Calcutta High Court
Md. Hassen Hashmi vs Sm. Kaberi Roy And Others on 3 June, 1992
Equivalent citations: AIR1993CAL70, (1993)2CALLT3(HC), 97CWN444, AIR 1993 CALCUTTA 70, (1993) 2 BANKCAS 357, 1993 (2) APLJ 3, (1993) 2 CALLT 3, (1993) CAL WN 444, (1993) 1 CIVLJ 843
ORDER Jain, J.
1. This is an appeal from the Judgment and Order of the learned Interlocutory Judge whereby the plaintiff's application for amendment of the plaint was allowed. The suit as originally instituted by the plaintiff against tahe defendants was inter alia, for declaration that the business of M/s. Tagore Park Apartments of 587/18, Dr R.N. Tagore Road, Tagore Park, Calcutta-700056, stood dissolved on and from November 13, 1989, winding up of the partnerhsip business carried on under the name and style of M/ s. Tagore Park Apartments at No. 587/18, Dr. R.N. Tagore Road, Tagore Park, Calcutta-700056; accounts and enquiries; injunction restraining the defendants and each of them whether by themselves, their servants, agents assigns or otherwise howsoever from acting in terms of or pursuant to or in furtherence of the said partnerhip agreement in any manner whatsover; Receiver; injunction; attachment; costs etc. After the suit was instituted the plaintiff made an application inter alia, for appointment of Receiver and for injunction and various orders were passed on the said application from time to time. The suit was instituted sometime prior to July 5, 1991 and pursuant to the said interlocutory application made by the plaintiff, an order was passed by the interlocutory court on July 5, 1991. On the said date, learned Counsel appearing on behalf of the defendants, gave assurance on behalf of the defendants that the defendants would not operate the bank account of the partnership firm in the United Bank of India and would not incur any other liability on account of the partnership firm.
2. One of the allegations contained in the plaint as originally filed was as follows:--
"10. The said partnership firm since 1985 has taken up three projects and/or construction of three building in Tagore Park area out of which one is a four storied building comprising of 10 flats and the third project is a five storied building comprising of 9 flats. The said projects apart from the said flats also have (masonry?) floors, shop rooms, garages etc., which were sold out separately. The said partnership business involved several lacs of rupees."
3. The plainff had also alleged in the plaint as originally filed that the business of the partnership was that of promoters and/ or developers and/ or building contractors under the name and style of 'Tagore Park Apartments' which was carried on, inter alia, at 5, Tagore Park Road (formerly No. 587/18, Dr. R.N. Tagore Road), Tagore Park, Calcutta-700056. From the aforesaid allegations, it will appear that the case of the plaintiff was that the partnership firm since 1985 had undertaken three projects and/or constructions of three buildings in Tagore Park area.
4. Thereafter on Sept. 12, 1991 a further order was passed which was to the following effect :--
"The Court : Supplementary Affidavit is to be filed by 16-9-1991; A/R if there be any by 18-9-1991 and the matter to appear on 19-9-1991. Mr. Bose assures this court that his client will take no steps or deal with the property in the meantime save and except for the purpose of construction."
5. The assurance given on behalf of the defendants was to the effect that they would not take any steps to deal with the property, save and except for the purpose of construction. According to the plaintiff the only construction that was going on in or about Sept. 1991 was, in respect of 587/20 Dr. R.N. Tagore Road. However that is a matter of proof for the parties at the trial where after the matter is to be decided.
6. The said interlocutory application of the plainiff was disposed of by an order dated Sept. 23, 1991 and by the said order the Court appointed Mr. Prasad Bagchi, an Advocate of this Court, as Receiver in terms of prayer (a) of the petition. The Receiver was also directed to initial the books of accounts in terms of prayer (b) of the petition and also an order of injunction was passed restraining the defendant No. 1 in terms of prayer (d) of the petition. The Court, however, in the said order mentioned that the address mentioned in prayer (d) of the petition would be 587-20, Dr. R. N. Tagore Road, Tagore Park, Calcutta-56. The original address of the partnership as was given in the prayer was 587-18, Dr. R.N. Tagore Road, Tagore Park, Calcutta-56. From the said order, the defendants preferred an appeal and the Court of appeal by its orer dated 9th October 1991, stayed only that part of the order dated Sept. 23, 1991 where the learned Judge had observed: "The address mentioned in prayer (d) will be 587-20, Dr. R.N. Tagore Road, Tagore Park, Calcutta-56". However, the court of appeal made it clear that it would be open to the plaintiff-respondent No. 1 to file an application for amendment of the plaint, if she was so advised, which would be considered by the learned Judge taking interlocutory matters in accordance with law and appropriate order would be passed. However no stay was granted in so far as the order for appointment of receiver and injunction is concerned. The order for appointment of receiver and for injunction could only be interpreted to be in respect of the partnership assets as alleged by the plaintifff. It is to be remembered that according to plaintiff's case as orginally made in the plaint and the petition the partnership undertook three building projects. However the plainiff did not give particulars of the three projects in the plaint and/or in the petition for appointment of receiver. The defendants admitted two projects in respect of 587-18 and 587/19 Dr. R.N. Tagore Road to have been undertaken by the partnership. The defendant in his affidavits however denied that there was any third project, which according to the defendant No. 1 was carried out by him personally. The aforesaid appeal in which the said order dated 9-10-1991 was passed is still pending and the same is not before us.
