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TMI Blog2012 (11) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... artered Accountant of the Partnership Firm has certified that all the Plaintiffs as well as Defendant Nos. 1, 2 and 3 had signed the Partnership Deed in his presence. Plaintiffs have made out a prima facie case for grant of interim relief in their favour - against the Defendants. - NM (L) No. 2281 OF 2012 - - - Dated:- 6-11-2012 - S. J. KATHAWALLA, J. Mr. Virag Tulzapurkar, Senior Advocate, instructed by Mr. A.R. Shaikh, for the Plaintiffs. Mr. Shailesh Shah, Senior Advocate, instructed by Mr. R.R. Nagda, for Defendant Nos. 1 to 3. Mr. Rajeev N. Narula, instructed by M/s. Jhangiani, Narula Associates, for Defendant No.5. JUDGMENT: 1. In the above Notice of Motion, the Plaintiffs have moved this Court for adinterim reliefs. However, the Defendants have raised the contention that this Court has no jurisdiction to entertain the suit since the Partnership Firm i.e. Laxmi Developers is not registered under the provisions of the Indian Partnership Act, 1932 ( the Act ). In view thereof, by consent of the parties, the following issue is framed as a preliminary issue and decided hereunder: Whether in view of non-registration of the Partnership Firm La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship Firm. 4. According to the Plaintiffs, after the constitution of the said Partnership Firm Laxmi Developers, the said Partnership Firm, under an Agreement of Sale dated 31st August, 1986, purchased property bearing Survey No. 61, Hissa No. 11, corresponding to CTS No. 443, admeasuring about 1072.40 sq. mtrs. situated at Taluka Borivali, Mumbai Suburban District (hereinafter referred to as the suit property ) from Manilal L. Vora, Navinchandra L. Vora and others for a total consideration of Rs. 4 lakhs. Pursuant to the said Agreement of Sale, the Vendors therein handed over and delivered peaceful possession of the suit property to the Partnership Firm and as such the said Partnership Firm i.e. Laxmi Developers acquired the right, title and possession of the suit property. 5. According to the Plaintiffs, though the said Partnership Firm had purchased the suit property for redevelopment and construction of new buildings, due to certain technical problems, including the fact that the suit property was a landlocked plot and therefore unless Laxmi Developers obtained an access and approach road from the adjoining plot of land, it was not possible to develop the suit property. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your said letter under reply. 9. The Advocate for the Plaintiffs vide his letter dated 28th May 2012 denied and disputed the contentions raised by the Defendants through their Advocate's letter dated 9th May 2012, and inter alia recorded as under: 3. My client states that merely because the said partnership is not registered under the Partnership Act, does not mean that the said partnership never existed. Whereas in fact, in joint venture agreement dated 1st July, 2005 with Kamla Sons it is in terms recited that the property in question is purchased by the said partnership Firm namely Laxmi Developers of which my clients and your client are the partners. In the said agreement it is further recited that my client Valjibhai and Satishbhai has relinquished their right, title and interest in the said partnership Firm and in the property in question which is purchased by Agreement of sale dated 31st August, 1986 by the said partnership Firm Laxmi Developers. These two recitals of your own agreement falsify the claim of your client that your client is the sole proprietor and owner of the property in question. The Advocate for the Plaintiffs therefore by his aforesaid response re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which it is alleged that the Firm agreed to acquire the rights in the suit property. In view of Section 69 (2) of the Act, there is a bar on institution of a suit by or on behalf of the Firm against any third party unless the Firm is registered and the persons suing have been shown as Partners in the said Firm, in the Registrar of Firms. The definition of third party given in Section 2 (d) of the Act reads as follows: 2 (d) third party used in relation to a firm or to a partner therein means any person who is not a partner in the firm; and It is therefore submitted on behalf of Defendant No.5, that the said Defendant No.5 falls within the definition of a third party and the suit is filed to enforce a right arising from a contract and as such the same is barred under Section 69 (2) of the Act. The learned Advocate for Defendant No.5 has further submitted that in the judgments relied upon by the Plaintiffs, it has been held that the suit to enforce statutory rights and the rights at Common Law are not barred. The said cases pertain to the vested rights of persons claiming such rights, and were not solely based on a contract. Therefore, the ratio laid down in the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under Section 69 of the Act. On this question, the Supreme Court reversed the decision of High Court and held that the suit was maintainable and not hit by the bar of Section 69 of the Act. Paragraphs 8 and 9 of the said decision are relevant and reproduced hereunder: 8. As far as the third question is concerned, that, no doubt, is a question of law. But the conclusion arrived at by the High Court is fallacious. Section 69 (1) of the 1932 Act reads: . ... ... 