limited has been produced in support of Ex.-A-21 to show that the plaintiff had resigned as Director and the first defendant had resigned only in 1989. He further submitted that Ex.A-19 is only the xerox copy and the original has not been produced and the authenticity of Ex.A-19 has not been accepted by the defendants and therefore no relevance could be placed on Ex.A-19.
145. Learned senior counsel further submitted that Ex.B-71, dated 02.08.1984 is a promissory note executed by the plaintiff and the tenth defendant in favour of the first defendant for a sum of Rs.3 lakhs received by them by way of a demand draft drawn on Union Bank of India, Coimbatore and the same has been attested by the fourth defendant; Ex.X-12, dated 02.08.1984 is the promissory note executed by the plaintiff and the tenth defendant in favour of Vasantha Kumarai, the daughter of the first defendant for Rs.2 lakhs received by way of demand draft and it has also been attested by the fourth defendant; Ex.X-12, dated 02.08.1984, is the another promissory note executed by the plaintiff and the tenth defendant in favour of Chitra Devi, the daughter of the first defendant for Rs.2 lakhs received by way of a demand draft and the promissory note has been attested by the fourth defendant; Ex.X-21, dated 20.03.1984 and Ex.X-22, dated 18.04.1984 are the two challans for obtaining demand draft in favour of the fourth defendant for Rs.2 lakhs each, which show the sum of Rs.4 lakhs have been paid to the fourth defendant as per the compromise decree; though in the written statement filed by the first defendant, in paragraph 17, the aforesaid payments and borrowals have been mentioned, the same have not been denied in the reply statement filed by the plaintiff; Ex.X-28 dated 31.08.1983 shows that the plaintiff and the tenth defendant have created equitable mortgage over the properties of Vasudeva Industries Limited for raising loans and after discharge of the loan, the documents have been released on 27.04.1987. He further submitted that the first defendant had not created any equitable mortgage and there is no personal guarantee given by the plaintiff and the tenth defendant under Ex.X-28; Ex.X-29, dated 18.11.1986 shows that Punjab National bank has advanced loan to Vasudeva Industries Limited and the plaintiff and the tenth defendant have deposited the title deeds in respect of the properties together with the land, buildings and machinery of Vasudeva Industries Limited as additional collateral security; Ex.X-30 shows that for the sanction of the term loan of Rs.1,96,000/- sanctioned to M/s. Anitha Doublers and Rs.1,96,000/- to M/s. Vijay Doublers, which belong to the family members of the plaintiff and the tenth defendant, the plaintiff and the tenth defendant have given the properties of Vasudeva Industries Limited as collateral security to the Bank, but they have not given any personal guarantee; Ex.X-32, dated 04.01.1984, which is the proposal for fresh term loan for Vasudeva Industries Limited, no personal guarantee had been furnished or insisted; Ex.X-32 also shows that in a period of nine months ending 30.11.1983 the company has made a provisional profit of Rs.6.74 lakhs. He further submitted that in 1984 no personal guarantee was given by the plaintiff and the tenth defendant. Learned senior counsel, by referring to Ex.X-35 (xviii), dated 23.03.1984, which is an inter-office communication between the Branch Office of Punjab National Bank, Coimbatore to its Regional Office regarding the renewal proposal of M/s. Vasudeva Industries Limited, wherein in the said inter-office letter, in paragraph 21, it is stated as follows, Personal guarantee of the Directors if insisted upon by the Bank shall be obtained. But we feel that it is superfluous, since we are having the entire assets of the mill as collateral security, which at the market rate will easily fetch around Rs.75 lacs..
and submitted that thus it is clear that no personal guarantee was given by the plaintiff or the tenth defendant and no documents have been produced by the plaintiff to show that the personal guarantee was given by the plaintiff and the tenth defendant before the compromise decree was passed. He further submitted that Ex.B-46, dated 22.04.1987, which is a memorandum, submitted to the Executive Committee of TIIC with regard to Anitha Doublers, shows that M/s.Anitha Doublers have proposed to take an area of about 97,000 square feet on fifty years lease from M/s.Vasudeva Textiles Limited; the partners of M/s.Anitha Doublers are Smt.Sirumani, the wife of the tenth defendant and Tmt.Abiramasundari, the wife of the plaintiff and they have proposed to construct a building in the lease land and it is further submitted that they are proposing to get the necessary funds from their husbands who are running the Mill. He further submitted that the aforesaid documents clearly show that from 1981, the plaintiff and the tenth defendant were in management of Vasudeva Textiles Mills Limited; in 1987, when the Mill was going down, the plaintiff wanted to grab the properties of the first defendant. He further submitted that Exs.B-36, B-37, B-38, B-40, B-41, B-44 and B-45, which relate to the Court proceedings show that the Mill was being represented only by the plaintiff and the tenth defendant as Managing Directors of Vasudeva Textiles Limited and nowhere the first defendant's name is mentioned, therefore, the learned senior counsel submitted that the contention of the appellant that the first defendant was in the total control and management of the textile mill is unsustainable.
146. Learned senior counsel further submitted that Ex.B-50 is the amended plaint in O.S.No.527 of 1987 for partition field by the minor sons of the tenth defendant, represented by their mother, and the same was withdrawn with the leave of Court and in that suit, Ex.B-8 is the affidavit filed by Mrs.Sigamani, the mother of the plaintiffs wherein the 1981 family arrangement has been referred to; Ex.B-9 is the memo filed by the tenth defendant on 10.02.1983 in O.S.No.1101 of 1987 (in that suit, he was the first plaintiff) in which he has stated that he had sold the property allotted to his share under the agreement, dated 08.03.1981 and the decree in A.S.No.33 of 1984 and he had not pressed his claim in the suit and sought for dismissal as against him. He further submitted that in the application to transpose S.R.Shanmuga Velayutham, the tenth defendant in the suit, the contents of the memo, Ex.B-9, have not been questioned; even at the time of amending the plaint, no effort has been taken by the plaintiff to raise pleadings regarding the family arrangement dated 08.03.1981.
147. Learned senior counsel further submitted that the documents produced and referred to by him earlier and the oral evidence clearly establish that the 1960 partition and 1981 family arrangement have been given effect to and the compromise decree also has been acted upon; it is also established that after 1960 there was no joint family and after 1981 the defendants 1, 4, the plaintiff and the tenth defendant got their share of properties.
148. Learned senior counsel submitted that the only ground of attack in the plaint is that only to save the properties from the Bank as the plaintiff and the tenth defendant have given personal guarantee, the compromise memo was filed and the compromise decree was obtained, but the personal guarantee said to have been given by the plaintiff and the tenth defendant has not been proved and the said ground of attack fails; the reason for filing the suit in O.S.No.37 of 1984 has been stated in paragraph 17 of the written statement of the first defendant. He further submitted that the plaintiff and the tenth defendant attack the decree as sham and nominal and collusive, but sham and nominal and collusion cannot go together, since the decree has been acted upon, it cannot be said to be sham and nominal; as far as the allegation of collusion is concerned, it is voidable and not void; moreover, the plaintiff, being a party to the alleged collusion, cannot challenge the compromise decree. He further submitted that the compromise decree cannot be declared as sham and nominal or collusive and the decree, if at all, can only be set-aside. Since the third parties have also acted upon and the Bank has given loan by accepting some of the suit properties allotted to the parties to the suit as security, the suit cannot be entertained. He further submitted that a perusal of Ex.B-50 plaint in O.S.No.527 of 1987 shows that the wordings therein and the plaint in the present suit O.S.No.1101 of 1987 are similar.
149. Learned senior counsel further submitted that Swami & Company, the partnership firm, was the lessee of Vasudeva Textiles Limited; the second defendant, the wife of the first defendant, was also a partner of the firm with the plaintiff; the fourth defendant and one M.C.Shroff; subsequently, M.C.Shroff, the second defendant and the fourth defendant retired from the partnership firm and the plaintiff became the owner of all the assets of Swami and Company and thereby he became the owner of the machineries installed in Vasudeva Textiles Limited; thus the evidence on record clearly show that the three branches have reallocated the properties purchased by them. He further submitted that the contention of Mr.Srinath Sridevan regarding violations of provisions of the Companies Act in the transfer of shares is concerned, there is absolutely no such plea in the plaint and without any pleadings and evidence, it cannot be raised for the first time in the above appeal. He further submitted that none of the shareholders or any bodyelse have filed any objection or suit challenging the transfer of shares.
150. Learned senior counsel further submitted that in view of the provisions contained Order 23 Rule 3 of the CPC and Order 23 Rule 3-A of the CPC, the suit is not maintainable; a separate suit, challenging the compromise decree, is not maintainable and if at all the plaintiff is aggrieved, he should have challenged the compromise decree in the same proceedings in O.S.No.37 of 1984 or filed an appeal.
151. Learned senior counsel further submitted that in the decision reported in 2010 (3) SCC 251 (referred to supra), which is relied upon by Mr.Srinath Sridevan, Order 23 Rule 3-A of the CPC has not been discussed and the facts of that case are totally different from the facts of the case on hand; in that case, the plaintiff did not know that she was signing the compromise memo, but in this case, the plaintiff, defendants 7 and 10 were fully aware of the contents of the compromise decree and thereafter only have signed the compromise memo and therefore the question of playing any fraud on the plaintiff or defendants 7 and 10 does not arise and in fact the plaintiff and defendants 7 and 10 have not pleaded that any fraud was played upon them; as far as non-denial of 1981 family arrangement in the reply statement filed by the plaintiff, the learned senior counsel submitted that this fact should be taken note off by the Court.
