Karnataka High Court
C Prakash vs The State Of Karnataka on 6 April, 2018
Bench: B.S Patil, B.V.Nagarathna
-: 1 :-
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 6TH DAY OF APRIL, 2018
PRESENT
THE HON'BLE MR. JUSTICE B.S. PATIL
AND
THE HON'BLE MRS. JUSTICE B.V.NAGARATHNA
REVIEW PETITION NO.363/2015
IN
W.A.No.333/2013
BETWEEN:
C. PRAKASH
AGED ABOUT 42 YEARS,
S/O. LATE CHIKKAVENKATAPPA @ VENKATAPPA,
PRESENTLY R/O. NO.32, 11TH CROSS,
KEMPANNA LAYOUT,
CHOLANAYAKANAHALLI,
R.T.NAGAR POST,
BANGALORE - 32. ... PETITIONER
(BY SRI: V. LAKSHMINARAYANA, SENIOR ADVOCATE A/W
SRI G. PAPI REDDY, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
REPRESENTED BY ITS SECRETARY,
DEPARTMENT OF COMMERCE & INDUSTRY,
M.S.BUILDING,
BANGALORE - 560 001.
2. THE KARNATAKA INDUSTRIAL
DEVELOPMENT BOARD,
BY ITS MANAGING DIRECTOR,
2ND FLOOR, RASHTROTHANA PARISHATH,
NO.14/3A, NRUPATHUNGA ROAD,
BANGALORE - 560 001.
3. THE SPECIAL LAND ACQUISITION OFFICER,
KARNATAKA INDUSTRIAL DEVELOPMENT BOARD,
2ND FLOOR, RASHTROTHANA PARISHATH,
NO.14/3A, NRUPATHUNGA ROAD,
BANGALORE - 560 001.
-: 2 :-
4. M/S. LAKE VIEW TOURISM CORPORATION,
REPRESENTED BY ITS DIRECTOR
SRI DAYANANDA PAI, NO.10/1,
LAKSHMINARAYANA COMPLEX,
GROUND FLOOR, PALACE ROAD,
BANGALORE - 560 052. ... RESPONDENTS
(BY SRI: S. VIJAY SHANKAR, SENIOR ADVOCATE A/W SRI
SRINIVAS RAO, ADVOCATE FOR C/R-4; SRI P.V.
CHANDRASHEKAR, ADVOCATE FOR R-3)
*****
THIS REVIEW PETITION IS FILED UNDER ORDER 47 RULE
1 OF CPC, PRAYING THIS HON'BLE COURT TO REVIEW THE
ORDER DATED 26/03/2014 PASSED IN W.A.NO.333/2013 (LA-
KIADB), ON THE FILE OF THE HON'BLE HIGH COURT OF
KARNATAKA, BANGALORE.
THE ORDER IN THIS PETITION HAVING BEEN RESERVED
ON 10/11/2017 AND IT BEING LISTED FOR PRONOUNCEMENT
OF ORDER TODAY, NAGARATHNA J., PRONOUNCED THE
FOLLOWING:
ORDER
This review petition is directed against judgment dated 26/03/2014 in W.A.No.333/2013 by which, writ appeal filed by petitioner herein was dismissed with cost of Rs.5,000/- payable to Karnataka State Legal Services Authority. Subsequently, petitioner herein preferred SLP.No.1316/2015 before the Hon'ble Supreme Court which, by order dated 23/03/2015, dismissed his SLP as withdrawn with the following order:-
-: 3 :-
"ORDER Learned counsel for petitioner seeks permission to withdraw the petition and says that he will file a review petition in the High Court.
Permission granted.
The special leave petition is dismissed as withdrawn."
In the above background, this review petition has been filed.
2. Briefly stated, the facts are that petitioner herein as well as his father - Chikkavenkatappa, had filed W.P.No.17819/2005, assailing Notification dated 25/11/2002, issued under Sections 3(1) and 1(3) of the Karnataka Industrial Areas Development Act, 1966 [hereinafter, referred to as the "Act", for the sake of brevity], declaring to establish an industrial area to an extent of 63.33 Acres. On the same day, Notification under Section 28(1) of the Act, was also issued proposing to acquire 46.20 Acres in Hebbal village and 15.22 Acres in Hebbal Ammanikere village, in all, measuring 62.02 Acres. On considering objections of -: 4 :- the land owners, final declaration under Section 28(4) of the Act, was issued on 11/05/2004, proposing to acquire 40.12 Acres in Hebbal village and 13.14 Acres in Hebbal Ammanikere village, totally measuring 53.26 Acres.