9. The subsection contains embargos which must coexist before a plaintiff can be non-suited under that subsection. The two embargos relevant for this case are : (1) that the suit should be filed by person suing as a partner in a firm and (2) that the suit must be to enforce a right arising from a contract. The submission of the respondents which was accepted by the High Court was that the prayer of the appellant, namely, for a declaration of the existence of the partnership and the share between the parties was a suit to enforce a right under a contract against the firm. A prayer for such declaration could not be said to be made by person suing as a partner. It was a prayer to be a partner and is therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent suit. Valji Shamji Chheda is a party to the suit in his capacity as a Partner of the Partnership Firm Laxmi Developers and has not been joined in the suit in his capacity as a covendor under the said Agreement. In support of the above contentions, the Learned Senior Advocate appearing for the Plaintiffs has relied on the decision of M/s. Raptakos Brett Co. Ltd. vs. Ganesh Property AIR 1998 SC 3085. He has also relied on the judgment dated 23rd July 2009 of the Division Bench of this Court in Appeal (L) No. 53 of 2009 in Notice of Motion No. 2012 of 2007 in Suit No. 1453 of 2007 (Kuljindersingh Ahluwalia vs. Smt. Sandeep Kaur Ahluwalia 2009 (10) LJ Soft 26), wherein the Hon'ble Division Bench has relied on the decision of the Hon'ble Supreme Court in M/s. Raptakos Brett Co. Ltd. (supra) and held that Section 69 must be strictly construed and the bar of Section 69 cannot be applied on inferences. The Hon'ble Division Bench in its said judgment further quoted from a decision of the Hon'ble Supreme Court in Haldiram Bhujiawala vs. Anandkumar Deepakkumar (2003) SCC 250, that a suit by an unregistered firm is not affected by nor hit by the provisions of Section 69 (2) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the suit. However, the instant suit proceeds on the basis that the property has already been acquired by and vests in the Partnership Firm. Prayer clause (b) is therefore based upon a Common Law right already acquired and held by the Partnership Firm on the basis that it already has and holds the title to the suit property. I am fortified in my view by the decision of the Division Bench of this Court in an unreported judgment dated 23rd July, 2009 in Kuljindersingh Ahluwalia vs. Smt. Sandeep Kaur Ahluwalia (supra) which draws support from the decision of the Hon'ble Supreme Court in Haldiram Bhujiawala vs. Anandkumar Deepak kumar (supra). 20. As set out hereinabove, the Learned Advocate appearing for Defendant No.5 has submitted that according to the definition of third party in Section 2 (p) of the Act, any person who is not a Partner in the firm should be treated as a third party . He submitted that Defendant No.5 falls within the definition of third party and the suit is filed to enforce a right arising from a contract, and as such the same is barred under Section 69 (2) of the Act. The Hon'ble Supreme Court in its decision in Haldiram Bhujiawala (supra) has in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) That this Hon'ble Court may be pleased to declare that the Joint Venture Agreements dated 1st July 2005 at Exhibit C hereto and Joint Venture Agreement dated 29th November 2011, at Exhibit D hereto are illegal, null and void and not binding upon the Plaintiffs . The Learned Senior Advocate appearing for the Plaintiffs has submitted that prayer clause (c) of the plaint seeks a declaration that the Joint Venture Agreements annexed at Exhibits-C and D to the Plaint are null and void and not binding upon the Plaintiffs. The said Agreements have been entered into by Defendant No.1 in his purported capacity as the sole owner of the suit property. Exhibit-D has been entered into by Defendant No.1 with Defendant No.5. Defendant No. 5 is not a Partner of the Firm. The Partnership Firm or any of the Partners are not parties thereto. Therefore, by prayer clause ( c), the Plaintiffs do not seek to enforce any right arising out of the contract of the Joint Venture Agreement. The relief in prayer clause (c ) is also based on the subsisting and already vested title to the suit property in the Partnership Firm and this relief arises out of a common law right of a owner of a property aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the parties. 25. The Learned Senior Advocate appearing for the Plaintiffs submitted that in view of the facts set out in paragraphs 3 to 9 above, the Plaintiffs are entitled to an order and injunction restraining the Defendants from selling, alienating, encumbering, parting with possession and carrying on construction and/or creating any third party rights in respect of the suit property. 