Delhi District Court
Rosy Agrawal And Anr vs M/S Kangaroo Advisors And Ors on 30 July, 2025
THE COURT OF MS. VRINDA KUMARI:
DISTRICT JUDGE COMMERCIAL COURT 03 - SOUTH
EAST DISTRICT, SAKET COURTS, NEW DELHI.
CS (COMM) No. : 657/2023
1. ROSY AGRAWAL
2. ANITA SACHDEVA
Both at B-21 (LGF)
Jangpura Extn., New Delhi-110014 .....Plaintiffs
VERSUS
1. M/S KANGAROO ADVISORS
H-7 (LGF), Lajpat Nagar-III,
New Delhi-110024
2. MRS. ARCHANA GUPTA
Partner, M/s Kangaroo Advisors
G-74 (2nd Floor), Masjid Moth,
Greater Kailash-II, New Delhi-110048
3. MR. VIKAS GUPTA
Partner, M/s Kangaroo Advisors
G-74 (2nd Floor), Masjid Moth,
Greater Kailash-II, New Delhi-110048 ....Defendants
Date of Institution : 14.07.2023
Date when final arguments concluded : 28.07.2025
Date of Judgment : 30.07.2025
CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 1 of 18
Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors.
JUDGMENT
1. Vide this judgment, I shall dispose of the present suit of the plaintiffs against the defendants for recovery of Rs. 20,82,617/- and rendition of account.
PLAINT
2. Case of the plaintiff is that M/s Kangaroo Advisors (defendant no. 1) is a partnership firm since November 2014. Both the plaintiffs, namely, Ms. Rosy Agrawal and Ms. Anita Sachdeva as also defendant no. 2 Ms. Archana Gupta were the founders/ initial partners. The Partnership Deed was executed between them on 25.11.2014. Plaintiffs and defendant no. 2 had 33.33%, 33.33% and 33.34% shares in the partnership firm respectively. It continued till 31.03.2020. Vide a Retirement-cum-Admission Deed dt. 12.06.2020 executed between them and Sh. Vikas Gupta (defendant no. 3), dissolution of their partnership was mutually and amicably agreed. It was agreed that the plaintiffs would retire from the partnership and accounts qua them would be settled. It was also agreed that defendant no. 2 would be at liberty to carry on the firm M/s Kangaroo Advisors with liberty to induct any other person of her choice. Defendant no. 3 executed the above-said Deed along-with plaintiffs and defendant no. 2 in the capacity of incoming/ new partner.
3. It is submitted by the plaintiff that an amount of Rs. 13,29,228/- and an amount of Rs. 7,43,769/- were paid to the plaintiffs as CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 2 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors. settlement of capital accounts on 31.03.2020. This settlement of plaintiff's capital accounts as on 31.03.2020 took place before the audit of books of accounts of defendant no. 1 firm for the year 2019-2020. The said audit was done in December 2020. It is submitted that a detailed audit report of the books of accounts of defendant no. 1 for the financial year 2019-2020 was duly conducted by Mani Gupta & Associates, Chartered Accountants in December 2020. This audit report was duly signed and accepted by the parties on 26.12.2020. The audited financial statements for the financial year 2019-2020 was filed before the Income Tax Department.
4. It is submitted by the plaintiff that the detailed balance sheet after auditing defendant no. 1 for the financial year 2019-2020 reveals the respective shares of plaintiff nos. 1 and 2 in capital account as Rs. 8,50,000/- each. Their respective share in the current account comes to Rs. 13,12,276/- and Rs. 7,26,818/-. It is further submitted that since the amounts of Rs. 13,29,228/- and Rs. 7,43,769/- have been paid to the plaintiffs respectively towards capital account as on 31.03.2020 calculated before the auditing of the firm, now only current account balance of the plaintiffs is required to be recovered from the defendants. As per the audit account report signed on 26.12.2020, now the current account balance of the plaintiffs to the tune of Rs. 8,33,048/- (rounded off)(for plaintiff no. 1) and Rs. 8,33,049/- (rounded off) (for plaintiff no.
2) are outstanding against the defendants. Despite repeated requests, these outstanding amounts have not been paid to the plaintiffs by the defendants. The plaintiffs have, accordingly, filed the present suit for CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 3 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors. recovery of total amount in sum of Rs. 16,66,094/- towards principal amount and interest @ 12% per annum from 26.12.2020 till filing of the present suit and pendente lite and future interest at the same rate till realization of the decretal amount.