3. According to the petitioner, fourth respondent is a private limited company, incorporated under the provisions of the Companies Act, 1956, which had approached the State Government in the year 2000, with an intention to establish "Unicare Tourist Centre", comprising of various facilities and amenities for recreation and amusement. That fourth respondent had negotiated to purchase 33 Acres of land from certain land owners at Hebbal and Hebbal Ammanikere village. But the fourth respondent required 37 Acres, it therefore placed a proposal before the State High Level Committee [hereinafter, referred to as the "Committee"], to examine its project. The Committee by resolution dated 14/08/2001, cleared the project and resolved that an -: 5 :- extent of 37 Acres could be acquired under the Act. That fourth respondent infact, required 70 Acres of land and therefore, the said extent of land could be acquired under the Act. In the above background, the aforesaid Notifications were issued by the State Government.
4. In the interregnum, Bangalore Development Authority [hereinafter, referred to as the "BDA"] issued Notifications under Sections 17(1) and 19(1) of the Bangalore Development Authority Act, 1976 [hereinafter, referred to as the "BDA Act"] on 03/02/2003 and 03/02/2004 respectively, intending to acquire the very same extent of land for the purpose of a residential layout known as Arkavathi Layout. Those Notifications were assailed before this court and they were quashed by order dated 20/05/2005.
5. The Notifications issued under the Act were also challenged by certain land owners including petitioner and his father herein in W.P.No.17819/2005. Learned Single Judge by order -: 6 :- dated 19/11/2012 dismissed the writ petition. Being aggrieved by that order, petitioner herein alone filed W.A.No.333/2013, which was also dismissed by this court on 26/03/2014, against which, the aforementioned special leave petition was filed and pursuant to the order of the Hon'ble Supreme Court, this review petition has been preferred.
6. Learned Senior Advocate, Sri Lakshminarayana, appearing for the review petitioner, with reference to the pleadings and written arguments, contended that review petition has been filed under Order XLVII Rule 1 of Code of Civil Procedure, 1908 [hereinafter, referred to as "CPC"] upon discovery of new and important piece of evidence. He further averred that the expression "any other reason", in Order XLVII Rule 1 of CPC is wide enough to encompass the reasons for filing the instant review petition. According to him if, upon discovery of new materials or facts and on consideration of the same, it is held that order impugned has resulted in -: 7 :- miscarriage of justice, this court could rectify the said order. Elaborating the said contention, learned senior counsel submitted that M/s.Lakeview Tourism Corporation, had moved an application before the State Government in Global Investment Meet in the year 2000 and they entered into an agreement with Karnataka Industrial Areas Development Board [hereinafter, referred to as the "Board"] as an incorporated company on the footing that 35 Acres of land was required by them. That M/s.Lakeview Tourism Corporation, though described as being represented by its Director, it is, in substance, a firm registered on 10/05/2004 i.e., on the date when the final Notification was issued. That even prior to that, W.P.No.46785/2004 had been filed by one of the partners of the firm. The partners of the firm are two companies namely, Ashwitha Property Developers Private Limited, a company incorporated on 09/07/1997 under the provisions of the Companies Act, and Shivashakthi Estates and Investments Private Limited, a company incorporated under the -: 8 :- Companies Act on 09/12/1990, that two incorporated companies cannot form a partnership firm as there is a legal impediment to do so. But agreement dated 04/04/2001 between the Board and the Company i.e., M/s.Lakeview Tourism Corporation, would show that it is an incorporated company under the provisions of the Companies Act, but the said company is neither a company nor a partnership firm and cannot be considered to be a legal entity. Therefore, as on 04/04/2001, there was no company in the eye of law, which could have entered into an agreement with the Board. Therefore, the said entity could not have preferred W.P.No.46785/2004 before this court, which had assailed acquisition of the very same land for the formation of Arkavathi Layout by the BDA. That the order of this Court in the said writ petition dated 23/10/2010 is obtained on account of fraud and the said order is void and a nullity in the eye of law.
7. Learned senior counsel further submitted that in the said writ petition, petitioner therein was -: 9 :- described as a partnership firm, but this court proceeded on the footing that it is a company. Infact, it was neither a company nor a firm, as it was not at all a legal entity. He further submitted that M/s.Lakeview Tourism Corporation was registered as a firm on 10/05/2004 and therefore, on 04/04/2001 it could not have entered into an agreement with the Board.
8. It is the next contention of the petitioner that under Section 69 of the Indian Partnership Act, 1932 [hereinafter, referred to as "Partnership Act"], rights which accrued to a partnership firm before its registration would not get transferred to the firm after registration. That proceedings of the State Government including the Board based on such an agreement is non-est and void ab initio, as there was no company incorporated as on the date of the agreement. That these facts were not known to the petitioner when the writ petition or writ appeal were filed, but such facts having been discovered -: 10 :- subsequently therefore, to examine the same, review petition must be allowed, is the submission of learned senior counsel for petitioner. He further submitted that whether M/s.Lakeview Tourism Corporation is a person or not, and whether it could take the benefit of acquisition made by the State Government is a question of law, which has not been considered by this Court in the writ appeal and that the judgment is erroneous, which is apparent on the face of the record and therefore, this review petition must be allowed.