26. The learned Senior Advocate appearing for Defendant Nos. 1 to 3 submitted that the Partnership Firm of so-called Laxmi Developers of which the Plaintiffs claim to be Partners does not exist at all during the last about 25 years and the signatures of Plaintiff Nos. 2 and 3 and those of Defendant Nos. 2 and 3 as they appear on Exhibits A, H and I are false and/or forged. The so-called Firm has never carried on any business nor have the Plaintiffs invested any amount in the suit property nor have they taken any interest whatsoever in the affairs concerning the suit property. It is submitted that the so-called Firm has never been registered under the Income-Tax Act nor any Income-Tax Returns under the Income-Tax have ever been filed by or on behalf of the so-called Firm and that the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fendant No.5 has submitted that the alleged Deed of Partnership was allegedly signed in the year 1986. Even the signature of some of the Partners is disputed. There is nothing on record to show that the said Partnership Deed was ever acted upon or that any business was conducted by the said Partnership Firm. Since the suit property has now become developable, the Plaintiffs who had abandoned their so-called right, have started laying claim to the same with mala fide intent and ulterior motives. However, there is gross delay and laches on the part of the Plaintiffs and in the meantime the Defendant Nos. 5 who is a third party has acted to his own prejudice by entering into a Joint Venture Agreements. It is further submitted that the Plaintiffs have suppressed material documents from this Court. The Plaintiff No.4, in lieu of the consideration received by him, has given up his rights in the suit firm in the year 1993-94. Further, the Plaintiffs had arrived at a settlement with the Defendant No.1 and entered into a Memorandum of Understanding dated 1st January, 1995. It is submitted that Defendant No.1 himself has been filing returns in respect of the business as a Proprietory Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended by Defendant No.5 that he has not seen the IOD documents before entering into the Joint Venture Agreements. It is obvious that along with the IOD documents, Defendant No.5 could not have missed the title certificate issued by Advocate Nagda on 6th August, 2009 stating that the property is owned by the Partnership Firm i.e. Laxmi Developers. It is therefore submitted by the Learned Senior Advocate for the Plaintiffs, that the Plaintiffs are entitled to interim reliefs as prayed. 30. I have considered the submissions advanced on behalf of the parties. The Plaintiffs have annexed a Deed of Partnership dated 11th August, 1986 as Exhibit-A to the Plaint. The said Deed shows that Defendant No.1 has only 9 per cent share in the profits/losses of the Partnership Firm. The said Partnership Deed is signed by the Plaintiffs and Defendant Nos. 1, 2 and 3. The Plaintiffs have also annexed to the Plaint, copy of the application forwarded to the Registrar of Firms in the prescribed Form A. The said application was numbered as AR/26115/D/2/86 by the Registrar of Partnership Firms. In the said application form, the name of Plaintiff No. 7 who was a minor at that time was mentioned in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bricated nor forged, an independent professional i.e. the Chartered Accountant of the Partnership Firm has certified that all the Plaintiffs as well as Defendant Nos. 1, 2 and 3 had signed the Partnership Deed in his presence. For these reasons, I do not see why he should be disbelieved until the Defendants through evidence prove otherwise. I am therefore satisfied that there exists a Partnership between the Plaintiff and Defendant Nos. 1, 2 and 3 since 11th August, 1986. The Firm is not dissolved till date. It appears that since the plot of land purchased by the Partnership Firm for the purpose of development was landlocked, therefore the Partners did not take any steps to develop the same for a very long time. However it in no way entitles the Defendant No.1 to claim sole ownership of the said plot. If the Defendant No.1 has spent any amounts on the said plot as alleged, he will have to produce the accounts for the said expenses incurred by him to the Firm, and claim the same, but he certainly cannot claim sole ownership of the Partnership Property on the ground that the other Partners have in several years not taken interest in the Partnership Property and/or have allowed him to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords and information given by it. ... .. . 4. By an agreement dated 31-8-1986 executed between the said Original Purchasers of One Part and M/s. Laxmi Developers of the Other Part, the Original Purchasers agreed to grant development rights in respect of the said plot of land to the said M/s. Laxmi Developers at or for the price and consideration and on the terms and conditions therein set out. 5. By Power of Attorney executed by the said (1) Manilal Lakhamsay Vora and (2) Navinchandra Lakhamsey Vora on or about 14-9-1989 in favour of the said Valji Shamji Chheda, the latter i.e. Valji Shamji Chheda acquired all the rights, powers and authorities in respect of the said plot of land. 6. Finally, the said M/s. Laxmi Developers paid entire price to the said original purchasers and procured an irrevocable Power of Attorney to sell and convey the said plot of land and thereupon the said Power of Attorney and Deed of confirmation dated 16-4- 2009 came to be registered with Sub-Registrar of Assurances ,Borivli 6 on 28-0-52009 vide serial No. 4273 of 2009. 8. In view of the above documents and information, I am of the opinion that titles of the said M/s. Laxmi Developers in res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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