152. We have heard the submissions of the respective learned counsel on either side and perused the materials available on record.
153. CMP Nos.12013 and 12014 of 2004 have been filed by the appellant in A.S.No.332 of 1999 to permit the petitioner / appellant to raise additional grounds and to amend the plaint in O.S.No.37 of 1984 respectively. While the appeal has been argued extensively by Mr.Srinath Sridevan, he has not even brought to the notice of this Court, the aforesaid two petitions and he has not advanced any arguments on the said petitions. Further, it is seen that not even notice has been ordered in these petitions and no opportunity has been given to the respondents to file their counter affidavit. As aforesaid, the learned counsel for the petitioner / appellant has not made any submissions, it has to be taken that the petitioner / appellant is not seriously pressing the applications. For the aforesaid reasons, we do not find any acceptable reason to entertain CMP Nos.12013 and 12014 of 2004 and accordingly the same are dismissed.
154. CMP No.13167 of 2004 has been filed by the petitioner in the above petition, who is the appellant in A.S.No.332 of 1999 seeking leave to produce the order bearing Tho.Mu.Na.B5/110/2001, dated 02.08.2001, issued by the Deputy Tahsildar, Coonoor, as additional evidence in the appeal and to mark the same as Ex.A-56.
155. Mr. Srinath Sridevan, learned counsel for the petitioner submitted that though the compromise decree was passed in O.S.No.37 of 1984 on 06.08.1984 as far as Item No.6 of 'B' Schedule, which is a property located at Coonoor and comprised in R.S.Nos.A/14/9/1 and A/14/6, the mutation of revenue records was taken place only on 17.08.1996 i.e., well after the trial in O.S.No.1101 of 1987 was under-way and therefore, according to the learned counsel, the property, which belongs to the appellant was never affected or intended to be affected by the decree in O.S.No.37 of 1984; the said document is necessary to establish the fact that the compromise decree was not acted upon; since the document was obtained only on 02.08.2001, the same could not be produced during the trial.
156. Though no counter affidavit has been filed by the respondents, Mr.T.R.Rajagopalan, learned senior counsel for respondents 1 to 3 submitted that when the case of the petitioner / appellant is that the compromise decree has not been acted upon, he should have been diligent enough to find out as to whether mutation of names in the revenue records have taken place in respect of the lands which are the subject matter of the compromise decree; if he had been diligent enough, the said fact could have been ascertained and the relevant document could have been produced before the trial court itself, as the mutation has taken place on 17.08.1996, whereas the suit was disposed of only on 30.09.1997. He further submitted that even otherwise the said document is not a vital document for deciding the issue that arises for consideration in the above appeal. Learned counsel for the other respondents did not raise any objection.
157. We have considered the aforesaid submissions made by the learned counsel on either side and perused the contents of the affidavit.
158. A perusal of the proceedings of the Joint Tahsildar 1, Coonoor, dated 02.08.2001, shows that the petitioner / appellant had applied for mutation of revenue records and got the the chitta only on 02.08.2001. When the suit itself has been disposed of on 30.09.1997 and the appeal had been filed in 1999, it has not been explained as to why the petitioner has not taken steps before filing the appeal or immediately thereafter. Further, as rightly contended by Mr.T.R.Rajagopalan, learned senior counsel, if the petitioner had been diligent enough in prosecuting the proceedings and when the specific case of the petitioner was that the compromise decree had not been acted upon, he could have applied for the certified copy of the Chitta, during pendency of the suit itself, but he had not done so. The reason for not applying for the copy of the Chitta during pendency of the suit has not been set out. Further, in our considered view, the said document now sought to be produced as additional evidence is cannot be said to be a very vital document to decide the issue. Therefore, we do not see any reason to entertain the application and hence CMP No.13167 of 2004 stands dismissed.
159. CMP No.974 of 2011 has been filed by respondents 2 and 3 in A.S.No.332 of 1999 to receive the the documents listed below as additional evidence:-
(i)26.09.1997 Letter depositing title deeds by the 6th defendant and his father, 4th defendant to the Manager, Punjab National Bank, Coimbatore for financial facilities limit Rs.27.25 lakhs sanctioned to M/s.Swamy Textiles.
(ii)25.03.1998 Letter depositing title deeds by the 6th defendant and his father 4th defendant to the Manager, Punjab National Bank, Coimbatore, for Term Loan Rs.10 Lakhs sanctioned to M/s.Swamy Textiles.
Learned counsel for the petitioners herein submitted that while the suit was dismissed by the Trial court on 30.09.1997, the first document is dated 26.09.1997, which is just few days prior to the disposal of the suit and Document No.2, is dated 25.09.1998 which is after the disposal of the suit, hence in the said circumstances, these two documents could not be filed before the trial court and the same came to light only recently after the appeals have been filed before the High Court. Therefore, the learned counsel submitted the petitioners filed CMP No.14533 of 1999 for production of the documents and a learned Single Judge of this Court, by an order dated 19.12.2000, allowed the said CMP. He further submitted that another petition under Order 41 Rule 27 of CPC to receive the documents sought to be produced as additional evidence was also filed and the same was numbered, but the Registry has misplaced the same and hence the present petition has been filed.
160. Except the fourth respondent, no other respondents have filed any counter affidavit. Learned counsel for the fourth respondent submitted that in the counter affidavit the circumstances under which the properties allotted to the fourth respondent were given as security for raising loan with Punjab National Bank have been set out and petition to receive additional documents is only intended to create prejudice. Learned counsel submitted that the documents now sought to be produced as additional evidence will not in any way advance the case of the petitioner.
161. We have considered the aforesaid submissions made by the learned counsel on either side and perused the averments in the affidavit and in the counter affidavit.
162. It is seen that by the order, dated 19.12.2000, passed in CMP No.14933 of 1999, Mr. Justice K.P.Siva Subramanian, has allowed the petition. Pursuant to the said order and after steps having been taken by the petitioner, Punjab National Bank had produced the documents now sought to be adduced as additional evidence. Learned senior counsel submitted that immediately a petition under Order 41 Rule 27 CPC was filed to receive two documents, referred to above, as additional evidence and the same was numbered and actually the same was being listed along with the appeals when the same were listed before other Benches, unfortunately the Registry has misplaced the same and the same is not shown in the cause list, hence the present petition has been filed. Learned senior counsel further submitted that while the first document came into existence just a few days before the disposal of the suit, the second document is after the disposal of the suit and hence both documents could not be produced before the trial court and immediately after filing of the appeal, the petition had been filed. He further submitted that these two documents are necessary to prove that the fourth respondent's branch had acted upon the compromise decree, whereas it is the contention of the learned counsel for the sixth respondent that the documents now sought to be produced as additional evidence are not the material documents to decide the issue. Since these two documents have been produced by Punjab National Bank, pursuant to the order passed by the learned Single Judge in CMP No.14933 of 1999 and the Registry has misplaced the petition filed under Order 41 Rule 27 of the CPC, and as the two documents are necessary for deciding as to whether the fourth respondent has acted upon the compromise decree or not and there is no unnecessary delay on the part of the petitioners in filing the above petition, we deem it fit to allow the petition. Accordingly, CMP No.974 of 2011 is allowed and (i) the first document, dated 26.09.1997 Letter depositing title deeds by the 6th defendant and his father, 4th defendant to the Manager, Punjab National Bank, Coimbatore for financial facilities limit Rs.27.25 lakhs sanctioned to M/s.Swamy Textiles, is marked as Ex.B-109 and (ii) the second document, dated 25.03.1998 Letter depositing title deeds by the 6th defendant and his father 4th defendant to the Manager, Punjab National Bank, Coimbatore, for Term Loan Rs.10 Lakhs sanctioned to M/s.Swamy Textiles, is marked as Ex.B-110.
163. The point for determination that arises for consideration in the above appeals is as to whether the suit seeking to declare the decree passed in O.S.No.37 of 1984 on the file of the Sub Court, Coimbatore, is sham and nominal, ultra-vires, collusive, unsustainable, invalid, unenforceable and not binding on the plaintiff, is maintainable in the light of the provisions contained in Order 23 Rule 3 of the CPC and Order 23 Rule 3-A of the CPC?
164. As the appeals could be disposed of on the basis of the finding to be recorded on the aforesaid point for determination, we have not formulated any other point for determination, though extensive arguments have been made by the respective counsel as to whether the partition effected under Ex.B-26, dated 07.11.1960 between Rangaswamy (father of the plaintiff), Kumaraswamy (D-1) and Chinnaswamy (D-4) was acted upon or not; whether there was a joint family among the three branches after 07.11.1960; whether the various businesses run under different partnership firms are the joint family businesses.