7. After the order of the Appeal Court dated 9-10-1991 was made, the plaintiff made an application before the learned Interlocu-
tory Judge and on October 11, 1991 the learned Interlocutory Judge, inter alia, observed that considering the facts and circumstances of the case and for the interest of justice the said Court was inclined to pass an order of injunction as prayed for. However, the learned counsel appearing for the respondents, upon instruction gave an undertaking before the interlocutory court that till disposal of that application the respondents would not alienate, transfer, sublet or in any way encumber the properties being 587/18, 587/19 and 587/20, Dr. R.N. Tagore Road, Tagore Park, Calcutta-56. The said order was, of course, passed without prejudice to the rights and contentions of the parties.
8. The said application for amendment of the plaint had come up for hearing before the interlocutory court and the same was disposed of by the judgment and order dated December 11, 1991. The learned Interlocutory Judge held that the plaintiff had not tried to change the nature and character of the plaint filed in the said suit and an order was passed for amendment of the plaint and other consequential directions were also given. The learned Judge also observed that the order made would not prevent the plaintiff from taking out any application in accordance with law for necessary interim relief. Apart from the said contention that the plaintiff was intending to change the nature and character of the plaint filed in the suit, no other contention seems to have been raised before the interlocutory court.
9. Thereafter the plaintiff made another application for appointment of Receiver and on December 12, 1991 an order was passed by the learned Interlocutory Judge that status quo would be maintained by the parties till the disposal of that application.
10. Before going into the points that have been urged before us, we should first like to consider the nature of the amendments that were prayed for, on behalf of the plaintiff. The first amendment that was prayed for was addition of paragraph 10A to the plaint. Paragraphs 10 and 10A of the plaint, which are relevant for this purpose are set out hereunder:--
"10. The said partnership firm since 1985 has taken up three projects and/or construction of three buildings in Tagore Park area out of which one is a four storied building comprising of 10 flats and the third project is a five storied building comprising of 9 flats. The said projects apart from the said flats also have (masonry?) floors, shop rooms, garages etc. which were sold out separately, The said partnership business involved several lacs of rupees.
10A. The aforesaid projects and/or constructions of 3 (three) buildings as stated in pragraph 10 are as follows:--
(i) Project I: situated at Premises No. 587/18, R.N. Tagore Road, Caclutta-700056;
(ii) Project II: situated at Premises No. 587/19, R.N. Tagore Road, Calcutta-700056;
(iii) Project HI : situated at Premises No. 587/20, R. N. Tagore Road, Calcutta-700056."
11. So far as this amendment is concerned, the plaintiff had already mentioned in paragraph 10 of the plaint that three projects and/or construction of three buildings was undertaken by the partnership out of which one was a four storied building comprising 10 flats and the third project was a five storied building comprising 9 flats. It appears that in paragraph 10 of the plaint the addresses of the three buildings or projects were not given and so far as paragraph 10A of the plaint is concerned, it appears that the particulars of the three projects which have been referred to in paragraph 10 of the plaint are given with regard to the premises numbers and addresses. Those three projects are situate at Premises No. 587/18, 587/19 and 587/20, Dr. R.N. Tagore Road, Calcutta. So far as this paragraph 10A of the plaint is concerned, it merely gives further and better particulars of the facts already stated in paragraph 10 of the plaint.