9. Learned senior counsel next submitted that even if fourth respondent is construed to be a company, acquisition proceedings could not have commenced in favour of a single company under the Act. He reiterated that M/s.Lakeview Tourism Corporation is a registered partnership firm comprising of two incorporated companies, which is impermissible in law. Further, the said partnership firm was registered only on 10/05/2004, but whatever rights were accorded to the unregistered firm is -: 11 :- unenforceable in law. That the acquisition proceedings to benefit fourth respondent is initiated on account of fraud and collusion between fourth respondent - Board and the State Government. Further, in terms of the recent judgment reported in Haribabu Siddappa Patil & Others [2013 (1) KCCR 491], acquisition of land through a single window agency for a single company is impermissible. That the preliminary Notification in the instant case was issued on 25/11/2002 whereas, the firm was registered thereafter. Hence, the benefits of acquisition would not enure to the firm after registration.
10. It is emphasized that when two incorporated companies are being governed under the Companies Act, whereas a firm is governed by the Partnership Act, the result of such a joint venture would be chaotic as there is no legal person in existence in the eye of law, which can follow a particular legal regime. In support of the above principle of law, reliance is placed on Ganga Metal -: 12 :- Refining Co. Pr. Ltd., vs. Commissioner of Income Tax, West Bengal [AIR 1967 Cal. 429], [Ganga Metal Refining Co.].
11. Learned senior counsel further drew our attention to the fact that in the judgment passed in writ appeal at Paragraph No.25, this court has adverted to the petitioner herein not having locus standi to file the petition, but prior to the filing of the writ appeal, petitioner's father, who was the first petitioner in the writ petition died and his son - the petitioner herein filed the writ appeal, of course, without disclosing the said fact. But the petitioner herein was entitled to file the writ appeal as a legal representative of his deceased father, who was the first petitioner in the writ petition and hence, the writ appeal would have to be reheard on merits by allowing this review petition.
12. Learned Senior Counsel has relied upon certain decisions in support of his submissions, which -: 13 :- shall be adverted to later. The said decisions are as under:-
1) Ganga Metal Refining Co. Pr. Ltd., vs. Commissioner of Income Tax, West Bengal [AIR 1967 Cal. 429],
2) Seth Loonkaran Sethiya and Others vs. Mr.Ivan E. John and Others [(1977) 1 SCC 379],
3) M/s.Shreeram Finance Corporation vs. Yasin Khan and Others [(1989) 3 SCC 476].
13. Per contra, learned senior counsel Sri S.Vijayashankar, appearing for fourth respondent, with reference to their statement of objections and written arguments has submitted that petitioner herein has filed this review petition only to fester litigation. That SLP.No.9223/2015 before the Hon'ble Supreme Court was withdrawn at the time of admission on 23/03/2015 and thereafter, a defective review petition was filed on 30/05/2015, the defects were removed only on 20/08/2015 and this review petition was listed before this court for the first time on 10/08/2016. That the intention of the petitioner is to -: 14 :- keep litigation pending and that the pendency of this review petition has a bearing on other writ appeals, which are pending consideration before this court.
14. Adverting to Section 69 of the Partnership Act, it is submitted that the said section operates as a bar to sue by an unregistered partnership firm seeking enforcement of a right. The said section does not bar the transfer of rights from an unregistered firm to a registered firm. That in the case of Seth Loonkaran Sethiya, the main issue was, whether the suit was barred under Section 69 of the Partnership Act or not. Similarly, in Shreeram Finance Corporation, the question was with respect to maintainability of the suit in view of Section 69(2) of the said Act. The said judgments do not allude to the rights of an unregistered firm being transferred to a registered firm.
15. Reference has also been made to what has been stated by the learned single Judge in W.P.No.17819/2005, wherein it has been observed -: 15 :- that the State Government decided to refer the project proposal to the State High Level Committee, to acquire lands under the provisions of the Act, whether the promoters of M/s.Lakeview Tourism Corporation, at the relevant point of time were partners of a firm or directors of a private limited company was not a relevant factor. It is further contended that the judgment in Ganga Metal Refining Co., arises under the Income Tax Act, 1961, which is a special enactment. That there is no bar under Section 69 of the Partnership Act, for two companies to form a partnership firm when the main object of both the companies is to carry on business of infrastructural development of land as in the instant case.