WRITTEN STATEMENT
5. In their Written Statement, defendant nos. 1, 2 & 3 have controverted all the averments of the plaintiffs. It has been contended that since defendant no. 1 partnership firm in respect of which claim has been sought was an unregistered one, the present suit is barred by Section 69 of the Indian Partnership Act, 1932. It has further been contended that once full and final settlement has been entered into by the plaintiffs and defendant no. 2, the plaintiffs are left with no cause of action. It has also been contended that the audit report relied upon by the plaintiffs is a work of forgery committed by the husbands of the plaintiffs who are Chartered Accountants by profession. It is further submitted that upon receipt of summons of the present civil suit, the defendant got the forensic audit done and came to know that the financial statements/ records had been forged and fabricated by the plaintiffs.
REPLICATION
6. In their replication, plaintiffs have denied the allegations and averments of the defendants and have reiterated their stand in the plaint.
ISSUES
7. Vide Order dt. 30.11.2023, following issues were framed :
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1. Whether the plaintiff is entitled for decree for a sum of Rs. 20,82,617/50p against the defendants, as prayed for? OPP
2. Whether the plaintiff is entitled to interest. If yes, at what rate and for which period? OPP
3. Whether the suit of the plaintiff is barred by Section 69 of Indian Partnership Act, 1932? OPD
4. Relief.
EVIDENCE
8. Plaintiff led PE in its favour and examined PW1- Sh. Adarsh Aggarwal, SPA Holder of plaintiff no. 1 (Ms. Rosy Aggarwal) and PW3- Sh. Mani Gupta, Proprietor of Mani Gupta & Associates, Chartered Accountant.
9. PW1 is Sh. Adarsh Aggarwal, SPA Holder of plaintiff no. 1(Rosy Aggarwal). His affidavit in evidence is Ex.PW1/A. He has relied upon various documents. Partnership Deed dt. 25.11.2014 is Mark-A. Retirement-Cum Admission Deed dated 12/06/2020 is Ex.PW -1/2 ( also Ex.P-1). Registration Certificate of M/s Kangaroo Advisors is Mark-B. Copy of Legal Notice dated 16/06/2021 and 24/09/2021 are Ex. PW-1/5 and Ex. PW- 1/6 respectively (also Ex. P-2 (Colly). Copy of the Postal Receipt is Ex. PW-1/7 (Colly). Copy of the reply dated 20/08/2021 is exhibited as PW-1/8 (also Ex. P-3). Rejoinder dated 09/10/2021 is exhibited as PW-1/9 (also Ex. P-4). SPA in favor of the Deponent Executed by Plaintiff No. 1 is Ex. PW-1/1.
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10. PW2 Sh. Rajan Sachdeva, SPA Holder of plaintiff no. 2 (Smt. Anita Sachdeva) was dropped by the plaintiff.
11. PW3 is Sh. Mani Gupta, Proprietor of Mani Gupta & Associates, Chartered Accountant. Her affidavit in evidence is Ex.PW3/A. She has relied upon the document i.e. audit report which is already exhibited as Ex.PW1/2.
12. Defendants led DE in their favour and examined Sh. Vikas Gupta as DW1. His affidavit in evidence is Ex.DW1/A.
13. I have heard detailed final arguments and have perused the record including case laws relied upon by Ld. Counsels for the parties and written submissions.
DISCUSSION
14. My issue wise findings are as follows:
ISSUE NO. 3.
Whether the suit of the plaintiff is barred by Section 69 of Indian Partnership Act, 1932? OPD
15. Section 69 of the Indian Partnership Act, 1932 provides as follows:
"69. Effect of non-registration.--
(1) No suit to enforce a right arising from a CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 6 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors.
contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
(3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect,--
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (3 of 1909) or the Provincial Insolvency Act, 1920 (5 of 1920) to realise the property of an insolvent partner.
(4) This section shall not apply,--
(a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories, are situated in areas to which, by notification under section 56, this Chapter does not apply, or
(b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882 (5 of 1882), or, outside the Presidency- towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim."
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16. The above said provision shows that the only circumstance in which a suit in respect of an unregistered firm can be filed is a suit for dissolution of a firm or for accounts of a dissolved firm, or for enforcement of any right or power to realise the property of a dissolved firm. The present suit is not a suit for dissolution of defendant no. 1 partnership firm. The present suit is for recovery of an amount along with interest on the basis of the Audit Report for the financial year 2019-20 relied upon by the retired partners and rendition of accounts. Not much emphasis has been laid on the prayer for rendition of accounts during the course of final arguments and the suit is based primarily on the audit report for the financial year 2019-20.