12. Apart from the amendment aforesaid, a new prayer has been sought to be added by way of amendment which is prayer (di). That prayer reads as follows:--
"(di) Injunction restraining the Respondent No. 1 by itself or by its servants, agents, assigns or otherwise whatsoever from dealing with, encumbering or selling the assets and properties of the firm of M/s. Tagore Park Apartments of No. 587/18, Dr. R.N. Tagore Road, Calcutta-700056; 587/19, Dr. R.N. Tagore Road Calcutta-700056 and 587/20, Dr. R.N. Tagore Road, Calcutta-700056;"
13. The contention raised on behalf of the appellant is that so far as premises No. 587/18 and 587/19 are concerned, they are admittedly the assets and/or properties of the said partnership firm. However, so far as Project III, as alleged by the plaintiff and alleged to be situated at premises No. 587/20, Dr. R.N. Tagore Raod, Calcutta, is concerned, the same according to the appellant is the personal property of the appellant and the partnership firm has or had no interest therein and the same is a disputed property. Further contention of the appellant is that the plaintiff by introducing the said prayer is seeking an order of injunction in respect of an immovable property situate outside the jurisdiction of this Court. According to the appellant, by virtue of this prayer and by virtue of the particulars given in the amended portion, it has become a suit for land situate outside the jurisdiction of this court and hence, according to the appellant, the learned trial Judge had no jurisdiction either to entertain the application for amendment or to pass an order for amendment. This is to be noted that this point that the suit has become a suit for land in respect of a property situate outside the jurisdiction of this court, was not at all urged in the affidavit-in-opposition, nor was the same argued before the learned trial Judge.
14. The next contention that was made on behalf of the appellant is that by virtue of the allegations which have been introduced by way of amendment, the suit is hit by the Benami Transactions (Prohibition) Act, 1988. This contention also, was not raised before the interlocutory Court while opposing the application for amendment.
15. Learned Counsel appearing on behalf of the appellant, in support of his contention that by allowing the amendments to the plaint the suit originally filed has become a suit for land, relied on various judgments, viz., a decision of the Federal Court reported in AIR 1950 FC 83 (M/s. Moolji Jaitha & Co. v. The Khandesh Spinning and Weaving Mills Co. Ltd.), a decision of the Special Bench of this Court , (Maharaja Probirendra Mohun Tagore v. State of Bihar), a decision of this Court (Bengal Glass and Silicate Works v. Lalit Bijlani) and a further decision of this Court (East Angtia Plastics Ltd. v. State of West Bengal). In all the aforesaid decisions, it has been held that what the Court has to see is the primary object of the suit and if the primary object of the suit is to obtain relief with regard to an immovable property outside the jurisdiction of the Court, then it is a suit for land; but if the primary object is otherwise and only incidental relief is claimed as a consequence of the primary object, then it is not a suit for land.
16. So far as the instant suit is concerned, there is hardly any doubt that the suit is a suit for declaration that the partnership has stood dissolved and for accounts. That is undoubtedly the primary object of the suit. So far as the relief with regard to injunction in respect of the assets and properties of the partnership is concerned, the same is in the nature of an incidental relief and is merely in the nature of an interlocutory relief until the final accounts are taken. The object of the plaintiff is to enforce its right to get accounts from the defendants in respect of the partnership business. It makes no difference whether property is admitted to belong to the partnership or is disputed to belong to the partnership, so far as the jurisdiction of the Court is concerned. Furthermore from the nature of business of the partnership, it is not necessary that the land should necessarily belong to the partnership. It was not so even in the other two admitted cases. The rights of partnership are governed by the agreement for promotership and for development and construction. What is the extent of interest if any of the partnership in the third project, is a matter to be decided at the trial of the suit.
17. The plaintiff/respondent No. 1 has relied on a case (Tilokram Ghosh v. Sm. Gita Rani Sadhu-
khan). In the said decision, the Division Bench of this Court held as follows :
"A suit for dissolution of partnership and accounts cannot be treated as a suit for land even if its assets consist of immovable properties, and, therefore, a suit for dissolution and accounts is maintainable in a Court though the Court has no territorial jurisdiction over the assets of the firm which are immovable properties."
18. The learned counsel for the plaintiff/respondent also relied on a decision reported in AIR 1947 Lah 13 (FB) (Ajudhia Pershad Ram Pershad v. Sham Sunder). In the said decision, it was inter alia, held as follows:--
"It is obvious that the Act contemplates complete liquidation of the assets of the partnership as a preliminary to the settlement of accounts between partners upon dissolution of the firm and it will, therefore, be correct to say that, for the purposes of the Indian Partnership Act, and irrespective of any mutual agreement between the partners, the share of each partner is, in the words of Lindley : 'his proportion of the partnership assets after they have been all realised and converted into money, and all the partnership debts and liabilities have been paid and discharged."
The Full Bench of the Lahore High Court in the said decision also held that there would thus appear to be no doubt that the share of a partner in an existing partnership is essen-. tially movable property, notwithstanding that a part of the partnership property may be immovable. The same view was taken by the Supreme Court in the decision (Addanki Narayanappa v. Bhaskara Krishnappa). There the Supreme Court inter alia laid down as follows (at p. 1303 of AIR):
"From a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the property to anyone."
