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1988 DIGILAW 1 (BOM)

Inderjit Sohahlal Gulati v. Manoharlal Palaram Gulati & others

1988-01-04

H.SURESH

body1988
JUDGMENT - H. SURESH, J.:---This notice of motion for receiver and injunction is in a partnership action. However, in view of the fact that defendant No. 2, who is not a partner, has been a added as party-defendant, a question arises as to whether this Court has jurisdiction to entertain and try this suit. Defendant No. 2 happens to be the owner of the land which according to the plaintiffs, had been let out to the firm for the purpose of doing their quarry business. In the plaint there is a prayer for a declaration that this quarry is an asset of the firm and that the defendants should not interfere with plaintiffs right to carry on quarry operations from the said land. Mr. Mody appearing for defendant No. 2 contends that if one has regard for the plaint, this is a suit between the tenants and the landlord relating to recovery of possession of land and that, therefore, the suit falls within the scope of section 28 of the Bombay Rent Act, 1947. Mr. Mody submits that this plaint has to be rejected on that this question be tried as a preliminary issue as provided under section 9-A of the Code of Civil Procedure 2. I have accordingly framed a preliminary issue under section 9-A of the Code of Civil Procedure as follows : Whether this Court has no jurisdiction to entertain and try this suit, in view of defendant No. 2's contention that the suit falls within the scope of section 28 of the Bombay Rent Act, 1947 ? 3. It is well settled that the question of jurisdiction will have to be decided on the basis of the averments made in the plaint. Mr. Mody submitted that the Court should look at the substance of the plaint and not attach any importance to ingenius drafting of the pleadings. There is no dispute about this proposition. In my view if one has regard for the plaint, it is essentially a suit for dissolution and for accounts and incidentally, since a part of the assets, has been sought to be diverted by collussion and connivance between defendant Nos. 1 2, the plaintiff had no choice but to add defendant No. 2 as a party to this suit. But before I observe anything further, I will deal with averments made in the plaint. 4. The plaintiff and defendants Nos. 1 2, the plaintiff had no choice but to add defendant No. 2 as a party to this suit. But before I observe anything further, I will deal with averments made in the plaint. 4. The plaintiff and defendants Nos. 1 3 are the partners of a firm known as M/s. Gulati Associates. They carry on quarrying business from the suit land bearine Survey No. 42-A. Defendant No. 2 is the owner of the said land. The plaintiff says that a portion of the said land admeasuring about 200 feet by 800 feet is of hilly tract and the said hilly tract has been referred to as the suit land. There is a plan, marked and annexed to the plaint as Ex. A, showing the suit land. The plaintiff says further that defendant No. 1 entered into an agreement dated April 16, 1971 with defendant No. 2 whereby defendant No. 1 was given the right to quarry metal stones and other materials from suit land. The plaintiff says further that defendant No. 1 entered into the said agreement on behalf the partnership firm which was to be constituted subsequently and defendant No. 2 at all material times was aware of the fact that defendant No. 1 was entering into the said agreement not in his individual capacity but on behalf of the firm which was agreed to be formed by defendant No. 1 and certain other members of Gulati family. One Mr. Ahuja was also to be taken as a working partner in the said firm. 5. Under the said agreement defendant No. 2 was to be paid Rs. 2.50 per lorry load of metal stone of rubbleet cetera. This right was conferred to carry on quarry operations till the suit land is completely quarried by bringing it to the ground level. A sum of Rs. 30,000/- was paid by way of deposit by defendant No. 1. 6. The plaintiff says that pursuant to this agreement, quarrying operations were started in February 1972, for and on behalf of the said firm of which the said Mr. Ahuja was the managing partner. A deed of partnership was initially entered into on April 24, 1972, consisting of various members of Gulati family including the plaintiff and defendant No. 1 and Mr. Ahuja. Thereafter in the plaint it has been started as to how defendant No. 1's initial deposit of Rs. Ahuja was the managing partner. A deed of partnership was initially entered into on April 24, 1972, consisting of various members of Gulati family including the plaintiff and defendant No. 1 and Mr. Ahuja. Thereafter in the plaint it has been started as to how defendant No. 1's initial deposit of Rs. 30,000/- with defendant No. 2 was treated as his capital contribution in the firm and it has also been stated as to how from time to time the firm has paid all the charges to defendant No. 2 as per the said agreement. The plaint also refers to various other documentary evidence to show as to how the firm had carried on the business on the said suit land. It is not necessary for me to deal with those documents for the purpose of deciding this preliminary issue. 