17. It is not disputed that M/s Kangaroo Advisors was an unregistered partnership firm. For the present suit to be maintainable, it is essential to prove that the said partnership firm was a dissolved firm. I shall now examine this aspect.
18. Vide email dated 30.03.2020 (Ex.PW1/D1) written by Sh. Rajan Sachdeva to Sh. Adarsh Agrawal and Sh. Vikas Gupta, a suggestive plan was agreed to in principal as per which the partnership firm was to be closed on 31.03.2020 and all accounts settled.
19. As per the Retirement-cum-Admission Deed (Ex.P1) dated 12.06.2020, however, it was agreed as follows:
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"AND WHEREAS the retiring patterns expressed their desire to retire on and with effect from day of 1st April 2020 from the said Partnership of leaving the continuing partner as the sole and absolute partner of the said Partnership firm. AND WHEREAS the Continuing Partner has agreed for the Retirement of the partners AND WHEREAS the incoming partner expressed his desire to join the continuing partner as part- ner to which the retiring partners agreed. AND WHEREAS the partners hereto have expressed their desire to record the terms and conditions of Retirement of the retiring partners and admission of the new partner into writing.
NOW THIS INDENTURE WITNESSETH AS FOLLOWS:
.
.
.
3. It is also agreed by and between the parties hereto that the Continuing Partners and New Partner shall become the absolute owners of the all the assets and liabilities of the said business of and shall also be entitled to carry on and continue the said business under the name and style of M/s Kangaroo Advisors.
4. The parties hereto covenant with each other that the Continuing Partner and New Partner shall pay and satisfy or cause to be paid and satisfied all debts and liabilities of the Part- nership on the date of the retirement of the Retir- ing Partners and the Retiring Partners shall have no responsibility and liability of paying and satis- fying the Liabilities of any sort of the Partnership Business on the day of their retirement except that the payment of Income Tax/GST by the Retiring Partners on account of any Income accruing to them respectively from the Partnership till the date of their retirement shall be paid and dis- charged by the Retiring Partners and Continuing partner only to whomsoever it may belong and the incoming partner shall not be responsible for the Same.
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5. All liabilities including statutory dues till 31 st March 2020 will be shared equally among retiring and continuing partners."
20. The above said clauses of the Retirement-cum-Admission Deed would show that upon retirement of two of the partners i.e. the plaintiff nos. 1 and 2, the partnership firm was not dissolved. It was reconstituted and the partnership firm (defendant no. 1) continued its business.
21. During the course of final arguments, a specific query was put to the plaintiff regarding the issue whether the partnership firm M/s Kangaroo Advisors was a dissolved one or did it continue to exist with a new partner. In response, it was argued by Ld. Counsel for plaintiff that as soon as two partners out of three retired, the partnership firm stood dissolved. It was also argued that with addition of a new partner, a new partnership was created. It was further argued that the title 'Retirement- cum-Admission Deed' shows that the two partners retired first and later a new partner was added. It was contended that had it been otherwise, it would have been titled as "Admission-cum-Retirement Deed. Ld. Counsel for plaintiff has relied upon V. Subramaniam Vs. Rajesh Raghuvandra Rao (2009) 5 SCC 608.
22. The Court is not able to agree with the above said arguments of Ld. Counsel for plaintiff. The clauses of the Retirement-cum- Admission deed show that the act of retirement of two partners and the act of admission of a new partner took place at the same time. Business of the defendant no. 1 partnership firm was agreed to be continued by the CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 10 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors. continuing partner (defendant no. 2) and the new partner (defendant no.
3).
23. At this stage, it is also apt to reproduce the relevant clauses of the Partnership Deed dated 25.11.2014 executed by plaintiffs and defendant no. 2 which is an admitted document. Clause 2 and Clause 14 are the relevant clauses which read as under:
"2. The partnership will commence on 25th No- vember, 2014 and will be a partnership at will. However, any partner can retire by will by giving one month notice in writing to the other partners and on the expiry of the notice period the firm would be settle the account of the retiring partner and other partners will carry on the business. .
.
.
14. Due to the death of any partners the remain- ing partner will be entitled to carry on the busi- ness by introducing the legal heir of the deceased partner as a partner or settle the accounts of de- ceased partner with its legal heirs at the option of legal heir and carry on the work under the name and style of "Kangaroo Advisors".
24. The above said clauses show that the defendant no. 1 partnership firm was Partnership at Will. How a partnership at Will is dissolved has been provided in section 43 of the Indian Partnership Act, 1932 which reads as follows:
"43. Dissolution by notice of partnership at will.
--
(1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in writ-
ing to all the other partners of his intention to dis- solve the firm.