19. So far as the instant suit is concerned, it is primarily a suit for accounts and for realisation of movable properties, namely, the interest of the plaintiff in the partnership assets, which is in the nature of movable assets. It does not really matter if the partnership has immovable properties, whether within or outside the jurisdiction of this Court. So far as the interest of the partner is concerned, it is in the nature of movable property.
20. Reliance was also placed on behalf of the appellant on the judgment of the Division Bench of this Court (Brij Mohan Lal Rathi v. Gita Devi Rathi). It was saught to be urged on behalf of the appellant that the moment the title is disputed by the defendant, the suit becomes a suit for land. It was also submitted that if title is not disputed then it is not a suit for land. According to the learned counsel this Court has jurisdiction to try and determine the suit in so far as the claims in respect of the first two projects are concerned but the Court has no jurisdiction in respect of the third project which is a disputed project. It is to be remembered that all the three projects are outside the jurisdiction of this Court. That is not the ratio of the said judgment. In the said case even according to the plaintiff the firm was dissolved by mutual consent in 1976. The suit was instituted in 1987, claiming reliefs in respect of a property situate outside the jurisdiction of this Court which admittedly stood in the name of the defendant's predecessor an ex-partner of tie dissolved firm.
If the firm was dissolved by consent in 1976, there was no scope for any suit for accounts, nor was there any such relief claimed in the suit. It was not the case of the plaintiff that the agreement for dissolution was subject to any accounts to be taken in future.
21. In the said case the Division Bench held that the principle that the shares of the partners in the firm's assets must be treated as movable property was not applicable in the said case. The Division Bench also held that the primary and only object of the plaintiff in the said suit was to establish his title to the premises out of the jurisdiction and have possession and control of the same. The plaintiff alleged in the plaint that the defendants were denying and/or interested in denying the plaintiffs title to the said property. The instant suit is a suit for accounts and that is the primary object of the instant suit. It could not be said in that case that the suit was a suit for accounts. In the said case the ratio of the aforesaid judgments in the cases of Tilokram Ghosh ; Ajudhiapershad (AIR 1947 Lab. 13) (FB) and Addanki Narayanappa had no application. Furthermore it cannot be accepted that in a suit for accounts of a partnership, the Court will have jurisdiction if the property is admitted to belong to the. partnership and that the jurisdiction of the Court can be taken away by the defendant by disputing the title. Either the Court has jurisdiction or it does not have jurisdiction. The jurisdiction of the Court does not depend on the volition of the defendant, In a suit for accounts the nature of interest of a partner has been held to be movable even though, partnership owns immovable properties outside the jurisdiction.
22. The next contention raised on behalf of the appellant was that the suit is hit by the Benami Transactions (Prohibition) Act, 1988. There are no allegations in the plaint as are required to be made in the case of making a claim in the nature of 'benami'. The plaintiff has not alleged that the defendant No. 1 was or is a Benamdar or that the money was paid by the plaintiff or that the property was purchased in the name of the defendant No. 1 as benamdar. Apart from that under Sections 14 and 15 of the Partnership Act, a partnership can acquire assets in the name of the partners. Those sections have not been deleted by the Benami Transactions (Prohibition) Act, 1988. Though Section 82 of the Trusts Act was repealed by the said Benami Transactions (Prohibition) Act, yet Section 88 of the said Act is there. Section 88 deals with the question of advantage gained by a fiduciary. In the said section Illustration (d) mentions that a partner buying a land in his own name with funds belonging to partnership, in that case the said partner holds such land for the benefit of the partnership. Illustration (f) to the said Section states that if out of two partners one partner dies and the other partner instead of winding up the affairs of the partnership retains the assets in the business then the surviving partner must account to the legal representatives of the deceased partner for the profits arising from the deceased partner's share of the capital. These Illustrations show that a partner stands in the relationship of a fiduciary for the partnership and/or the partners or even the heirs and legal representatives of the deceased partner. Under the Benami Transactions (Prohibition) Act, (where there is a question of trust), the Act does not prohibit the enforcement of the trust.
23. Section 14 of the Indian Partnership Act, 1932 provides that subject to contract between the partners, the property of the firm includes all properties and rights and interests in property originally brought into the stock of the firm or acquired, by purchase or otherwise, by or for the firm or for the purposes and in course of the business of the firm and includes also the goodwill of the business. It also provides that unless the contrary intention appears, the properties and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm.