16. It is next contended that decision of this court in Haribabu Siddappa Patil, is not applicable to the present case. Comparing the facts and decision of that case with the judgment passed in the writ appeal in the instant case, it is submitted that in Haribabu Siddappa Patil, 13 Acres of land was acquired by the -: 16 :- Board for a private party to set up a cold storage plant etc. In the instant case, 53 Acres of land has been acquired to set up a Tourist Centre and recreational facility. That in Haribabu Siddappa Patil, a Division Bench of this court held that power of eminent domain cannot be pressed in to service for acquiring land for establishing the project of a private co-operative society. That in the said case, beneficiary - allottee was a politically influential person and acquisition was completed with great speed. Further, acquisition was contrary to the ruling of this court in P.Narayanappa & Anr. vs. State of Karnataka & Ors. [2006 AIR SCW 4132]. Therefore, Notifications of acquisition in the said case were quashed. Alluding to the aforesaid case, it is submitted that in P.Narayanappa's case, Hon'ble Supreme Court has ruled that an acquisition of land and development by the acquiring authority and allotment of the same to an entrepreneur or a company, for setting up an industry or infrastructural facility cannot be characterized as acquisition of property for the benefit of a private party. -: 17 :-
That the State Government has constituted a single window agency to accelerate economic development of the State, which has been recognized by the Hon'ble Supreme Court in Chairman and M.D. BPL Ltd. vs. S.P.Gururaja and Ors. [AIR 2003 SC 4536]. It is further submitted that if land is acquired in a particular place for a single industry, the same would answer the definition of "industrial estate", within Section 2(7) of the Act, vide Markhandappa and Ors. vs. State of Mysore and Ors. [1974 (1) KLJ 71]. It is contended that fourth respondent's project is an industrial infrastructural facility, which falls within the meaning of Section 2(7) of the Act and hence, invoking the Act for acquiring the land was proper. Adverting to Section 47 of the Act, it is contended that the said section has an overriding effect in relation to other enactments that may be inconsistent with its provisions vide N.Somashekhar and Ors. vs. State of Karnataka and Ors. [1997 (7) KLJ 410]. Learned senior counsel for respondent No.4, sought dismissal of the review petition. -: 18 :-
17. At the outset, it is noted that though the petitioner herein as well as his father had filed the writ petition and the writ appeal, out of which this review petition arises, the writ appeal was filed only by the petitioner herein by stating that petitioner's father was not interested in filing an appeal. It is now contended by learned senior counsel for petitioner that infact, petitioner's father had died and therefore, petitioner could have maintained the writ appeal in his own name and hence, the appeal had to be considered on merits without adverting to the locus standi of petitioner herein to file the writ appeal. It is contended that in the above circumstances, the Hon'ble Supreme Court permitted the petitioner herein to withdraw the SLP, reserving liberty to the petitioner herein, to file a review petition. We have heard the review petition at length. Before proceeding to answer petitioner's contentions in this review petition, it would be useful to briefly summarize the judgment under review. -: 19 :-
(a) In the writ appeal, petitioner herein as appellant contended that the acquisition process was vitiated as the State Government had acquired land only for the purpose of fourth respondent and that the State Government had not applied its mind before notifying the land to be acquired. That fourth respondent - company was not a statutory body and no public purpose was served by the impugned Notification. That Notifications of acquisitions were issued by the State Government under the provisions of the Act and Notifications were also issued under the BDA Act, in respect of the very same land. Reliance was placed on two decisions namely, Special Land Acquisition Officer, KIADB, Bangalore vs. State of Karnataka [ILR 2007 Kar.4891] [H.S.Sheela's case] and A.Janardhan Shetty vs. Shantamma and Others [ILR 2009 Kar. 2159] [A.Janardhan Shetty].
(b) Fourth respondent contended that challenge to the acquisition was made by land owners -: 20 :- to an extent of 5.02 Acres only, in which the petitioner's land is only 25 Guntas. That the single window agency constituted by the State Government recommended for acquisition of the land under the provisions of the Act. The acquisition was for establishment of an industrial area and Notifications of acquisitions were issued in that regard. The object and scope of the Act being establishment of an industrial area with infrastructural facilities for development in the State, notion of the public purpose is irrelevant under the Act, as even for a single individual or entity, lands could be acquired for an industrial purpose under the Act. That acquisition was not made on behalf of the fourth respondent. That provisions of the Act have an overriding effect in view of Section 47 of the Act. Relying upon certain decisions which have been adverted to above, fourth respondent sought dismissal of the appeal. It was contended that though the State High Level Committee had initially decided 37 Acres of land through the Board, for the benefit of fourth -: 21 :- respondent - Company, but the Committee finally decided to acquire 70 Acres through the Board, this decision is in the nature of recommendation made by the Committee to the State Government. The State Government thereafter issued preliminary and final Notifications in the instant case, after issuing Notification under Sections 3(1) and 1(3) of the Act, declaring that an industrial area to an extent of 63.33 Acres would be established and ultimately, final Notification proposed to acquire 53.26 Acres. Of course, when the very same land could not have been acquired by the BDA, this court rightly quashed the Notifications issued by the said authority in a proceeding instituted by the predecessor entity of respondent No.4.
(c) Further, reliance placed on two decisions of the Division Bench of this Court by the petitioner in the appeal were also considered. In H.S.Sheela's case (supra), land reserved for a park and for a residential purpose was sought to be acquired under the Act. -: 22 :- This court held that acquisition was vitiated as the requisite extent was only 12.80 Acres whereas, acquisition was made for 17.21 Acres. Further, the Division Bench noted as to how proposal had been implemented in respect of the land reserved for park and residential area so as to use it for industrial purpose. In A.Janardhan Shetty (supra), acquisition Notifications were quashed but the Hon'ble Supreme Court dismissed the SLP by holding that the ratio of the judgment shall be confined to the facts of the said case.