7. However, the material portion is to the effect that the plaintiff came to know some time in February 1985 that defendant No. 1 had surrendered his right, title and interest in the suit land to defendant No. 2. This was done on the basis of his false claim to independent right, title and interest in the suit land. The plaintiff refers to the correspondence in this behalf and submits that defendant No. 1 had no authority to surrender the right, title and interest of the said firm in the suit land, and that the purported surrender of the rights under the agreement dated April 16, 1971 is not binding on the plaintiff and the other partners and that it is merely a paper surrender as at all material times the plaintiff and defendant No. 3 are in possession of the suit land and are lawfully carrying on quarrying operations and the stone crushing operations. The plaint further says that since February 5, 1985 defendant No. 2 in collusion and in conspiracy with defendant No. 1 is illegally interfering with the right of the plaintiff to carry on quarrying operations from the suit land by obstructing the blastering operations required for quarrying. 8. It appears that the plaintiffs and defendant No. 1 tried to settle the matter but the settlement was not feasible. That is how the plaintiff had to file the present suit. 8. It appears that the plaintiffs and defendant No. 1 tried to settle the matter but the settlement was not feasible. That is how the plaintiff had to file the present suit. In paragraph 23 of the plaint the plaintiff says that he is entitled to a declaration that the right to carry on quarrying operation from the suit land was at all material times and is, an asset of the said firm and defendant No. 1 has no independent right, title and interest therein save and except as partner of the said firm. The remaining averments in the plaint are that in any event the said partnership firm stood dissolved by a notice and that they are entitled to have the business of the firm wound up and accounts to be taken. 9. Prayer (a) is for declaration that the right to quarry stones and other materials from the suit land situated at Poisar, Kandivali, Bombay -101, was at all materials times and is an asset and/or property of the M/s. Gulati Associates, a partnership firm. Prayer (b) is for an order restraining defendants Nos. 1 2 form interfering with plaintiff's right to carry on quarrying operations from the suit land. The remaining prayers are for dissolution of the partnership business and consequently interim prayers have been made for an appointment of receiver and there is also a prayer that defendants Nos. 1 2 be ordered and decreed to make good the loss suffered by the plaintiff. 10. I cannot understand as to how on these averments defendant No. 2 could have ever contended that this is a suit between a landlord and the tenant relating to recovery of possession. It is essentially a suit for dissolution of partnership and for taking accounts. The plaint shows that with regard to certain assets there is dispute. Defendant No. 1 says that the right in respect of the suit land is his personal right and that the firm has no right in respect of the said land. It is essentially a suit for dissolution of partnership and for taking accounts. The plaint shows that with regard to certain assets there is dispute. Defendant No. 1 says that the right in respect of the suit land is his personal right and that the firm has no right in respect of the said land. The plaintiff and defendant No. 3 on the other hand contend that, through out the said land has been treated as part of the assets of the firm and that, therefore, they contend that defendant No. 1 in collusion with defendant No. 2 has sought to interfere with quarrying operations and in these circumstances they seek a declaration that the said right to carry on quarrying operations on the suit land is a right which has been conferred on the said firm and not on defendant No. 1 in his personal capacity and consequently they seek for an injunction restraining defendants Nos. 1 2 from interfering with the said business. This is not a suit either to recover possession or in relation to recovery of possession. Mr. Mody submitted that for the purpose of determining the scope of the suit under section 28 of the Bombay Rent Act, 1947, it is not necessary that the suit should necessarily be a suit for possession of the land. He submitted that it is sufficient if it relates to the recovery of possession. In my view this suit does not relate to recovery of possession either by the tenant as against the landlord or by the landlord as against the tenant. It is true that there is a sort of collusive attempt on the part of defendants Nos. 1 2 to see that the business is put to an end and, in that, they have acted in concert. The plaintiff wants to set that thing right. Such a suit cannot be considered is a suit for recovery of possession of any premises under section 28 of the Bombay Rent Act, 1947. 