Delhi High Court
Arun Bansal vs Anil Kumar Puri & Anr. on 17 September, 2015
Author: Vipin Sanghi
Bench: Vipin Sanghi
$~ R-205.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 17.09.2015
% RSA 242/2015
ARUN BANSAL ..... Appellant
Through: Mr. Rajat Aneja & Mr. Vijay Kasana,
Advocates.
versus
ANIL KUMAR PURI & ANR ..... Respondents
Through: Mr. Virender Tarun, Advocate along
with respondent No.1 in person.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (OPEN COURT)
1. I have heard learned counsel for the parties.
2. While framing the substantial question of law to be considered in the
present second appeal, this Court on 14.07.2015, inter alia, recorded the
relevant factual background and observed as follows:
"5. I have heard learned counsel on the aspect of substantial
question of law arising in the present case.
6. The first respondent/ plaintiff filed civil suit to seek
permanent injunction to restrain defendant no.1, i.e. DSIIDC
from allowing the change in the constitution of the firm M/s
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India Chem. The suit had been filed on the premise that the
plaintiff and defendant No.2 - the appellant herein are partners
of M/s India Chem and that both partners are carrying on the
business of the firm smoothly.
7. The plaint avers that on 19.06.2006, disputes arose
between the plaintiff and the defendant No.2. The plaintiff was
pressurised by defendant No.2 to sign some papers, including
the dissolution deed. The plaintiff stated that when he asked for
settlement of accounts, defendant No.2 assured that before
registration of the dissolution deed, all payments due to the
plaintiff would be made. The plaintiff also stated that he
accepted this version of defendant No.2. He received a
communication dated 18.05.2007 from the DSIIDC asking the
plaintiff to submit his No Objection Certificate for change of
constitution of the firm M/s India Chem, as applied for by
defendant No.2. The plaintiff filed his objection on 08.06.2007
regarding change of constitution of the firm. The plaintiff, inter
alia, claimed that he was still a partner of M/s India Chem. In
the written statement filed by the defendant No.2/ appellant, the
appellant, inter alia, pleaded that the partnership between the
plaintiff and defendant No.2 had been dissolved by dissolution
deed dated 19.06.2006. It was also pleaded that the said
dissolution deed had taken effect as the account of the plaintiff
had been settled by issuance of cheques aggregating to Rs.6
Lakhs, which had been received and the amount appropriated
by the plaintiff. Defendant No.2 also claimed that the plaintiff
had acknowledged that he had no further dues outstanding, or
claimable from the firm.
8. At the stage of admission/ denial of documents, the
plaintiff admitted execution of the dissolution deed and the
execution of the No Dues Certificate. He also admitted the
signatures on his affidavit containing his no objection to the
DSIIDC for change of constitution of the firm dated 03.07.2006
and the receipt acknowledging payment of Rs.6 Lakhs.
9. Since the plaintiff had claimed his status as a partner, the
Trial Court framed an issue: whether the plaintiff had the right
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to sue as on 05.07.2008 in his capacity/ status as a partner of
the firm of M/s India Chem. By taking into account the fact that
the plaintiff had admitted the execution of the dissolution deed
dated 19.06.2006, the Trial Court held that the claim of the
plaintiff that he was still a partner of M/s India Chem, stood
belied. Consequently, the suit was dismissed.
10. In the first appeal, the said judgment has been reversed
and set aside. The First Appellate Court has taken the view
that it was obligatory for the Trial Court to decide all the issues
which had been framed by permitting the parties to lead their
respective evidence at trial.
11. The submission of Mr. Aneja is that the First Appellate
Court has fallen into error in not appreciating that the plaintiff
has not disputed the factum of execution of the dissolution deed
dated 19.06.2006. He submits that a suit for accounts and
share of profits of a dissolved partnership firm should be filed
within a period of three years from the date of dissolution under
Article 5 of the Schedule to the Limitation Act. The respondent
plaintiff was aware and conscious of the dissolution deed when
it was so executed. The suit had been initially filed only on
16.06.2008 for seeking injunction simplicitor, and that too,
directed against the DSIIDC. The application to seek
amendment of the plaint so as to incorporate the relief of
rendition of accounts was moved only on 23.11.2012. Thus,
even if the amendments were to be granted for the purpose of
relief of rendition of accounts, the issue of limitation with
regard to the said relief, would have to be determined by
treating the date of filing of the suit as 23.11.2012. The said
relief was barred by limitation as on that date.