18. Having adverted to the judgment passed in the appeal, which is sought to be reviewed in this revision petition, we shall consider the contentions raised by the learned senior counsel for petitioner in seriatim although, these contentions have been raised for the first time in this review petition and not in the writ appeal, out of which, this review petition arises.
19. The first and foremost contention is with regard to the fact that M/s.Lakeview Tourism -: 23 :- Corporation was registered as a partnership firm on 11/05/2012 whereas, the partnership deed was executed between Ashwitha Property Developers Private Limited and Shivashakthi Estates and Investments Private Limited, on 14/07/1999. A two fold contention is raised in this regard: firstly, that the two companies incorporated under the provisions of the Companies Act could not have formed a partnership firm in the name and style of M/s.Lakeview Tourism Corporation. Secondly, the said firm was registered only on 10/05/2004 (Annexure "D", in the application filed under Order XLI Rule 27 r/w Section 151 of CPC in this review petition and without going into the question as to whether such an application is maintainable), whereas, the agreement was entered into by M/s.Lakeview Tourism Corporation, as a company incorporated under the Companies Act with the Board on 04/04/2001 and therefore, M/s.Lakeview Tourism Corporation could not have entered into an agreement with the Board. That the rights which the unincorporated partnership -: 24 :- firm secured under the said agreement could not have been conveyed to the partnership firm subsequent to its registration.
20. With regard to the first contention of there being a bar of two incorporated companies forming a partnership firm, learned Senior Counsel Sri Lakshminarayana has placed reliance on a judgment of the Calcutta High Court in the case of Ganga Metal Refining Co. In Ganga Metal Refining Co., the Calcutta High Court was considering a case of three separate limited companies incorporated under the Companies Act, entering into a joint venture as an unregistered firm and the distinction between such a joint venture and a partnership under the Partnership Act. While considering the same, the Calcutta High Court held that under Income Tax Act, an entity in the nature of partnership is separate from the meaning and concept of partnership under the Partnership Act as the former does not have to satisfy the legal requirement of the latter. That such a joint venture is -: 25 :- not a partnership under the Partnership Act but under the Income Tax Law, an entity in the form of an unregistered firm or partnership is recognised for the purpose of taxation. It is regarded as an association of persons under Section 3 of the Income tax Act. In that context, Calcutta High Court held that when two incorporated companies under the Companies Act enter into a partnership, the legal entity of partnership under the Partnership Act cannot be applied. It can be a partnership in the loose sense of the term between two incorporated companies for the purpose of Income tax Act but they cannot be construed to be a partnership firm under the provisions of the Partnership Act. It was further held that unregistered firm is a separate and distinct legal entity as compared to a company as an assessee under the Income tax Act and it is an Association Of Persons (AOP), as defined under Section 3 of the Income tax Act. Therefore, the incorporated company cannot be permitted to set off a loan which it had incurred in the joint venture of an unregistered partnership/AOP, as -: 26 :- the assessee company is a totally different entity when compared to an unregistered firm of which, it is a partner. Further, an unregistered firm carrying on such a venture is an assessee under the Income tax Act and such an assessee in its capacity of being an unregistered firm, is distinct and different from a company, in which status the latter is assessed and in which assessment, it claims the set off. Therefore, all that the Calcutta High Court observed is that in the context of an incorporated company, set off of loss it has incurred as a partner in an unregistered firm is impermissible under the provisions of the Income tax Act. It is in that context, the aforesaid observations have been made. The aforesaid observations do not imply that there is a legal impediment or a bar for two incorporated companies to enter into a joint venture or a partnership, which is unregistered, as it can be construed to be an AOP under Section 2(31)(v) of the Income tax Act and such an entity would not be a partnership under the provisions of Partnership Act. Therefore, contention of the learned senior counsel for -: 27 :- appellant that M/s.Lakeview Tourism Corporation being a "partnership firm" under the Partnership Act, consisting of two incorporated companies does not have a legal sanctity nor is not a legally recognised entity in the eye of law, for whose benefit the lands could not have been acquired and therefore, it could not have entered into an agreement with the Board, is not accepted. In our view, the joint venture in the name and style of M/s.Lakeview Tourism Corporation was an AOP, which could enter into an agreement with the Board.