165. It is the specific case of the plaintiff in the plaint that in the beginning of 1984, the first defendant represented that since the plaintiff and the tenth defendant have given personal guarantee to the Bank for the loans of several lakhs, it would be risky and not expedient to have the family properties in the names of the plaintiff and the tenth defendant and it would be advantageous and safe to keep off the names of the plaintiff and the tenth defendant on records as owners; the entire family properties would be kept in the name of defendants 1 and 4 for the purpose of record and to avoid the risk of any bank claim; the first defendant assured that this arrangement would not affect or extinguish the legitimate share of the plaintiff and the tenth defendant in the properties; the first defendant arranged to file a suit in Sub Court, Coimbatore, through the family lawyer and it was a collusive suit and a mere make believe affair; as there was no misunderstanding or provocation for any one of the members of the family to go to a court of law for partition; it is the further case of the plaintiff that on 06.08.1984, the first defendant took the plaintiff and the tenth defendant to the Court and their signatures were taken and made to stand before the Presiding Officer and say that they are accepting the contents of the compromise petition; they obeyed the directions of the first defendant, but infact, they did not go to any lawyer independently nor gave any instructions to represent them in the above suit and subsequently they came to know that the lawyers of the same office have signed and filed a compromise petition into court and secured a decree thereon on 06.08.1984; the entire proceedings in O.S.No.37 of 1984 on the file of the Sub Court, Coimbatore, was a collusive one and it was a mere make believe affair; the first defendant has abused the process of the Court; the entire proceedings and the decree secured from the court is a fraud played not only on the plaintiff, but also against the Court and therefore the decree is void; the plaintiff never even thought of relinquishing or giving up his rights in valuable properties; the compromise decree which was intended only to secure and safeguard the properties is sham and nominal besides being fraudulent; subsequent to the passing of the decree, the attitude of the first defendant has changed and has given a go-by to his assurance and want to press the compromise decree against the plaintiff to deprive his legitimate share in the estate; it is the further case of the plaintiff that there is vast disparity in the value allotted to each groups and no member in his sense would have accepted the decree; the plaintiff's group is allotted no shares in immovable properties and only worthless shares in the Public Limited Company have been allotted to them; as the mother and sister of the plaintiff have expressed their desire not to take any share, the plaintiff and the tenth defendant are entitled to claim 1/3rd share in the suit properties.
166. Mr. Srinath Sridevan, learned counsel for the plaintiff / appellant contended that the compromise decree is not at all a compromise decree in the eye of law as it is a collusive and a make believe affair and the process of the court was misused to achieve the ulterior object of the first defendant; as the decree has been obtained by playing fraud on the court, the same is void; the decree is contrary to the provisions of the Companies Act, as the shares of the Public Limited Company have been transferred without permission of the Company Law Board and the provisions of Order 23 of the Code of Civil Procedure have not been followed and hence the decree is not valid. He further submitted that the averments in Exs.A-44 and A-45 will show that machineries installed in M/s.Vasudeva Textiles Limited belongs to the lessee and not to the company; under Ex.A-52, Order, dated 22.01.1982, passed in Company Petition No.46 of 1981, the winding up order, dated 27.04.1967 passed in Company Petition No.39 of 1966 was permanently stayed, but the alleged family arrangement pleaded by the first defendant was on 08.03.1981. According to the learned counsel, there would not have been a family arrangement in 1981 when the company was under winding up proceedings and the winding up order was permanently stayed only on 22.01.1982. He further submitted that the 1981 family arrangement is not mentioned in Ex.B-1, which is the plaint in O.S.No.37 of 1984; in Ex.B-3, which is the written statement filed by the first defendant, in O.S.No.37 of 1984 also there is no mention about the 1981 family arrangement but in the present written statement, it has been stated that the family arrangement of 1981 has been given effect to by the compromise decree; in Clause (3) of the application filed under Order 23 Rule 3 of the CPC, the same has been referred to; therefore, the learned counsel submitted that the 1981 family arrangement is not true; if the 1981 family arrangement is not true, then the arrangement or agreement pleaded in the memo of compromise is also cannot be true and when there is no lawful agreement, there cannot be any compromise decree based on that; the same contentions have been raised by Mr.S.Parthasarathy, learned senior counsel appearing for the seventh defendant / appellant in A.S.No.281 of 2000. He further submitted that the total loan obtained by M/s.Vasudeva Textiles Limited was Rs.22 lakhs; Ex.X-35 (xii), which is a letter, dated 17.06.1988 written by the Managing Director of Sri Vasudeva Textiles Limited refers to the personal guarantee to be given by the two Managing Directors and the fourth defendant and Ex.X-29, dated 18.11.1986 refers to the guarantee for the term loan for Sri Vasudeva Textiles Limited. He submitted that in paragraph 15 of the written statement, the first defendant has stated that in 1983 when the loan was taken from Punjab National Bank the plaintiff and the tenth defendant were in management and therefore guaranteed payment of the loan.
167. It is pertinent to point out that in the plaint the plaintiff has nowhere stated as to in respect of which loan, the personal guarantee was given by the plaintiff and the tenth defendant, the quantum of loan obtained, etc., When it is the specific case of the plaintiff that he and the tenth defendant had given personal guarantee to Punjab National Bank and as the first defendant represented that to safeguard the properties of the family from creditors and Punjab National Bank, the compromise memo was being filed, he should have mentioned all the relevant details and particulars regarding the alleged personal guarantee given by him and the tenth defendant to Punjab National Bank. The burden is heavily on the plaintiff to prove that. A perusal of Ex.X-29, dated 18.11.1986, which is a copy of the title deed register maintained by Punjab National Bank, Coimbatore Branch, pertaining to M/s.Sri Vasudeva Industries Limited, shows that there is absolutely no mention about the alleged personal guarantee said to have been given by the plaintiff and the tenth defendant, but it refers only to the collateral security given by the Managing Directors.
168. A perusal of Ex.X-35 (xii), relied upon by Mr.Srinath Sridevan, learned counsel for the plaintiff / appellant, which is the letter, dated 17.06.1988, written by one of the Managing Directors of Sri Vasudeva Textiles Limited addressed to the Chief Manager, Punjab National Bank, Coimbatore, refers to the Bank sanction letter, dated 02.03.1988 and in the letter, it is mentioned as follows:-
"Regarding the personal guarantee to be given by Directors, we request you to accept only the 2 Managing Directors' guarantee as the other Director is not willing to give his personal guarantee."
Hence it refers to the personal guarantee to be given and it does not refer to the personal guarantee, if any, already given by the plaintiff and the tenth defendant. Further, this letter is dated 17.06.1988 i.e., which is long after the passing of the compromise decree and therefore this letter has absolutely no relevance, but it is of course true that in paragraph 15 of the written statement the first defendant has stated that in 1983 when the loan was taken from Punjab National Bank, the plaintiff and the tenth defendant were in management and therefore guaranteed payment of the loan. From the aforesaid solitary statement made in the written statement of the first defendant, it could not be concluded that the plaintiff and the tenth defendant had given personal guarantee to Punjab National Bank prior to 1984 in the absence of any other material.
169. Learned counsel for the plaintiff / appellant relied upon Ex.X-34, which is the operating statement of Vasudeva Textiles limited for the period from 1984 to 1989 and submitted that in Ex.X-34, it is mentioned the Term Loan, DPG, C.C., and pledge have been secured by pledging of stock-in-trade and equitable mortgage of land and building and machineries and two directors have given personal guarantee for the loan. He also referred to Ex.X-35 (xviii) wherein it is mentioned "Personal guarantee of the Directors, if insisted upon by the Bank shall be obtained. But we feel that it is superfluous, since we are having the entire assets of the mill as collateral security, which at the market rate will easily fetch around Rs.75 lakhs.
170. A perusal of Ex.X-34 shows that it is the operating statement of Sri Vasudeva Textiles for the period from 1984 to 1989 which has been prepared by the Auditor of Sri Vasudeva Industries Limited on the basis of the informations furnished to him. The auditor himself has written in his own handwriting, viz., "As per informations given." In Ex.X-34, the following writing is found, namely "by pledge of stock-in-trade and equitable mortgage of land, building and machinery, two directors have given personal guarantee for the loan". This seems to be a statement prepared for obtaining loan. The aforesaid extracted portion does not reveal the names of the two directors who have given personal guarantee for the loan. It has also not been mentioned as to in respect of which loan the personal guarantee had been given and when and there is no mention about the quantum of loan for which personal guarantee was given.
171. It is relevant to point out that the plaintiff and the tenth defendant were the Managing Directors of M/s.Vasudeva Industries Limited during that period and if they had given personal guarantee, as contended, it would have been mentioned that the Managing Directors of the Company have given personal guarantee, but it is not mentioned so. Therefore from the above writing, in Ex.X-34, it cannot be held that the plaintiff and the tenth defendant had given personal guarantee for the loan. In Ex.X-35 (xiii) which is an application dated 08.02.1988 submitted by Sri Vasudeva Textiles Limited to Punjab National Bank seeking term loan of Rs.6 lakhs, it is mentioned that the two Managing Directors have already given their personal guarantee for all loans, but it has not been mentioned in respect of which loan and when the personal guarantee was given. Therefore, Ex.X-35 (xiii) does not reveal that the personal guarantee was given by the plaintiff and the tenth defendant before 1984.
172. A perusal of the portion contained in Ex.X-35 (xviii) relied upon by the learned counsel, which has been extracted supra, does not help the case of the plaintiff. The Bank has not insisted upon any personal guarantee, therefore, as rightly contended by Mr.T.R.Rajagopalan, learned senior counsel for respondents 1 to 3 herein, the personal guarantee said to have been given by the plaintiff and the tenth defendant has not been proved by acceptable evidence. The trial court also has considered the relevant evidence, both oral and documentary, and has also come to the conclusion that the personal guarantee said to have been given by the plaintiff and the tenth defendant has not been proved.