12. In view of the aforesaid, the following substantial
questions of law arise for consideration in the present second
appeal:
(i) Whether the learned lower Appellate Court committed a
grave jurisdictional error in holding that a preliminary
issue premised on a pure legal aspect cannot be decided
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if the matter is fixed for evidence of the plaintiff, even
though, the said evidence has not even commenced?
(ii) Whether the learned lower Appellate Court below erred
in law while observing that without deciding the
application under Order VI Rule 17 CPC for amendment
of plaint, the dismissal of the suit while deciding a
preliminary issue was not a correct approach?
(iii) Whether the suit for injunction simplicitor can be
converted into a suit for rendition of accounts and
damages in respect of a firm, that too, without making
any averment with regard to dissolution of the
partnership firm, coupled by the fact that the reliefs
sought had become time barred?
13. Admit.
14. Trial Court Record be requisitioned.
15. The parties are agreeable that the matter be taken up for
consideration on priority."
3. The submission of Mr. Aneja is that the First Appellate Court erred in
allowing the first appeal of the respondent/ plaintiff and remanding the case
back to the Trial Court with a direction to decide the suit after taking
evidence of the parties and adjudicating upon all the issues as framed on
19.10.2010 and 09.07.2014 (which have been wrongly typed in the
impugned judgment as 19.01.2014 and 29.11.2014).
4. The issues framed on 19.10.2010 by the Trial Court read as follows:
"1. Whether the present suit is not maintainable being
barred by section 41 (h) and section 31 of Specific Relief
Act? OPD
2. Whether the present suit is bad for non joinder of
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necessary parties? OPD
3. Whether the plaintiff is entitled to a decree for permanent
injunction as prayed? OPP
4. Relief."
5. The additional issue framed on 09.07.2014 reads as follows:
"5. Whether the plaintiff had right to sue on 05.07.2008 in
his capacity/ status as partner of M/s India Chem?
OPP"
6. Mr. Aneja has pointed out the amendments sought by the respondent/
plaintiff by moving an application under Order VI Rule 17 CPC on
23.11.2012. It is pointed out that the plaintiff sought to amend the title of
the suit from "sought for permanent injunction" to "suit for rendition of
accounts and damages". The respondent/ plaintiff also sought to strike off
the name of defendant No.1 from the memo of parties and to add the name
of M/s India Chem as defendant No.1. Thus, the original defendant No.1
DSIIDC - against whom the original relief was sought, was sought to be
dropped from the array of defendants. The reliefs sought to be substituted,
in place of the relief originally claimed by the proposed amendment, were as
follows:
"(a) to pass a preliminary decree for the rendition of accounts
of firm M/s India Chem in view of the above mentioned
facts and directed the defendant no.2 to give the balance
share of the plaintiff to him alongwith interest @ 9%
p.a.;
(b) to pass a preliminary decree and direct the defendant
no.2 to pay the damages in respect of the property in
dispute for the period for which the defendant no.2
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unauthorisedly used;
(c) to pass any other or further relief as may be deem fit and
proper by this Hon'ble Court."
7. Mr. Aneja submits that the First Appellate Court has completely
overlooked the aforesaid aspects while passing the impugned judgment. He
submits that even if the amendments, as sought by the plaintiff were to be
granted - which may be taken as granted, the suit - as amended, was not
maintainable as the relief of rendition of account was clearly barred by
limitation. The submission is that the said relief directed against the
appellant could have been claimed within three years from the date of
dissolution. The dissolution of the firm had taken place on 19.06.2006. The
dissolution of the firm had been accepted by the respondent/ plaintiff. The
period of limitation for preferring the relief of rendition of accounts is three
years from the date of dissolution in terms of Article 5 to the Schedule to the
Limitation Act.
8. Similarly, the relief of a money decree against the appellant, "to pay
the damages in respect of the property in dispute for the period for which
defendant No.2 unauthorisedly used", could have been sought only on the
premise that the firm had not been dissolved validly. However, the
dissolution of the firm itself was not even challenged by the respondent/
plaintiff. In fact, he admitted the said dissolution deed which acknowledged
that the accounts of the due share of the retiring partner, i.e. the respondent/
plaintiff "have been settled" and the same shall be paid to him or credited to
his account with the firm as mutually agreed, and the retiring partner has no
right, claim, lien and entitlement whatsoever over the assets and good will of
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the firm hence forth. Clause 7 of the dissolution deed also provided that
"the business premises shall remain with the remaining partner and the
retiring partner has no right whatsoever of any kind therein".