21. In arriving at such a conclusion, we are supported by the following exposition of law:-
(a) Section 2 (23) of the Income Tax Act, defines firm, partner, partnership to have meanings under Partnership Act, but the expression "partner"
also includes any person who has been admitted to the benefits of partnership. Section 4 of the Indian Partnership Act defines "partnership" as the relation between persons who have agreed to share the profits -: 28 :- of a business and it states that persons who have entered into partnership with one another are called individual partners. Persons are either natural persons or juridical persons. Artificial or juridical person connotes a juristic personality and hence it can enter into partnership with another such artificial juridical person or with an individual, a company or a local authority. Therefore, such artificial juridical persons can enter into a partnership unless their constitution or objects forbid. But a partnership firm within the meaning of Partnership Act cannot enter into any partnership either with an individual or a company. If it does enter into a partnership, the result would not be firm within the meaning of the Partnership Act, but would be only an association of persons.
(b) However, a company may be a partner in a partnership, indeed all the partners in a partnership may be companies i.e., incorporated companies. These companies like all partners are liable for the debts of the partnership without limitation - vide -: 29 :- Palmer's Company Law, 24th Edition - Paragraph 18-
12.
(c) In CIT vs. Indira Balakrishna [(1960) 39 ITR 546 (SC)], the Hon'ble Supreme Court pointed out that in order that a group of persons can be held to assessment as an association of persons, there should be defined acts of management on the part of the members constituting that association, as a consequence of which income is earned from the activity. Two or more persons could join in a common purpose or action with the object of producing income, profits and gains. An association of persons does not mean any and every combination of persons. It is only when they associate themselves in an income producing activity that they become an association of persons. When there is a combination of persons formed for the promotion of joint enterprise, branded together as co-adventurers with mutual rights and obligations, that would result in an association such as, joint ventures. Further, the Supreme Court has approved the observations made in Estate of Khan -: 30 :- Sahib Mohd Oomer Sahib vs. CIT [(1958) 33 ITR 767], to the effect that to constitute an association of persons as a taxable unit, the objects of the association must be to produce income, profits or gains and to that effect should proceed from those who formed the association. Thus, volition and common management of business is a requisite for inference of AOP. In other words, the aspect of common management and common sharing of profits have been considered as the basic requirements for joint assessment.
Further, there are certain distinctions between a body of individuals and an association of persons. The dividing line between an association of persons and a body of individuals, according to the Hon'ble Supreme Court is, whereas an "association" implies a voluntary getting together for a definite purpose, a "body of individuals" would be just a body without any common design or intention to get together (which may also be created by operation of law), but doing something -: 31 :- which results in income. There are three alternative ways of understanding this expression: (i) on the same basis as an association of persons i.e., members joining together for an income producing activity; (ii) a conglomeration of individuals who happen to have come together but carry on some activity with a view to earn income; and (iii) any conglomeration of individuals irrespective of the object which brought them together and of what they do. The second of these meaning is the most appropriate. A body of persons entrusted with power to administer, charged with the duty to receive income on behalf of a group of individuals can be assessed as a body of individuals on the other hand, the word "association" implies a common design or combination, which is peculiar and distinctive, which is different from a mere body of individuals. The absence of a common design is what principally distinguishes a body of individuals from an association of persons. Thus, body of individuals may not form an "association of persons", but the latter incorporates the concept of body of individuals and -: 32 :- much more. [Source: Sampath Iyengar's 'Law of Income Tax' 10th Edition Chapter I].
(d) In the case of Smt. Indira Balkrishna, it has been held that an 'association of persons' must be one in which two or more persons join in a common purpose or common action with the object of producing income, profits or gains. Such a concept is in Income Tax Law, so as to tax such a combination of persons who are engaged together in some joint enterprise but in law did not constitute partnership according to the Partnership Act. Also, in Mohamed Noorullah etc., vs. Commissioner of Income Tax, Madras [(1961) 42 ITR 115], it has been observed by following earlier decisions that a combination of persons formed for the promotion of a joint venture and for sharing the income derived from the joint venture would constitute an association of individuals or persons as the case may be. Similarly, in N.V.Shanmugham and Company vs. Commissioner of Income Tax, Madras [(1971) -: 33 :- 81 ITR 310], reliance has been placed on Indira Balkrishna (supra) and In re B.N.Elias and others [(1935) 3 ITR 408], to hold that an 'association of persons' need not be equated to a partnership firm but, there should be a combination of individuals engaged in a joint enterprise from which income is derived and distributed amongst its members.
22. Therefore, in the instant case, although Ashwitha Property Developers Private Limited and Shivashakthi Estates and Investments Private Limited, two incorporated companies came together for a joint venture to be called as M/s.Lakeview Tourism Corporation, the same was not a partnership firm within the meaning of the Partnership Act, but in law, an "association of persons" and that there was no impediment in law for the said companies to come together as such and that their registration as a partnership firm was not a mandatory requirement when they entered into an agreement with the Board after the committee had decided to recommend to the -: 34 :- State Government about the land to be acquired for the benefit of such an entity.
23. Thus, an Association of Persons (AOP) would not constitute a partnership unless they carry on a business. A trade association or pool by different traders, with a view to promoting business and avoiding competition may constitute a firm or may be assessable as an AOP or may be a mutual association not liable to tax. Such an entity is a legal person distinct from the individuals comprising it and it is not a partnership firm within the meaning of Partnership Act.