173. It is pertinent to point out that if really the plaintiff and the tenth defendant had given personal guarantee in respect of the loan obtained by M/s.Vasudeva Industries Limited prior to 1984, that is prior to the filing of O.S.No.37 of 1984, the plaintiff could have filed an appropriate application for summoning an official of Punjab National Bank, Coimbatore, and to produce the relevant Bank guarantee said to have been executed by them, but admittedly no such step has been taken by the plaintiff. The best evidence that could have been produced by the plaintiff to prove the personal guarantee would be production of the personal guarantee itself through an official of Punjab National Bank. It has not been explained as to why no such steps were taken by the plaintiff. When according to the plaintiff the personal guarantee is available with Punjab National Bank the plaintiff has not produced or taken any steps to summon the personal guarantee, which is the best evidence and hence an adverse inference also could be drawn against him.
174. During the course of his cross-examination, P.W.1 has stated as follows:-
VERNACULAR (TAMIL) PORTION DELETED If in the light of the aforesaid evidence of P.W.1, the case of the plaintiff is considered, it could be easily seen that the plaintiff has pleaded a totally false case. The very case of the plaintiff, pleaded in the plaint, which has been stated supra, is that in the beginning of 1984, the first defendant represented that since the plaintiff and the tenth defendant have given personal guarantee to the Bank for loans of several lakhs, it would be risky and not expedient to have the family properties in the names of the plaintiff and the tenth defendant and it would be advantageous and safe to keep off the names of the plaintiff and the tenth defendant on records as owners; the first defendant assured that this arrangement would not affect or extinguish the legitimate share of the plaintiff and the tenth defendant in the properties; the plaintiff obeyed and acted according to the decisions and directions of the first defendant; the first defendant arranged to file a suit in Sub Court, Coimbatore and it was a collusive suit and a mere make believe affair, but quite contrary to that he has deposed as above. According to his evidence, the plaintiff was not aware of the personal guarantee given by him on behalf of the Mill to the Bank in 1984. He has also admitted that in 1984, he did not go to the Bank and enquired about the personal guarantee. He has also admitted that he has not produced any documents relating to the personal guarantee. He has also stated that even on the date of the compromise decree he was not aware of the amount of loan payable to the Bank. When that being so, if really the first defendant had made the aforesaid representation, the plaintiff and the tenth defendant would not have agreed for the filing of the suit collusively. When the plaintiff was not aware of the Bank guarantee in 1984, it is un-understandable as to how he meekly accepted the alleged representation of the first defendant. Therefore, the entire case of the plaintiff relating to the personal guarantee said to have been executed by him and the tenth defendant and the alleged representation made by the first defendant is only an after thought of the plaintiff and it is an invented reason for filing the present suit to set-aside the compromise decree.
175. As pointed out above, the details of the personal guarantee alleged to have been given by the plaintiff and the tenth defendant have not only been mentioned in the plaint, but also has not been proved by acceptable evidence. When the plaintiff has not proved the personal guarantee given by him and the tenth defendant, the very substratum of the case pleaded by the plaintiff that the first defendant represented that since the plaintiff and the tenth defendant have given personal guarantee for the loans obtained by M/s.Vasudeva Industries Limited and to save the family properties from the claim that may be made by the Bank, the compromise memo is being filed, but the right of the plaintiff and the tenth defendant in the family properties will be held intact goes and the said plea of the plaintiff is nothing but false. As the plaintiff has not proved the alleged personal guarantee the alleged representation said to have been made by the first defendant cannot be true.
176. It is the contention of Mr.Srinath Sridevan that the parties did not go to Court by filing O.S.No.37 of 1984 to get the disputes settled through Court, but it is a stage managed affair and a fraud played upon the Court to achieve the object of the first defendant and the entire show was stage managed by the first defendant; the filing of the suit was only a make belief affair; the unequal distribution of shares in the properties itself will show that the parties would not have signed the compromise with an intention to give effect to it, but it was only at the direction of the first defendant the plaintiff has signed the compromise memo and appeared before the Court and he acted in good faith.
177. In the plaint itself, the plaintiff has stated that on 06.08.1984, the first defendant took the plaintiff and the tenth defendant to the Court and their signatures were taken and made to stand before the Presiding Officer and say that they are accepting the contents of the compromise petition and the plaintiff and the tenth defendant obeyed the directions of the first defendant and acted to his directions. In his chief examination, the plaintiff has stated that the details of the suit came to his knowledge only on 06.08.1984. He has further deposed that the first defendant asked him to express his consent for the compromise decree, if the Court asked whether he is giving his consent for the compromise decree and he accordingly expressed his consent for the compromise decree and expressed his consent before the Court, but quite contrary to the said evidence, in his cross-examination, he has stated that he had not expressed his consent for the compromise decree before the Court. He has gone to the extent of deposing that none of the parties were asked by the Court regarding his and the tenth defendant's consent. He has also gone to the extent of saying that what he has stated in chief-examination is not correct. He has deposed in his cross-examination that only on the date of compromise decree, the first defendant told him that O.S.No.37 of 1984 has been filed to safeguard the properties, but as stated above, in paragraphs 12 and 13 of the plaint, it has been clearly stated that there was a representation by the first defendant in the beginning of 1984 itself. Further, in his cross-examination, the plaintiff has further stated that he was not aware of the pendency of the suit prior to the compromise decree; he does not remember whether he received any summons from the Court in that suit, but in the next breath, he has stated that it is not correct to state that summons were sent to him and he received it. He has further deposed that even prior to the compromise decree in O.S.No.37 of 1984 the plaintiff and the first defendant have discussed about the protecting of properties and that was at the time when some problems arose in M/s.Vasudeva Textiles Mills. He has further deposed that four or five times they discussed about the same and lastly at the end of 1983, the first defendant discussed with him. Having so deposed, quite contrary to that, he has deposed that the details of the suit came to his knowledge only on 06.08.1984 and on the date of the compromise decree, the first defendant told him that the suit has been filed to protect the properties. The aforesaid evidence of P.W.1 shows that he is not speaking the truth and he is not a reliable and trustworthy witness. Therefore, the case of the plaintiff that he was under the total control and influence of the first defendant also cannot be believed.
178. The case of the plaintiff is that a fraud has been played upon him and the Court to achieve the object of the first defendant and the entire show was stage managed by the first defendant and the filing of the suit was only a make belief affair and the entire proceedings and the decree secured from the court is a fraud played not only on the plaintiff, but also against the Court. In the light of the above referred to evidence of P.W.1, the said case of the plaintiff cannot be accepted.
179. At this juncture, it is relevant to refer to Order 6 Rule 4 of the Civil Procedure Code, which reads as follows:-
"Order 6, Rule 4. Particulars to be given where necessary. - In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading."
180. In the decision reported in (1977) 1 Supreme Court Cases 279 = AIR 1977 SC 615 = (1977) 2 SCR 213 (Varanaseya Sanskrit Vishwavidyalaya v. Rajkishore Tripathi), the Hon 'ble Apex Court while considering the aforesaid provisions has held as follows:-
"Under this rule, where fraud is alleged, necessary particulars should be stated in the pleading. The allegations must be clear, definite, express and specific. It is not enough to allege fraud without stating particulars with dates and items as to such fraud. General allegations, however strong, if unaccompanied by sufficient particulars, are ot enough and the court will not take notice."
181. In the decision reported in AIR 1951 SC 280 = 1951 SCR 548 (Bishnudeo Narain v. Seogeni Rai), which has been referred to in (1977) 1 Supreme Court Cases 279 = AIR 1977 SC 615 = (1977) 2 SCR 213 (referred to supra) the Apex Court has observed as follows:-
"... there is one rule which is better established than any other is that in case of fraud, undue influence or coercion, the party pleading it must set forth full particulars and the case can only be decided on such particulars. There can be no departure from the rule while leading evidence. General allegations are insufficient even to amount to an averment of fraud of which any court ought to take notice, however strong may be the language in which they are couched."
182. In the decision reported in (1909) 32 Mad 242 (FB) (Thathu Naick v. Kondu Reddi), it has also been held that the plaint seeking relief on the allegation of the fraud but omitted to give particulars does not disclose a cause of action.
183. If we consider the averments in the plaint regarding the fraud alleged by the plaintiff, in the light of the aforesaid legal principles, it could be seen that the plaintiff has alleged as if the entire proceedings in O.S.No.37 of 1984 was a collusive one, it was a make belief affair and the first defendant had abused the process of the Court and the decree secured from the Court is a fraud played not only on the plaintiff, but also against the court, but the necessary particulars have not been stated in the pleadings. What was the actual fraud that is alleged to have been committed upon the plaintiff by the first defendant has not been pleaded in the plaint with all necessary particulars. Similarly, the nature of the fraud said to have been committed upon the Court has also not been stated with necessary particulars. The allegation that the suit was collusive, it was a make belief affair, process of the Court have been abused to secure the decree cannot be considered to be the necessary particulars sufficient to plead fraud.
184. It is pertinent to point out that in the prayer what is sought for is a declaration that the compromise decree is sham and nominal, ultra vires, collusive, unsustainable, invalid and unsustainable and not binding on the plaintiff, but no declaration has been sought for on the ground that the decree is void.