11. Needless to say that in the case of a firm every assets, moveable or immoveable, for the purpose of winding up, has to be considered as moveable property only. If that is so, this suit cannot be considered to be a suit falling within the scope of section 28 of the Bombay Rent Act. 11. Needless to say that in the case of a firm every assets, moveable or immoveable, for the purpose of winding up, has to be considered as moveable property only. If that is so, this suit cannot be considered to be a suit falling within the scope of section 28 of the Bombay Rent Act. In a partnership action if the assets are sought to be diverted, the partners have a right to follow. Therefore, if the assets are sought to be diverted then that can be restrained by an order of injunction. Therefore, looking to the matter from any angle, I find no substance in this contention and, therefore the preliminary issue will have to be answered in the negative as against defendant No. 2. 12. This takes me to the main question as to whether the notice of motion has to be granted or not. Earlier my brother Judge Pratap. J., passed an order dated April 26, 1985. After hearing the Counsel in extent he had granted the relief as asked for by the plaintiff. But the learned Judge had not given reasons. That was a convenient ruse for the defendants to take up the matter to the Appeal Court and it is for that reason the Appeal Court allowed the appeal and the matter was remanded back. At one stage the Appeal Court formulated the questions which will have to be gone into at the time of the disposal of the motion. The questions are as to whether the contract entered into between defendant Nos. 1 2 was personal and whether its benefit could not be assigned or transferred. Secondly, whether the contract was fully worked out and that possession has been handed over back to the owner. Thirdly, there is a controversy relating to the actual location of the area where the quarrying took place under the said contract. These are some of the questions which will have to be answered while disposing of the notice of motion. The Appeal Court has cautioned as far as the merits are concerned the reasons be "brief". 13. I, therefore, propose to consider these questions briefly and I am more than satisfied that having regard to all the documents that are placed before me, it cannot be said that defendant No. 1 had any personal right as such under this agreement. 14. 13. I, therefore, propose to consider these questions briefly and I am more than satisfied that having regard to all the documents that are placed before me, it cannot be said that defendant No. 1 had any personal right as such under this agreement. 14. The agreement is dated April 16, 1971 between defendants Nos. 1 2. In terms, the agreement says that defendant No. 1 (who is described as the contractor) is entitled to have partner or partners or association in this quarrying operation but the agreement also says that under no circumstances the contractor will transfer or assign to any one else his right, title and interest without the written permission of the owner. But the conduct of the parties clearly shows that in spite of this contract, no written permission was obtained from defendant No. 2 when the firm carried on quarrying operations on this land. There is a letter dated December 2, 1972 written by defendant No. 2 and it is addressed to the Beat Officer (Factories), 'R' Ward, B. M. C., stating that he has no objection in case the necessary permission or licence is granted to M/s. Gulati Associates. In that letter he has expressly stated that he has allotted the said land "On lease to M/s. Gulati Associates". He has further stated that he has authorised them to operate the stone quarry and to establish stone crushing factory on that plot and to use his private road for their vehicles. He has also stated that the authorities should grant "them" the necessary permit or licence to establish the stone quarry and stone crushing factory on the above mentioned plot. 15. It is an admitted position that all the payments thereafter, under the agreement, were made by M/s. Gulati Associates. Ex. D is a bill of royalty and the name of the contractor has been shown as "M/s. Gulati Associates". It is also an admitted position that a sum of Rs. 30,000/- paid by defendant No. 1 as initial deposit to defendant No. 2 has been shown as his capital contribution in the books of accounts of the firm. It is also an admitted position that defendant No. 1 had never participated in the day to day management of the business at all. 30,000/- paid by defendant No. 1 as initial deposit to defendant No. 2 has been shown as his capital contribution in the books of accounts of the firm. It is also an admitted position that defendant No. 1 had never participated in the day to day management of the business at all. Therefore, it is clear that right from the beginning though the agreement, for name sake, stood in the name of defendant No. 1, it was for the benefit of the firm and therefore, prima facie it must necessarily be held that the right which was conferred upon defendant No. 1 by the agreement dated April 16, 1971 really belonged to the firm M/s. Gulati Associates and it is in that sense, it must be held to be an asset of the firm. 16. The question which has to be considered is as to whether the contract was fully worked out and whether the possession has been handed over back to the owner. Connected with this question is the other question as to the location of the suit land. In the plaint there is a plan which is at Ex. A. The plan shows the suit land that