24. The second contention of the petitioner is that though two incorporated companies namely, Ashwitha Property Developers Private Limited and Shivashakthi Estates and Investments Private Limited, registered as a firm only on 10/05/2004, it had come together way back on 14/07/1999 and had entered into an agreement with the Board on 04/04/2001. That the benefits which had accrued to the -: 35 :- unregistered firm prior to its registration as a partnership firm could not have been succeeded to by the registered partnership firm having regard to Section 69 of the Partnership Act. In that regard, learned Senior Counsel, Sri Lakshminarayana, for petitioner placed reliance on a judgment of the Hon'ble Supreme Court in case of Seth Loonkaran Sethiya (supra), wherein one of the questions determined was whether the suit was barred under Section 69 of the Partnership Act. In the said case, the facts were that Sethiya & Co., was not registered under the Partnership Act. That the suit was for enforcement of an agreement entered into by the plaintiff therein as partner of Sethiya & Co., which was an unregistered firm. The suit being for the benefit and in the interest of the firm consequently, was a suit on behalf of the firm. It was found that the suit was hit by Section 69 of the Partnership Act and was not maintainable. This is because Section 69 is mandatory in character and its effect is to render a suit filed by a plaintiff in respect of a right vested or acquired by him -: 36 :- under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69 of the Indian Partnership Act.
25. For the purpose of immediate reference, Section 69 is extracted as under:-
"69. Effect of non-registration.-(1) No suit to enforce a right arising from a 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.-: 37 :-
(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 -: 38 :-
(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."
On a reading of Section 69, it is noted that the bar contained therein is for an unregistered firm to sue in the name of the firm against any third party for enforcing its right. But in the instant case, Section 69 of the Partnership Act does not apply at all.
M/s.Lakeview Tourism Corporation, an AOP, was granted the benefit of acquisition under the Act, for the purpose of implementing its project. Whereas, in W.P.No.46785/2004, M/s.Lakeview Tourism Corporation an AOP represented by one of its partners -: 39 :- challenged the preliminary and final Notifications issued under the BDA Act, for a housing scheme to be implemented insofar as the lands in question are concerned, as the said lands were also sought to be acquired under the Act, for an industrial purpose for the benefit of the aforesaid AOP. In the said writ petition, one of the contentions was whether impugned acquisition Notifications issued under the BDA Act were liable to be set aside as being illegal and unsustainable, in view of acquisition being made in favour of fourth respondent under the Act. A learned single Judge of this court by order dated 23/10/2010 held that the acquisition Notifications were not sustainable and hence, quashed the Notifications in W.P.No.46785/2004. The aforesaid judgment of the learned Single Judge was upheld in W.A.Nos.3725- 3726/2011 and connected writ appeals by observing that the acquisition Notifications issued by the BDA were illegal as the Board had already taken possession of the acquired lands pursuant to the Notifications issued by the State Government when at that stage, -: 40 :- BDA sought to acquire the very same lands vide Notifications issued under the BDA Act. The order of the learned single Judge as well as the Division Bench proceeded on the basis that the lands in question could not have been subjected to acquisition by two public bodies. That when the State had promised M/s.Lakeview Tourism Corporation (fourth respondent) of providing facilities including land for its project, the same could not have been nullified by another entity under the State Government namely, BDA. The doctrine of promissory estoppel was pressed into service and it was accepted by both the learned single Judge as well as the Division Bench and on the basis of the said doctrine, acquisition made by BDA in respect of the very same land, which was sought to be made available to the fourth respondent herein was quashed.
26. What is relevant and what needs to be emphasized is that the fourth respondent - M/s.Lakeview Tourism Corporation did not file -: 41 :- W.P.No.46785/2004 as a partnership firm as understood within the meaning of the Partnership Act. The said entity filed the writ petition as an AOP or a partnership in the loose sense comprising of two incorporated companies, which had formed a joint venture in respect of the project in question. In fact, in the judgment of the Calcutta High Court, it has been clearly held that formation of such a firm for the purpose of a joint venture is permissible in law and under the Income tax Act. When the said entity was not a partnership firm formed under the provisions of the Partnership Act or within the meaning of that Act, registration of such an entity under Section 69 did not arise. Such an entity could sue as an AOP and not as a partnership firm within the meaning of Partnership Act. Thus, the bar under Section 69 of the Partnership Act, did not at all apply to such an entity. Further, AOP does not mandate registration as a partnership firm under the provisions of the Partnership Act, for the purpose of carrying out a joint venture. If, subsequently such an entity gets registered as a -: 42 :- partnership firm under the provisions of the Partnership Act, there is no legal impediment for the registered firm succeeding to the benefits that had accrued to the unregistered entity. The Partnership Act nowhere creates such a bar and it definitely does not arise under Section 69 of the said Act. In the circumstances, there is no merit in the contention of learned senior counsel that M/s.Lakeview Tourism Corporation could not enter into an agreement with the Board or that it could not file a writ petition challenging the acquisition initiated by the BDA in respect of the very same land, which had been acquired by the State for the benefit of the said entity.