185. In the preceding paragraphs, it has been pointed out that the plaintiff and the first defendant even in 1983 had discussed about the protecting of properties and hence the case of the plaintiff that the details of the suit came to his knowledge only on 06.08.1984 could not be believed. Even otherwise when the plaintiff in his chief-examination has stated that the details of the suit came to his knowledge only on 06.08.1984 it clearly shows that he was fully aware of the contents and all the terms of the compromise memo and only after fully knowing about the same, he has expressed his consent before the Court that he is consenting for passing of the compromise decree. As aforesaid, when he is fully aware of the terms of the compromise decree, the plaintiff cannot be heard to contend that a fraud was played upon him. As already pointed out, the plaint is silent as to the nature of the fraud played upon him by the first defendant. It is not the case of the plaintiff that a particular representation was made by the first defendant regarding any one of the terms of the compromise memo but it was not either found in the compromise memo or contrary to what was represented regarding the terms of compromise, something else has been incorporated in the compromise memo. Therefore, we are of the view that the plea of fraud said to have been played upon the plaintiff by the first defendant has not been proved. Perhaps, that may be the reason why in the prayer the decree is not sought to be declared as void.
186. The other main contention of the plaintiff as pleaded in the plaint and in his evidence is that the compromise decree has been brought about by collusion between the parties and it was only a make belief affair. It is settled law that if fraud is suggested in obtaining compromise memo then the plea of collusion cannot stand along with the suggestion regarding the fraud. If by playing a fraud upon the plaintiff the compromise decree was obtained then the collusion between the plaintiff, the first defendant and other defendants does not arise at all. Similarly, if the plea of collusion is accepted then the plea of fraud will not arise.
187. On the ground of collusion one of the parties to the collusion namely the plaintiff cannot seek for setting aside the decree. Having been a party to the collusion himself, the plaintiff is estopped from questioning the validity of the decree. In this context, it will be useful to refer to a Division Bench decision of the Kerala High Court reported in AIR 1959 KERALA 206 (K.P.Abraham v. N.D.P.Namboodripad) wherein in paragraph 6, it is observed as follows:-
"Any party to a suit or other proceeding may show that any judgment, order or decree which is relevant under Sections 40, 41 or 42 and which has been proved by the adverse party, was delivered by a Court not competent to deliver it, or was obtained by fraud or collusion." This plea cannot, in our opinion, sustain. To avoid a plea of res judicata a judgment or an order or a decree can under the Section, no doubt be shown to be obtained by fraud or collusion. But it will not be open to a party to plead his own collusion for the purpose. The expression 'any party to a suit or other proceeding' occurring in the section must be given a restricted meaning and must be limited to a person or persons other than the one who asserts the fraud or collusion. As observed by Sulaiman, J., as he then was, in Sahib Rai v. Bahari Rai reported in AIR 1927 All 494, "A third party can undoubtedly avoid a decree on the ground that it has been obtained collusively, but a party to a collusive decree cannot avoid it on that ground".
For as the teamed Judge went on to point out, "If parties to a decree Or their representatives were allowed to nullify a decree by pleading their own fraud or collusion the result would be disastrous and would open a wide door for urging false and convenient pleas." "
188. In a Division Bench decision of the Bombay High Court reported in A.I.R. 1941 Bombay 77 (SHRIPADGOUDA v. GOVINDGOUDA), after referring to various decisions of the other High Courts and English decisions, it has been clearly held that as between the parties to the collusion a decree would be binding but only the strangers could repudiate it. In the said decision, after referring to the decision of the Queens Bench in (1861) 30 L J Q B 186 = 3 E1 & E1 42 = 6 Jur (NS) 1113 = 2 L T (NS) 502 (The Queen v. Wardens and Assistants of The Saddlers' Company) the learned Judges of the Bombay High Court have laid down as follows:-
"That is a clear authority for the proposition that a party to the decree cannot complain of any fraud practised by himself and another upon the Court. In other words, a party could not be permitted to take advantage of his own baseness or permitted to defeat a judgment by showing that in obtaining it he had practised an imposition on the Court. It would indeed be otherwise if one of the parties and the Court were deceived by the fraud of another. In such a case, as I have pointed out, the jurisdiction of the Court to set aside a decree cannot be denied provided the alleged fraud is established, and there is no excessive delay in bringing the action after the discovery of fraud."
Infact, the said decision, in all fours applies to the facts of this case in the light of what Chief Justice Beaumont has, in his separate judgment, laid down, which reads as follows:-
"Beaumont C.J. - I agree. The essence of the plaintiff's case is that a decree was obtained in favour of the defendant, which would have the effect of preventing the plaintiff's creditors from claiming his property, and that the defendant represented that he would not enforce that decree. The plaintiff alleges that by reason of that representation he consented to a reference of the defendant's claim on promissory notes to arbitration, and agreed that the arbitrator should give an award in favour of the defendant, and that the award should be embodied in a decree of the Court. Now that is really a case of obtaining a collusive decree. Both parties were in parti delicto. The plaintiff and the defendant each knew the facts, and both agreed that a bogus reference to arbitration should be made, and that a decree of the Court should be obtained on the award, and they deceived the Court by representing that the award was a genuine award, though in fact it was not. That is the plaintiff's case, and on that case, as I have said, the decree is a collusive decree. I know of no authority for the proposition that one party to such a decree can obtain relief by getting the decree set aside, and the case to which my learned brother has referred, (1963) 10 H L C 404 = 32 L J Q B 337 = 9 Jur (N S) 1081 = 9 L T 60 = 11 W R 1004 (Reg. v. Saddlers' Co) is a direct authority against such a proposition."
189. The aforesaid decision clearly lays down that when even according to the plaintiff, the compromise decree has been collusively obtained, the parties to O.S.No.37 of 1984 are in parti delicto. Further, even assuming that a fraud was played upon the Court as contended by the plaintiff, it cannot be contended that the first defendant alone has played the fraud, since according to the plaintiff it was a collusive suit and hence it can be presumed that all the parties to the suit have joined together and by playing a fraud on the court a collusive decree has been obtained from the Court. It has been further laid down in that decision that a party to the decree cannot complain of any fraud practised by himself and another upon the Court. Therefore neither the plaintiff nor the defendants 6, 7 and others who were parties to the collusion or fraud can question the validity of the compromise decree.
190. Mr. Srinath Sridevan relied upon the decision of House of Lords reported in (1896) AC 199 (referred to supra) wherein it has been laid down that a fraud is fraud all the same and it is the fraud, not the manner of it, which calls for the interposition of the Court. There cannot be any quarrel over the said legal proposition.
191. Basing reliance on the decision of the Apex Court reported in (2010) 3 Supreme Court Cases 251 (referred to supra) the learned counsel for the plaintiff / appellant submitted that the present suit seeking to set aside the compromise decree is maintainable, but in that case, the Apex Court has referred to the facts of that case, in paragraph 3 of the judgment, which reads as follows:-
"3. The respondents are the sons of one Daya Ram, who was the real brother of Chander Pal. The appellant was approached by Daya Ram (DW 4), who convinced her to accompany him to the courts of Mehendragarh, so that the mutation of the properties inherited by her from her husband could be made and the properties could be recorded in her name. Believing him, she accompanied him to Mahendragarh, where her thumb impressions were obtained on 3-4 papers. She was also asked to say "yes" if she was asked any question by the authorities. She believed in good faith that the mutation will be done and the properties would be recorded in her name. All this happened on 26-3-1985."
In the background of the aforesaid facts, a decree was obtained on 26.03.1985 against Santosh, the appellant before the Apex Court. To declare her title to the property and the decree, dated 26.03.1985, is illegal, bad and was a result of fraud and not binding upon her, the respondent therein filed the suit. The suit was decreed and when the matter came up before the Apex Court, the Apex Court has held as follows:-
"We are fully convinced that this was nothing, but a towering fraud played upon an illiterate and helpless widow, whose whole inherited property was tried to be grabbed by Daya Ram and / or the respondents herein."
In the preceding paragraphs while referring to this decision paragraphs 24 to 26 have been extracted. The observations contained therein came to be made only in the aforesaid factual background. Therefore, the said decision is not applicable to the facts of this case. We have already held that no fraud has been played upon the plaintiff and for that reason also, the said decision is not applicable. Further, it is pertinent to point out that the Apex Court in that case had no occasion to consider the scope of Order 23 Rule 3 (A) of the CPC and for that reason also, the said decision is not applicable.
192. Mr.Srinath Sridevan, learned counsel for the plaintiff/ appellant, placing reliance on the decision of a Division Bench of this Court reported in AIR (29) 1942 Madras 632 (cited supra), submitted that if a person had obtained a transfer of property under order of Court by gross fraud, the Court can remedy injustice by applying the principles of Common Law for avoiding fraudulent conveyances and the party aggrieved can file a suit to declare it as nullity. The ratio laid down in the aforesaid decision has already been extracted in the preceding paragraphs. But, it has to be pointed out that a reading of the entire judgment shows that in that case, the transfer effected by order of court collusively was questioned by a third party and not by one of the parties to the collusion. Therefore, the said decision is not applicable to the facts of this case.
193. Mr.Srinath Sridevan also relied upon the decision of the Apex Court reported in 1994 (1) LW 21 (cited supra). In the said decision, it has been laid down that a decree obtained by practising fraud on a court is a nullity. There cannot be any quarrel regarding the aforesaid legal proposition. But, we have already held that no fraud has been played upon court in this case. In that case, it was not a compromise decree that was obtained and further, the provisions of Order XXIII Rule 3 and Order XXIII and Rule 3A of the Civil Procedure Code have not been considered. Therefore, the said decision is not applicable to the facts of this case.