9. Mr. Aneja submits that the respondent/ plaintiff has also admitted to
have received Rs.6 Lakhs in two installments of Rs.4 Lakhs and Rs.2 Lakhs
on 26.06.2006 and 27.06.2006, and he issued a No Dues Certificate in his
own hand on 07.07.2006. These documents, including the said No Dues
Certificate have been admitted by the respondent/ plaintiff in admission/
denial of documents before the Trial Court.
10. On the other hand, learned counsel for the respondent has supported
the impugned judgment. He submits that the suit could not have been
dismissed by the Trial Court on the ground of non-maintainability of the
suit, as the respondent/ plaintiff had been sued as a partner of the firm.
11. Having heard learned counsels for the parties, perused the judgment
of the Trial Court, the impugned judgment of the First Appellate Court and
all other material brought on record, I am of the view that the First Appellate
Court has fallen in patent illegality while passing the impugned judgment.
The First Appellate Court appears to have passed the impugned judgment
mechanically, without applying its mind to the facts and circumstances taken
note of herein above.
12. The issues framed in the suit on 19.10.2010 pertained entirely to the
original relief prayed for in the suit, which was directed primarily against the
original defendant no.1 DSIIDC and the appellant. The relief originally
sought by the respondent/plaintiff was to seek a permanent injunction
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against the DSIIDC from allowing change in the constitution of the firm
M/s. India Chem from a partnership to a proprietary firm of the appellant.
13. The First Appellate Court should have appreciated that by moving the
application under Order 6 Rule 17 CPC, the respondent/plaintiff had sought
to completely give up the said relief and to seek deletion of DSIIDC from
the array of defendants. It appears that the respondent/plaintiff had taken the
said step on account of the framing of additional issue on 09.07.2014,
questioning the plaintiffs right to sue in his capacity/status as partner of M/s.
India Chem - in the background that the plaintiff had admitted during
admission/denial of documents, the execution of the dissolution deed and the
no due certificate. He had also admitted his signatures on the affidavit
containing his no objection to the DSIIDC for change of constitution of the
firm dated 03.07.2006. Thus, the issues framed in the suit on 19.10.2010 and
09.07.2014 - post the moving of the application under Order 6 Rule 17 CPC
did not survive, particularly when the appellant/defendant did not object to
the said application being allowed. Even otherwise, the said issues did not
require any evidence to be led in the face of the admissions made by the
plaintiff during the admission/denial of documents. Pertinently, the
dissolution deed was accepted by the plaintiff, and he did not seek to
challenge the same either on the ground of fraud, misrepresentation or
coercion. He did not challenge the dissolution deed either at the time of
filing of the suit in 2008 (which was filed two years after the signing of the
dissolution deed, and in the plaint, the plaintiff referred to and raised a
grievance about the dissolution deed, and was thus aware of the dissolution
deed), or at the time of filing the application to seek amendment of the plaint
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on 23.11.2012. Since the firm stood dissolved without any challenge by the
respondent/plaintiff within the statutory period of limitation, obviously, the
plaintiff had no right to sue on behalf of the firm M/s. India Chem in his
capacity as a partner when the suit was initially filed in 2008.
14. The First Appellate Court has also failed to appreciate that the suit,
even after amendment - which the appellant/defendant did not oppose, and
does not oppose, was barred by limitation. As noticed above, the relief of
rendition of accounts against the firm and the appellant could have sought
within three years of dissolution of the firm. However, the amendment to
incorporate the said relief was moved only on 23.07.2012, i.e. well beyond
the period of limitation which expired on 18.06.2009. The said amendment
to incorporate a fresh relief tantamounted to the suit in respect of the relief
when the application for amendment was filed. Such an amendment, when
allowed, would not lead to incorporation of the fresh relief on the date of
original filing of the suit.
15. The second relief sought to be introduced by amendment to claim
damages from the appellant in respect of the property in dispute, i.e. the
property allotted by DSIIDC, could not be maintained without successfully
assailing the dissolution deed, since in terms of the dissolution deed, the
properties of the firm vested in the appellant to the exclusion of the
respondent/plaintiff. As the dissolution deed was not challenged, no cause
of action could have arisen in favour of the respondent/plaintiff to seek a
decree requiring the appellant to pay damages in respect of the said property
as it could not be said that the appellant has unauthorisedly used the same
for any length of time.
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16. Consequently, the present appeal is allowed and the impugned
judgment and the decree of the Trial Court is set aside. The suit of the
plaintiff is dismissed for the aforesaid reasons, and the substantial questions
of law framed above stand answered in favour of the appellant. The parties
are left to bear their respective costs.
VIPIN SANGHI, J.
SEPTEMBER 17, 2015 B.S. Rohella/sr RSA 242/2015 Page 10 of 10