27. The decision in M/s.Shreeram Finance Corporation vs. Yasin Khan and Others reported in (1989) 3 SCC 476, is also not applicable. In that case, it was held that the suit filed by the partnership firm was hit by sub-section (2) of Section 69 of the Partnership Act. As on the date when the suit was filed, two of the partners shown as partners as per the -: 43 :- relevant entries in the Registrar of Firms were not, infact, partners, one new partner had come in and two minors had been admitted to the benefit of the partnership firm regarding which no notice was given to the Registrar of Firms. Hence, it was held that the suit was not maintainable. Although the plaint was amended on a later date that could not save the suit.
28. Thus, we do not find any substance in the contention of learned senior counsel for the petitioner that fourth respondent could not have filed W.P.No.46785/2004 as it was an unregistered partnership firm within the meaning of the Partnership Act as it was filed as an AOP. Further, filing of the aforesaid petition cannot be termed to be an act of fraud committed on this Court or as an abuse of the process of this Court as contended by learned senior counsel for the petitioner.
29. Further, in P.Narayanappa's case, Hon'ble Supreme Court observed that an entrepreneur or a company could give a proposal to the State -: 44 :- Government for setting up an industry or infrastructural facility and the Government could thereafter acquire the land and give it to the Board i.e., KIADB for further allotment to the entrepreneur. It is also possible that after the land has already been acquired and given to the Board, it may be allotted to an entrepreneur or a company. Infact, in S.P.Gururaja's case, it has been held that in order to accelerate economic development of the State, the single window system was adopted and the High Level Committee was constituted. Thus, the decision to allot land taken by the Committee under the single window system after the due deliberations and consultation for the purpose of establishing the industry proposed by the fourth respondent therein cannot be found fault with. The decision taken by the Committee, which is in the nature of recommendation was taken into consideration prior to initiating acquisition of lands by the State Government. The recommendation made by the Committee in the said case was in line with the policy for economic development envisaged by the -: 45 :- State Government, having regard to the promises held out to prospective entrepreneurs at the Global Investors' Meet, 2000. The fourth respondent's project being an industrial infrastructural facility, the Act was invoked for acquiring the land in question.
30. The other contentions raised on behalf of the appellant in the writ appeal have been considered in detail in Paragraph Nos.13 to 24 of the judgment, in the writ appeal.
31. We may also rely upon the following decisions of the Hon'ble Supreme Court with regard to review of an order or a judgment:-
(a) In the case of Promoters & Builders Assn. Of Pune vs. Pune Municipal Corpn. and Others in (2007) 6 Supreme Court Cases 143, it has been reiterated that review of an order is not a routine procedure. It is not permissible, unless the court is satisfied that material error, manifest on the face of the order undermines its soundness or results in -: 46 :- miscarriage of justice. A review of judgment in a case is a serious step and reluctant resort to it is proper only where a glaring omission or patent mistake like a grave error has crept in.
(b) In Inderchand Jain (dead) through LRs. vs. Motilal (dead) through LRs. reported in (2009) 14 SCC 663, it has been opined that an application for a review would lie inter alia, when the order suffers from an error apparent on the face of the record and permitting the same to continue would lead to failure of justice. In paragraph - 7 of the judgment, the scope of review under Order XLVII Rule 1 of the Code of Civil Procedure, has been reiterated.
It has been observed that review is not an appeal in disguise. A rehearing of the matter is impermissible in law. It constitutes an exception to the general rule that once a judgment is signed or pronounced, it should not be altered.
(c) In Union Of India vs. Sandur Manganese and Iron Ores Limited and Others -: 47 :- reported in (2013) 8 SCC 337, the Hon'ble Supreme Court has enunciated on the notion of error apparent on the face of record and held that if an error is not germane or relevant to the dispute, then it is impermissible to re-agitate a decided issue. In that case, it was also held that although there was a misquoting of a report in the judgment, that did not give rise to a review. It was also opined that mere disagreement with the view of the judgment cannot be a ground for invoking review jurisdiction. As long as the point is already dealt with and answered, parties are not entitled to challenge the impugned judgment in the guise that an alternative view is possible under review jurisdiction. Under such jurisdiction, the Court can interfere only when there is a glaring omission or patent mistake or when a grave error has crept in the impugned judgment. In that case, the Hon'ble Supreme Court dismissed the writ petition by deleting the misquoted lines. Meaning of review as stated in Order XLVII Rule 1 of the Code of -: 48 :- Civil Procedure was also reiterated and the review petition was dismissed.
32. In the result, we do not find any merit in the review petition. The review petition is hence, dismissed.
Parties to bear their respective costs.
Sd/-
JUDGE Sd/-
JUDGE *mvs/s