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(2) The firm is dissolved as from the date men- tioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice."
25. As envisaged in section 43, no notice of dissolution was given by the plaintiffs in the present case. The Partnership Deed also does not contemplate dissolution of defendant no. 1 firm upon retirement of one or more partner(s).
26. I shall now refer to Abbashbhai K. Golwala Vs. R.G. Shah & Ors. AIR 1988 BOMBAY 187 wherein it has been held as follows:
"8. Neither the partnership deed nor any of the above sections of the Partnership Act dealing with the dissolution of a firm provide for dissolution of a firm on retirement of one or more partners. In fact, it is an accepted position in law that retire- ment of a partner' from the partnership firm is distinct from the dissolution of a firm. As observed by Bhagwati J. (as he then was) in the case of Ke- shavlal Lallubhai v. Patel Bhailal Narandas, re- ported in AIR 1968 Guj l57at P. 161 "...........the law of partnership in India represents a compro- mise between the strict view of the English law which refuses to accord a legal personality to a firm and regards it merely as a compendious name for the partners and the merecantile usage which recognises a firm asa distinct entity or quas-corporation........". Thus, on the retirement of a partner the partnership firm continues to exist as such, which is not the case when a partnership is dissolved. In a strict sense, on retirement of one of the partners the firm which continues would be a firm consisting of different partners with possi- bly different shares. In this sense it would be a dif- ferent firm from the firm which existed prior to re- tirement of one of the partners. The Partnership Act, however, makes a distinction between the re- tirement of a partner and dissolution of the firm.
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Chapter VI of the Partnership Act deals with dis- solution of a firm white Chapter V deals with in- coming and outgoing partners. In the case of Suresh Kumar v. Amrit Kumar reported in AIR 1982 Del 131 in Paragraph 15 it has been ob- served, "It is well settled that retirement is not the same thing as dissolution. On retirement of a partner the firm continues to exist as such which is not the case when a partnership is dissolved. Technically speaking retirement is a severance of the interest of a partner from the partnership busi- ness and is not tantamount to determination of the partnership as a whole, the other partners con- tinue to carry on the business of the firm. On the contrary, the dissolution of a partnership com- pletely destroys jural relationship as partners be- tween all the partners and the question of part- nership business being carried on by partners other than the outgoing partner does not arise."
9. In the present case however, it is contended by the defendants that on account of retirement of 3 out of 4 partners, only one person is left behind and he cannot carry on partnership business be- cause there is no partnership. The business of partnership, however, can be carried on even by an individual as a sole proprietor or in partner- ship with others. Hence the contention of the de- fendants is fallacious. Secondly, this contention must be examined in the light of Clause 2 of the partnership deed in the present case. The first part of Ci. 2 sets out that the partnership business shall continue unless it is dissolved by the mutual consent of all the partners. Obviously, by retire- ment of three partners, the partnership is not dis- solved with the mutual consent of all the partners. Only 3 out of 4 partners, at the highest have de- cided to "dissolve" the firm. Since the partnership cannot be dissolved without mutual consent of all the partners, three partners out of four cannot dissolve the partnership without the consent of the fourth partner, The second part of Clause 2 deals with retirement. It sets out that a partner may re- tire from the partnership after giving to others a notice in writing of not less than three calendar months. This is the provision under which a notice of retirement was given by the defendants. The CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 13 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors.
clause further provides that the remaining part- ners shall be entitled to continue to carry on the said partnership business amongst themselves or with any other person or persons. On retirement, therefore, the remaining partners have a right to continue the partnership business.
10. Mr. Kapadia, learned Counsel for the defen- dants, has emphasised the plurality of the word "remaining partners" in Clause 2 . He has submit- ted that the provision relating to the remaining partners being entitled to continue the partner- ship business comes into operation only when more than one partner remains on retirement of other partners. He has submitted that this provi- sion does not apply when only one partner re- mains. This interpretation ignores the last part of this clause which entitles the remaining partners to carry on the business in partnership with any other person or persons. It would not, therefore, be correct to interpret this phrase to mean that only if there are two partners or more remaining that they would be entitled to continue the busi- ness in partnership. Even if one partner remains, he would be entitled to carry on the business in partnership with any other person or persons. Under Section 13 of the General Clauses Act, 1897 in interpreting any Act or Regulation the words in the singular shall include the plural and vice versa. The same principle applies in inter- preting the terms of the partnership deed. The phrase "remaining partners" includes 'a remain- ing partner' also, especially in the context of this clause where he is entitled to carry on business in partnership with any other person or persons. Under Clause 2 , therefore, on retirement of some of the partners, the partnership does not stand dissolved because the remaining partner or part- ners have a right to continue the said business in partnership either among themselves or with any other person or persons.