194. Mr.Srinath Sridevan, learned counsel also relied upon a recent decision of the Apex Court in 2011 (5) LW 73 (cited supra). In that case, the appellants entered into an agreement to sell the land to the respondents for a consideration of Rs.14,22,000/- and received Rs.1 lakh as earnest money. The respondents were not in a position to pay the balance sale consideration and therefore, failed to get the sale completed. Therefore, there was a panchayat in that regard wherein the appellants should permit the respondents to cultivate the lands for a period of 1= years in satisfaction and discharge all the claims for refund of Rs.1 lakh. In pursuance of the said panchayat settlement, appellants delivered possession of the suit lands to the respondents. The respondents represented that they would reduce the terms of the said settlement into writing and requested the appellants to come to Kurukshetra to sign some papers. The appellants trusted the respondents as it was a panchayat settlement and went to Kurukshetra, and signed the papers given by the respondents, under the bonafide belief that they were signing papers relating to the terms of the aforesaid settlement. The respondents also asked the appellants to appear in court and confirm the same. The appellants accordingly went to the court and nodded their assent when asked whether they were agreeable for the settlement. Some months thereafter, a suit was filed against appellants in June 1992 by one Lal Singh and others claiming pre-emption. During the pendency of that suit, the appellants learnt that the respondents had obtained a mutation in their favour on the basis of some decrees obtained by them from the court of Senior Sub-Judge, Kurukshetra. On verification, the appellants were surprised to learn that consent orders had been passed by the court of Sr. Sub-Judge, Kurukshetra on 30.3.1992 in C.S.No.366/1992 and C.S.No.367/ 1992, directing decrees be drawn in terms of arbitration awards dated 13.3.1992 made by one Chandra Bhushan Sharma, Advocate, Kurukshetra, appointed as per reference agreements dated 12.3.1992. According to appellants, the agreements dated 12.3.1992, the arbitration awards dated 13.3.1992, the consent decrees dated 30.3.1992 and the mutations in favour of respondents were all illegal, null and void and non-est, being the result of fraud and misrepresentation on the part of respondents. Only in the light of the aforesaid facts, the Apex Court held as follows :
If an award was not genuine, but was collusive and sham, the court will not and in fact cannot make it a rule of the court. As noticed above, there should be a dispute, there should be an agreement to refer the dispute to arbitration, there should be reference to arbitration, there should be an adjudication or decision by the arbitrator after hearing parties, for a valid arbitration. If the parties had already settled their disputes and the arbitration award was only a ruse to avoid payment of stamp duty and registration with respect to a sale deed and declare a title in persons who did not have title earlier, then the entire proceedings is sham and bogus. In fact, C.B. Sharma was not really an arbitrator, nor the proceedings before him were arbitration proceedings and the awards were not really arbitration awards. If all these facts which have a bearing on the making of the award and the validity of the award are suppressed before the court and the court was misled into making decrees in terms of the awards, necessarily the proceedings are fraudulent and amounted to committing fraud on the court. In these circumstances the decree in CS Nos.366 and 367 of 1992 on the file of the Sr. Sub-Judge, Kurukshetra were invalid. In the aforesaid decision, it has been further held as follows :
The modus operandi adopted by the respondents to obtain title to lands without a conveyance and without incurring the stamp duty and registration charges due in respect of a conveyance by obtaining a sham and collusive arbitration awards when there was no dispute, and then obtaining a nominal decree in terms of the said awards would be a fraud committed upon the court and the state government by evading liability to pay the stamp duty and registration charges. The irregularities, illegalities, suppressions and misrepresentations which culminated in the orders dated 30.3.1992 in CS NOs.366 and 367 of 1992 directing that the awards dated 13.3.1992 be made decrees of the court, show that the decrees in terms of the awards were obtained fraudulently.
195. But, the facts of the aforesaid case are totally different from the facts of the case on hand. There, a fraud had been committed on the party to the decree sought to be set aside. Here in our case, we have already found that no fraud has been played upon the plaintiff or the seventh defendant or the tenth defendant by the first defendant and therefore, the said decision is not applicable to the facts of this case. Further, it has to be pointed out that in that case, it was not a compromise decree, which was sought to be set aside and therefore, the Apex Court had no occasion to deal with the maintainability of the suit in the light of the provisions contained in Order XXIII Rules 3 and 3A of the Civil Procedure Code. For this reason also, the said decision is not applicable to the facts of this case.
196. As far as the contention of Mr.Srinath Sridevan, learned counsel that without obtaining permission of the Company Law Board and without following the provisions of the Companies Act, the shares of Sri Vasudeva Textiles were dealt with and transferred, and therefore, the transfers were not valid and the compromise decree is vitiated, it has to be pointed out that no such plea was raised in the plaint or in the written statement filed by the seventh defendant and hence an issue, which has to be decided on facts, cannot be for the first time, raised in the appeal. Therefore, we are not considering the applicability of the two decisions referred to by the learned counsel.
197. Mr.Srinath Sridevan, learned counsel, and Mr.S.Parthasarathy, learned senior counsel, appearing for the respective appellant in the above appeals submitted that notwithstanding the partition, dated 07.11.1960, the defendants 1, 4 and the deceased-K.Rangaswamy continued to live jointly and did business jointly and the family is deemed to have re-united and that the three brothers constituted re-united joint family members. Countering the said submissions, Mr.T.R.Rajagopalan, learned senior counsel, by referring to several exhibits and the oral evidence of P.W.1 and D.W.2 submitted that the partition, dated 07.11.1960 under Ex.X-5 had been acted upon and thereafter there was no joint family consisting of the three brothers and their family members. Mr.T.R.Rajagopalan, learned senior counsel, relied upon various exhibits, which have been mentioned in paragraph 127 supra. A perusal of the aforesaid documents show that each of the members were individually assessed under the Income Tax Act and the Wealth Tax Act. From the aforesaid income tax assessment orders, wealth tax returns and assessment orders, it could be clearly seen that till Rangasamy was alive, the assessee's name was shown in the income tax assessment orders as M/s.K.Rangasamy, HUF (Ex.B62). After his death, for the assessment years 1967-1968 the name of the assessee was shown as Shanmuga Velayutham, HUF (one minor) (Ex.B63). In 1961, Rangasamy was the head of the family. During 1967-1968, the 10th defendant is shown as the head of the family. The plaintiff, who was a minor then, was shown as a coparcener. Ex.B57, dated 30.7.1963, which is the income tax return for the assessment year 1962-1963, the first defendant has been assessed in his individual status. Exs.B58 and B59 also show that the first defendant had been assessed as an individual. Ex.B60 shows that in the year 1971 and 1972, the status of the first defendant was HUF. Since D3 was born by then, Ex.B61 also shows that for the assessment year 1972-1973 the status of the first defendant was shown as HUF. Ex.B19, dated 4.3.1983, which is I.T. assessment order for the year 1975-1976, stands in the name of the 10th defendant. The 10th defendant was a partner in M/s. Rangasamy & Brothers. The Wealth tax assessment of the fourth defendant for the year 1984-1985 was shown as HUF ordinary.
198. Further, it has to be pointed out that the under Ex.A23 sale deed, dated 21.8.1975, the 4th defendant sold the property allotted to him in 1960 partition to D7 and her brother D9. Under Ex.A24, dated 21.8.1975, the first defendant sold the property allotted to him to one Siva Natarajan. Under Ex.A25, dated 21.8.1975, the first defendant sold another property allotted to him in 1960 partition to D7 and D9. Similarly, Under Ex.B4 sale deed 21.8.1975, the plaintiff and 7th defendant and 10th defendant have sold the property allotted to Rangasamy in 1960 partition to the third party. Thus it is clear that after the 1960 partition, the three branches have treated the properties allotted to them as their own and have accordingly dealt with the properties by alienating and encumbering the same. Therefore, the contention of Mr.Srinath Sridevan, learned counsel, and Mr.S.Parthasarathy, learned senior counsel, that the 1960 partition was not acted upon and the joint family continued even thereafter cannot be countenanced. It has to be further pointed out that after 1960 partition, the property allotted to the respective sharers cannot be considered to be their ancestral property but they are the separate properties of the respective parties.
199. It was contended by Mr.S.Parthasarathy, learned Senior Counsel for the tenth defendant, who is the appellant in A.S.No. 281 of 2000, that the transfer of properties to the names of non co- owners can only be by transfer inter-vivos and not by a compromise decree. In support of the said contention, learned Senior Counsel referred to the decision reported in 1990 (1) SCC 440 (cited supra). In that case, it has been laid down that there cannot, therefore, be a partition and hence, a family settlement with regard to the ancestral property so long as it is joint, in favour of either the wife or the daughter. In this case, there is no transfer of property to a non co-owner in respect of any ancestral property, since, admittedly, there was a partition of the ancestral properties among the three brothers under the 1960 registered partition deed. After the partition in 1960, there was no joint family and therefore, the question of transferring ancestral property in favour of the non-owner does not arise. Under the compromise decree, no ancestral property has been transferred to any non co-owner and therefore, the said contention cannot be countenanced.