24. In a suit for dissolution of partnership and for accounts the necessary pleadings are, as set out in Form No. 49, Appendix A of the Code of Civil Procedure. From the said form it will appear that it is not even necessary in a suit for dissolution and for accounts to plead as to what are the different assets of the partnership firm. All that has to be pleaded is that there was a partnership, the terms of the partnership deed and/or the circumstances under which it has been dissolved or it is required to be dissolved and the reliefs that are required to be claimed which are for dissolution of the partnership and for accounts.
25. The definition of 'Benami Transaction' given in the Benami Transactions (Prohibition) Act, 1988, is as follows: "(a) 'Benami transaction' means any transaction in which properties transferred to one person for a consideration paid or provided by another person." This stipulates that a property is required to be transferred to one person and the consideration has to be paid or provided by another person. It requires three parties, namely, the transferor, the transferee and the real owner. In the present plaint there is no such allegation and furthermore when a property of the firm is purchased in the name of a partner the partner is not a third person so far as the partnership is concerned.
26. Section 4 of the aforesaid Act which creates a bar in respect of a suit or claim or action to enforce any right in respect of any property held benami, provides an exception in sub-section (3) which clearly mentions that nothing in this section shall apply where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity.
27. I have already referred to Section 88 of the Indian Trusts Act, Illustrations (d) and (f) which clearly recognise that a partner stands in a fiduciary capacity to the partnership in respect of the property purchased in his name with the funds of the partnership.
28. Furthermore, the appellant never raised the contention that the suit has become a suit for land or that it was hit by the Benami Transactions (Prohibition) Act, 1988 before the interlocutory Court, and neither of these contentions were raised in the affidavit nor were they argued before the learned inter-loctory Court, the appellant is not entitled to raise these contentions for the first time before the appeal Court. It is also doubtful as to whether the order is at all appealable as nothing was finally decided against the appellant and the truth of the amendments is yet to be proved at trial.
29. Prima facie we are satisfied that by virtue of the amendments that have been allowed or were prayed for, the suit does not and has not become a suit for land nor is the suit hit by the Benami Transactions (Prohibition) Act, 1988, as is being sought to be urged on behalf of the appellant. The observations which have been made above are for prima facie purposes but this will not debar the defendants from raising any such defence at the time of trial of the suit as to the maintainability of the suit or as to the jurisdiction of the Court as the defendant may be advised.
30. The appellant obtained stay of further proceedings in the suit pending before the learned trial Court and the appeal Court at the interlocutory stage also restrained the defendants from transferring, encumbering or creating any third party right during the pendency of the appeal and directed the defendants to maintain status quo in respect of the subject matter in dispute. The stay was granted conditionally as aforesaid and the status quo order was a condition to the order for stay.
31. At the interlocutory stage in this appeal, the appeal Court then taking the matter inter alia ordered that in view of the order of stay passed, it need not be said that it is always open to the party to the suit to seek any appropriate relief from the appeal Court. This observation was made when it was pointed out on behalf of the respondent that the respondent should be at liberty to move the application for appointment of Receiver before the appeal Court. When we passed directions for the hearing of the application for appointment of Receiver by this Court objections were raised on behalf of the appellant on the ground that there was no clear order to the effect that the application pending before the trial Court will be heard by the appeal Court. Considering the said objections we make it quite clear that we are not taking the said application for appointment of receiver and the said application will be heard and disposed of by the trial Court before whom the said application was made. However, the order of injunction granted by the appeal Court on February 7, 1992, at the time of admission of the appeal will continue until disposal of the said application for appointment of Receiver made purusant to the Notice of Motion dated 12th December, 1991. The said application for appointment of Receiver will therefore be heard and disposed of by the trial Court and interim order if any made by the trial Court in the said application, will also be subject to the final order to be made by the interlocutory court at the final hearing of the said application. We are also told that in view of the order of stay, amendments could not be carried out. The time for carrying out .the amendments is extended until four weeks from date.
32. In view, of what has been stated above, we find no merits in the appeal. The appeal is therefore dismissed with costs. All interim orders made in this appeal, save as provided hereinabove are vacated. The appeal has been heard for about seven days and in view, of the fact that the contentions that were raised in this appeal were not at all raised before the trial Court and were raised for the first time before the appeal court and in view of our judgment and order we assess the costs at 700 Gms. The costs are to be paid within a fortnight from the date of service of the signed copy of the operative portion of this judgment and order.
33. The learned counsel appearing for the appellant prays for stay of the operation of this judgment and order. We decline to grant any order for stay of this judgment and order. The prayer for stay is refused.
34. Department and all parties are to act on a signed copy of the operative portion of this judgment and order on the usual undertaking.
Prabir Kumar Majumdar, J.
35. I agree.
36. Appeal dismissed.