.
.
.
12. There would have been no room for any argu- ment if, on the retirement of the defendants, more than one partner had remained. Does it make any CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 14 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors.
difference if on retirement of the defendants only one partner remains? In my view, looking to the language of clause 2, 18 and 20, it makes no dif- ference whether on retirement of some of the part- ners, only one partner remains to carry on the partnership business or more than one remain..."
27. In light of the above judgment, the issue whether a partnership firm would continue when only one partner remains must be decided in view of the various clauses of Partnership Deed and in the present case also on the basis of Retirement-cum-Admission Deed.
28. Upon reading the Partnership Deed and the Retirement-cum- Admission Deed together, it is clear that the partnership firm did not get dissolved on its own upon retirement of two out of three partners. No recourse to Section 43 of the Indian Partnership Act was taken by either of the partners.
29. So far as V. Subramaniam's case is concerned, it deals with the Maharashtra Amendment Act 29 of 1984 vide which the rights of partners of unregistered firms as provided in Section 69 (3)(a) of the Indian Partnership Act, 1932 were taken away. It was held that sub-section 2A of Section 69 introduced by the Maharashtra Legislature vide the above mentioned Amendment Act was violative of Article 14, 19(1)(g) and 300A of the Constitution of India and was unconstitutional. This case law is not applicable to the facts of the present case.
30. Since defendant no. 1 did not get dissolved upon retirement of two out of three partners, therefore, the bar of Section 69 of the Indian CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 15 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors. Partnership Act, 1932 would operate. The issue is decided in favour of the defendants and against the plaintiff.
ISSUE NO. 1 & 21. Whether the plaintiff is entitled for decree for a sum of Rs. 20,82,617/50p against the defendants, as prayed for?
OPP
2. Whether the plaintiff is entitled to interest. If yes, at what rate and for which period? OPP
31. Clause 2 of the Retirement-cum-Admission Deed reads as follows:
"2. Capital accounts of all parties as on 31 st March 2020 have been drawn and initiated by all parties to confirm the same. Capital account bal- ance as on 31st March 2020 of each party is as follows:
Archana Gupta (Continuing Partner) :- Rs. 15,07,978.43 Anita Sachdeva (Retiring Partner) :- Rs.
7,43,769.42
Rosy Agarwal (Retiring Partner) :- Rs.
13,29,228.43
Payment to retiring partners has been made as per their respective capital accounts mentioned above as full and final settlement from Partner- ship firm except refund (if Any) of income tax for the financial year 2019-20. Refund (if Any) re- ceived from Income tax department for the finan- cial year 2019-20 (assessment year 2020-21) will be distributed equally among retiring and contin- uing partners i.e. Anita Sachdeva, Rosy Agarwal & Archana Gupta; as and when the same is re- ceived from the Income Tax Authority. The pay- ment for the above mentioned capital account has CS (COMM) No 657/23 Dt. 30.07.2025 Page no. 16 of 18 Rosy Agrawal & Anr. Vs. M/s Kangaroo Advisors & Ors.
been done through transfer of funds to their bank account as per details below:
S. no. Name Amount RTGS/UTR# Dated Drawn on
1. Anita Rs. 7,43,769.42 ICICR4202006 10.06.202 ICICI Sachdeva 1000433330 0 BANK
2. Rosy Agarwal Rs. ICICR4202006 10.06.202 ICICI 13,29,228.43 1000373390 0 BANK
32. The phrase "Full and Final Settlement" used in the above mentioned clause is vital. The retiring partners (plaintiffs) and continuing partner (defendant no. 2) are now bound by the Retirement-cum-Admission Deed. This Deed does not stipulate that this settlement was subject to audit for the financial year 2019-20. Once the retiring partners have accepted the full and final settlement at the time of their retirement, no further claim now lies.
33. As already discussed while deciding issue no. 3, the present suit is barred by Section 69 of the India Partnership Act, 1932.
34. Both the issues are decided against the plaintiffs.
RELIEF
35. In view of above discussion, the suit of the plaintiffs is dismissed. Parties shall bear their own costs.
36. Decree sheet be prepared.
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37. File be consigned to Record Room after due compliance.
PRONOUNCED IN OPEN COURT ON THIS 30TH DAY OF JULY 2025 Digitally signed by VRINDA VRINDA KUMARI (VRINDA KUMARI) KUMARI District Judge(Commercial Courts- 03), Date:
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