200. Placing reliance on the decision reported in AIR 1992 SC 248 (1) (cited supra), Mr.Parthasarathy, learned Senior Counsel submitted that by consent or agreement, the parties cannot achieve what is contrary to law and a decree merely based on such agreement cannot furnish a judicial amulet against statutory violation. There cannot be any dispute over the aforesaid legal proposition. But, that was not a case wherein the validity of a compromise decree was challenged in a separate suit and the scope of Order XXIII Rules 3 and 3A of the Civil Procedure Code was not considered, as there was no scope for that in that case. Hence that decision is not applicable to the facts of this case.
201. In this context, it is relevant to refer to the decision of the Apex Court in the case of Kale Vs. Dy. Director of Consolidation, (reported in AIR 1976 SC 807) relied upon by Mr.T.R.Rajagopalan, learned Senior Counsel. In that decision, in paragraph 10(5), it has been laid down as follows :-
The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no difficulty in giving assent to the same. Therefore, the contention of Mr.Parthasarathy, learned Senior Counsel cannot be countenanced and the decision in AIR 1992 SC 248 (1) (cited supra) is not applicable to the facts of this case.
202. In the decision reported in AIR 1956 SC 593 (cited supra), a distinction between collusion and fraud has been laid down. As we have already held that there was no fraud played upon either the plaintiff or the seventh defendant or the tenth defendant and that a collusive decree cannot be challenged by a party to the collusion, the said decision is not applicable to the facts of this case.
203. Mr.T.R.Mani, learned Senior Counsel appearing on behalf of K.R.A.Muthukrishnan, learned counsel for the sixth defendant in the suit, contended that the provisions contained under Order XXIII Rule 3 of the Civil Procedure Code have not been strictly followed while passing the compromise decree and his contentions have been set out in paragraphs 116 to 120 supra.
204. But, Mr.T.R.Rajagopalan, learned Senior Counsel appearing on behalf of the respondents 1 to 3 submitted that the sixth defendant was the plaintiff in O.S.No.37 of 1984 and he was set ex parte in the present suit initially and after trial commenced in the suit and after the evidence of DW4 was completed on 13.8.1997, the ex parte order passed against the sixth defendant was set aside and he filed a written statement on 21.8.1997 during the course of arguments and even in that written statement, he had not denied the 1981 family arrangement and has not questioned the share allotted to him. But, he simply stated that no proper share has been allotted to the plaintiff, seventh defendant and tenth defendant. The fourth defendant, who is the father of the sixth defendant, has not filed any written statement and has not entered the witness box. In his written statement, the sixth defendant has not pleaded that the procedure contemplated under Order XXIII Rule 3 of the Civil Procedure Code has not been followed. Therefore, Mr.T.R.Rajagopalan, learned Senior Counsel submitted that without any pleadings and without any evidence, it is not permissible for Mr.T.R.Mani, learned Senior Counsel to raise the aforesaid contention.
205. We are of the considered view that the aforesaid contention of Mr.T.R.Rajagopalan, learned Senior Counsel is well founded. Admittedly, in the written statement filed by the sixth defendant, he has not stated that the share allotted to him is not correct or the procedure contemplated under Order XXIII Rule 3 has not been followed. Without raising any such pleadings and in the absence of any evidence, it is not open to the sixth defendant to contend that the compromise decree is not valid on the ground that the procedure contemplated under Order XXIII Rule 3 has not been followed, at the appellate stage.
206. It has to be pointed out that the Trial Court, while considering the contention of the plaintiff and the seventh defendant that they have not engaged a counsel, that they have not put signatures in the compromise memo, etc., has extracted the endorsement made by the Trial Court on the compromise memo, which is as follows :
Plaintiff, 1st defendant, 4th defendant, 9th defendant and 10th defendant (1st defendant as guardian of 3rd defendant minor, 4th defendant as guardian of 7th defendant minor) are present. Other defendants are represented by counsel on special vakalath. Terms of compromise petition put to the parties. They accepted them as correct and said final decree for partition may be passed directing each party to bear their own cost. Endorsement for the same is made. Compromise is recorded so far as it relates to the subject matter of the suit property and the final decree was passed as per the terms of the compromise and has elaborately considered Ex.B72, Ex.B47 and Ex.B76 and has rightly come to the conclusion that the compromise decree has been passed by following proper procedure.
207. We have also considered the aforesaid documents and we find from the suit register that all the applications filed under Order XXXVII Rule 7 of the Civil Procedure Code and Order XXIII Rule 3 of the Civil Procedure Code have been mentioned and appropriate orders have been passed and only thereafter, the compromise decree has been passed. Further, under Section 114 (e) of the Indian Evidence Act, a presumption arises that judicial and official acts had been regularly performed. The said presumption has not been rebutted by acceptable evidence. Therefore, we do not find any irregularity in the passing of the compromise decree. Therefore, the contention of Mr.T.R.Mani, learned Senior Counsel cannot be countenanced.
208. Further, it has to be pointed out that in the written statement of the sixth defendant, in the first paragraph itself, it has been stated as follows :
The suit is false, frivolous, vexatious and unsustainable both in law and on the facts of the case. Having taken such a plea, the sixth defendant has pleaded that the compromise decree is sham and nominal, collusive and unenforceable. Though the sixth defendant has stated in his written statement that no proper share was allotted to the plaintiff or the tenth defendant or the seventh defendant under the compromise decree, no where he has stated that the share allotted to him is less or unjust. Though he has stated as if the compromise decree was never intended to be acted upon and in fact, it was not acted upon, the evidence on record, both oral and documentary, clearly show that the compromise decree has been acted upon by the branch of the fourth defendant and the sixth defendant is the son of the fourth defendant. The documents referred to in paragraph 134 supra and the Exs.B-109 and B-110 received as additional evidence on the side of the defendants 1 to 3 / respondents 1 to 3 clearly show that the fourth defendant and the sixth defendant and their branch have acted upon the compromise decree. Therefore, it is not open to the sixth defendant to contend that the compromise decree is invalid.
209. As far as the maintainability of a separate suit challenging the validity of the compromise decree is concerned, Mr.T.R.Rajagopalan, learned Senior Counsel submitted that a separate suit is not maintainable and he has referred to the following decisions in support of his contentions :
(i) In the decision in the case of Banwari Lal Vs. Chando Devi (reported in 1993 (1) SCC 581), the Apex Court has extensively considered the said question. In the said decision, in paragraphs 6 and 7, the Apex Court has considered the amendments made to Order XXIII and introduction of Order XXIII Rule 3A and after elaborately considering the nature and scope of the amendments made, in paragraph 13, it has been laid down as follows :
When the amending Act introduced a proviso along with an explanation to Rule 3 of Order 23 saying that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question, the Court before which a petition of compromise is filed and which has recorded such compromise, has to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise which is void or voidable under the Indian Contract Act ... shall not be deemed to be lawful within the meaning of the said Rule. In view of the proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order 23, or an appeal under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1-A of Order 43 of the Code.
(ii) In the decision in the case of Pushpa Devi Bhagat Vs. Rajinder Singh (reported in 2006 (5) SCC 566), the Apex Court, in paragraph 17, laid down as follows :-
The position that emerges from the amended provisions of Order 23 can be summed up thus:
(i) No appeal is maintainable against a consent decree having regard to the specific bar contained in Section 96(3) CPC.
(ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) of Rule 1 Order 43.
(iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3-A.
(iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23.
Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not.
In the very same decision, it has also been laid down that a counsel possessed of the requisite authorization by vakalatnama can act on behalf of his client, sign a compromise memo, appear before Court and express consent on behalf of his client to pass the compromise decree. In this case, a contention was raised on behalf of the seventh defendant that she had not given any special vakalat to the counsel and even if such special vakalat has been given, the counsel has no authority to express consent to pass the compromise decree. Such a contention cannot be countenanced in view of the aforesaid decision.
(iii) In the decision reported in the case of Syed Yusuff Vs. Fathimabi (reported in AIR 2009 (NOC) 1169 (Kar.)), it has been laid down as follows: -
Suit to set aside compromise decree prayer in suit though not to set aside decree but to declare decree as void, illegal suit is in effect to set aside decree only, on ground that it is not lawful separate suit is barred in view of Order XXIII Rule 3A Remedy available to plaintiff is to approach Court which recorded compromise and made decree in terms thereof and establish that same was not lawful and that there was no compromise Court which recorded compromise should consider and decide question as to whether there was a lawful compromise or not.
(iv) A Division Bench of Rajasthan High Court in the case of Gopal Lal Vs. Babu Lal (reported in AIR 2004 Rajasthan 264), after considering the various decisions of the Apex Court, has held that the word not lawful are of a wide amplitude and include all sorts of irregularities. In paragraph 15 of the said decision, it has been laid down as follows :
Thus a suit challenging the compromise decree is completely barred under Order 23 Rule 3A, read with explanation to Order 23 Rule 3, C.P.C. The law, however, provides two modes to challenge a compromise decree to party to the compromise. The first remedy is under proviso to Rule 3 of Order 23 of the Code of Civil Procedure. According to the proviso, a party can question the compromise before the Court which has recorded the same and has passed the decree is accordance therewith. The second remedy lies in filing an appeal under Section 96 of the Code of Civil Procedure against the compromise decree. This view finds support from the decision of the Supreme Court in Banwari Lal v. Smt. Chando Devi (AIR 1993 SC 1139).
(v) In the decision reported in the case of Y.S.Manchanda Vs. Nand Singh and Others (CDJ 2010 DHC 1557), a learned Single Judge of the Delhi High Court laid down as follows :
However, in view of the authoritative pronouncement of Supreme Court in the case of Pushpa Devi Bhagat's case (supra) and the specific provisions contained in Order 23 Rule 3A of the Code of Civil Procedure read with the Explanation to Rule 3 thereof, there is no escape from concluding that irrespective of whether a fraud is played upon the Court or by one party to the litigation on the other, no independent suit lies for setting aside the compromise decree on the ground that the compromise on which the IA NO.7398/2009 in CS (OS) NO.826/2004 Page 12 of 20 decree was based was unlawful. Such a decree can be challenged before a Court which passed the decree based on compromise by filing appropriate application under Section 151 of CPC. And
(vi) In the decision reported in the case of Shaik Sharaff Uddin & Others Vs. Abdul Karim (reported in CDJ 2011 Kar.H.C.377), a learned Single Judge of that Court held as follows:
"...no independent suit challenging the compromise on the ground of fraud is competent in view of this specific bar provided in Rule 3-A of Order XXIII of CPC Rule 3-A has been inserted only to ensure the finality of the litigation. It bars the filing of the suit for the cancellation of a compromise decree on the ground of the compromise not being lawful this Court rejects this appeal on the short ground of maintainability.
210. A contention was raised by both Mr.Srinath Sridevan, learned counsel and Mr.S.Parthasarathy, learned Senior Counsel that the prayer in the suit is not to set aside the compromise decree, but what is prayed for is for a decree to declare the compromise decree as sham and nominal, ultra vires, collusive, unsustainable, invalid, unenforceable and not binding on the plaintiff and that therefore, a separate suit is not barred either under the proviso to Order XXIII Rule 3 or Order XXIII Rule 3-A of the Civil Procedure Code. The said contention has to be rejected in the light of the aforesaid decisions of the Apex Court as well as the other High Courts.
211. In the decision in the case of Janab S.K.Kalallulah Sheriff Vs. S.K.Janab and others (reported in 1989 (1) MLJ 172), V.Ratnam,J (as his Lordship then was), had considered the scope of Order XXIII Rule 3 Explanation and Order XXIII Rule 3-A of the Civil Procedure Code. In the said decision, in paragraph 6, the learned Judge has laid down as follows :
The bar enacted under Order 23, Rule 3-A regarding the institution of suit seeking the relief of setting aside the decree on the ground that the compromise, on which the decree is founded, was not lawful, seems to be total and absolute, and does not admit of any exceptions. That rule is an independent provision and the bar enacted thereunder has to be given effect to. Order 23, Rule 3-A bars the institution of suits on the ground that the compromise, on the basis of which, the Court passed the decree, was not lawful. Under the Explanation to Order 23, Rule 3, added by Act 104 of 1976, an agreement or compromise, which is void or voidable under the provisions of the Indian Contract Act, 1872, shall not be lawful within the meaning of that rule. What is contemplated as a lawful agreement or compromise for the purposes of Order 23, Rule 3 of the Code, is, that the agreement or compromise, in order to be recorded and form the basis of the judgment and decree of Court, should be free from the challenge of their being void or voidable under the provisions of the Indian Contract Act. The Explanation merely seeks to indicate what kinds of agreements would be lawful agreements or compromises, which can form the basis for the Court to record the same and pass a decree thereon. The Explanation is really clarificatory, because, there was a doubt entertained earlier, whether agreements, which would be voidable within the meaning of Section 19 of the Indian Contract Act were within, or, excluded from, the operation of Rule 3 of Order 23 of the Code. The proviso and Explanation appended to Order 23 Rule 3 introduced by Act 104 of 1976, have, therefore, to be taken as restricted in their application to the recording of the compromise and the passing of orders thereafter provided for under Order 23 Rule 3.There is, thus, no scope whatever for reading the Explanation appended to Order 23, Rule 3, by Act 104 of 1976, into Rule 3-A and give a restricted meaning to the words 'not lawful' occurring therein. Order 23, Rule 3-A of the Code along with the proviso and the Explanation, and Order 23, Rule 3-A, are independent provisions, totally different in their scope. While Order 23, Rule 3 deals with the power of the Court to record a compromise and pass judgment and decree on the basis of the compromise arrived at between the parties and enable the Court also to hold an enquiry in connection therewith, and also indicates the kinds of agreement or compromise lawful for the purpose of that rule, Order 23, Rule 3-A deals exclusively with the bar of suit questioning the compromise decree passed by the Court on the ground that the agreement or compromise was not lawful. The expression 'not lawful occurring in Order 23, Rule 3-A of the Code is very wide and would take in a variety of cases, in which the lawful nature of a compromise can be challenged and is not confirmed only to the lawful nature of a compromise or adjustment in accordance with the provisions of the Indian Contract Act, 1872. In other words, whatever be the ground of challenge to the lawful nature of the compromise, the remedy of a suit is barred under Order 23, Rule 3A. In this view of the matter, the argument of the learned Counsel for the respondent that as the compromise, even according to the petitioner, is either void or voidable and therefore unlawful under the Explanation to Order 23, Rule 3 of the Code, and it would also stand outside Order 23, Rule 3A, is unacceptable. We are in complete agreement with the aforesaid view of the learned Judge.
212. Therefore, we are of the considered view that whatever be the ground of challenge to the lawful nature of compromise, the remedy of a suit is barred under Order XXIII Rule 3-A of the Civil Procedure Code. Therefore, the contention of Mr.Srinath Sridevan, learned counsel, Mr.S.Parthasarathy, learned Senior Counsel and Mr.T.R.Mani, learned Senior Counsel that since a fraud has been played upon the plaintiff as well as upon the Court in securing the compromise decree, a separate suit is maintainable to set aside the compromise decree, cannot be countenanced.
213. As far as the contention of the appellant in both the appeals that since the relief of setting aside the compromise decree has not been sought for, but only a declaratory relief is sought for, a separate suit will lie, is concerned, the said contention is fallacious. Courts have always taken care to point out repeatedly that mere astuteness in drafting the plaint will not be allowed to stand in the way of the Court looking at the substance of the relief asked for and the Court should look into the allegations in the plaint to see what is the substantive relief that is asked for. If the allegations made in the plaint in the present case are considered, one can have no doubt whatever that in substance the suit is for setting aside the compromise decree passed in O.S.No.37 of 1984. The plaintiff cannot get any relief in the suit without setting aside the said decree. A perusal thereof is sufficient to point out that though the plaintiff has chosen to pray for the relief of declaration, in substance he is praying for setting aside the decree and displacing the same, when only he can seek the relief of partition. The mere fact that the plaintiff has chosen to introduce an allegation that the compromise decree is sham and nominal, invalid, unsustainable and unenforceable, will not alter the nature of the suit or absolve the plaintiff from the necessity to have the decree set aside.
214. Thus, it is well settled by the decisions of the number of High Courts and by the Apex Court that a compromise decree cannot be set aside by filing a separate suit whatever be the ground of challenge. The remedy to the party aggrieved by the compromise decree is to approach the Court, which passed the compromise decree by filing an appropriate application in the very same proceedings in which the compromise decree was passed or to file an appeal against the compromise decree. Since we have already held as above that the suit in O.S.No.1101 of 1987 is not maintainable and the same is barred by Order XXIII Rule 3-A of the Civil Procedure Code, we are not going into some of the other contentions raised by the learned counsel for the appellants.
215. It is pertinent to point out that in his chief examination itself, P.W.1 / plaintiff has stated that till the beginning of 1987, the Mill was being run as before, but thereafter in 1987, it is because of the loss suffered by the Mill, the Mill could not be run further, the first defendant was evading and not showing any interest in reviving the Mill and when P.W.1 asked the first defendant in May 1987, he had told him that he has nothing to do with the Mill and though the first defendant was approached through one Rayappa Gounder, there was no response from the first defendant. Only thereafter steps were taken to get the certified copy-Ex.A-2, which is the compromise decree and the plaintiff and the tenth defendant took steps to file the suit and thereafter the suit has been filed in 03.08.1987. The compromise decree, which is now challenged, came to be passed on 06.08.1984. Thus it is clear that the present suit has been filed just three days prior to the expiry of the period of limitation. It is the case of the first defendant that since the Mill suffered a loss under the management of the plaintiff and the tenth defendant, they have filed the suit to grab the property of the first defendant. The said contention of the first defendant when considered, in the light of the aforesaid evidence of P.W.1, makes it probable that since the Mill suffered loss and it could not be run further and the first defendant was not forth coming to provide financial assistance to revive the Mill, the plaintiff and the tenth defendant had thought of challenging the compromise decree to grab at the properties allotted to the other sharers. Since the period of limitation prescribed for filing an application in the same proceedings, namely in O.S.No.37 of 1984 and for filing an appeal against the compromise decree had expired long back, the plaintiff and the tenth defendant have resorted to the filing of this suit just a few days prior to the expiry of the period of limitation for filing this suit. Therefore, we are of the considered view that the suit in O.S.No.1101 of 1987 is nothing but a litigative gambling indulged in by the plaintiff.
216. For the foregoing reasons, the appeals are liable to be dismissed and accordingly dismissed. However, in view of the close relationship of the parties, there will be no order as to costs. As stated earlier, CMP Nos.12013, 12014 and 13167 of 2004 stand dismissed and CMP No.974 of 2011 stands allowed.
srk / rs To
1. The Principal Subordinate Court Coimbatore