was given to defendant No. 1 or to M/s. Gulati Associates. In the agreement the area has been described as a piece of land having a frontage of about 200 running feet from North to South and length of 100 feet from East to West, in all admeasuring six acres. It has been further stated that the said suit land is situated on the southern side of the plot of one Maph Khan Shabat Shah. The agreement says that a detailed plan of the said property given for the purposes of quarrying shall be prepared hereafter and signed by both the parties and affixed to this agreement and when so affixed the said plan will be treated as a part of this agreement. Mr. Mehta has produced before me the said plan which he says was prepared as per Clause 8 of the said agreement and that plan has been signed by defendant No. 1 as also by defendant No. 2. An attempt was made to say that defendant No. 1 or No. 2 was not aware of the circumstances under which it was signed et cetera. An attempt was made to say that defendant No. 1 or No. 2 was not aware of the circumstances under which it was signed et cetera. So also it was sought to be argued that this is not be correct plan et cetera. I have to take a prima facie view of the matter. There is no reason as to why I should not accept this plan. It appears that defendant No. 2 the owner of the suit land as also of the other adjoining lands has let out various parts of his estate to other persons. There is a plan prepared by an Architect Mr. Pathare some time in the year 1984 and this is much prior to any dispute between the parties. That again shows various divisions of the land given by defendant No. 2 to various business men and quarrying contractors including the area given to the firm. What is significant in all these divisions is that on the eastern side there is a common boundary being that of National Part. That boundary is found in the original plan signed by defendant Nos. 1 2. If Mr. Mody's contentions are to be accepted, the suit land would be very much to the west, and while all other contractors have National Park as their boundary on the eastern side, which is the natural boundary, I must presume that defendant No. 2 deviated from this natural approach while giving the suit land to the plaintiff's firm for some unknown reason. Prima facie, this contention seems improbable. Again on the northern side of the suit land there is a land belonging to Maph Khan Shabat Shah and on the southern side of the suit land a part of the land is given to one Kasamali Suleman Zaveri. The land given to Kasamali Suleman Zaveri does not extend on the western side to the same extent as the suit land extends. On the south and western sides of the land of Kasamali Suleman, there is the land allotted to United Stones Industries. But what is important is that every plot, of land has one common boundary on the Eastern side, namely, the boundary of National Park. If that is so there cannot be any dispute as to the location of the suit land at all. Mr. Mody submitted, there is a discrepancy as to the area. But what is important is that every plot, of land has one common boundary on the Eastern side, namely, the boundary of National Park. If that is so there cannot be any dispute as to the location of the suit land at all. Mr. Mody submitted, there is a discrepancy as to the area. Defendant No. 2 has relied on a plan prepared by Mr. Pathare but much after the suit, and submitted that is the real plan. Mr. Mody also submitted that one of the landmarks for the purposes of deciding the location is the situation of the road on the western side. He also submitted that there is no road in the plan shown by the plaintiff and, therefore, he submitted that if one measures 800 feet from the said road to the eastern side that would fix the location of suit land. He also referred to the fact that the agreement mentions that in the addition to the area where the quarrying operation was to be carried on, an additional area of one acre has been given to the contractor for the purpose of keeping the crusher etc. He submitted that the plan as annexed to the plaint would indicate that the additional land is far to the west and it occupies, in all probability, more than one acre and, therefore, that cannot be considered as a correct plan at all. I need not got into all these details as in my view the agreement and the plan produced by Mr. Mehta clearly show the location of the suit land. 17. Therefore, once the location is established it cannot be gainsaid that there is sufficient land to be quarried and, therefore, defendant No. 1 could never have surrendered any right on the footing that the quarrying operations have come to an end and land has been levelled. Here I must mention that defendant No. 1's conduct is not praiseworthy. Of course he is a disgruntled partner. He has only a 10% share of the business. Some time in October 1984 he writes to the Bank that no transaction should be operated without his signature. That was the beginning. Thereafter till about February 1985 he remains quiet but purports to sign a declaration saying that he has surrendered his right, title and interest in the land after a survey was done. On what date was the survey done? That was the beginning. Thereafter till about February 1985 he remains quiet but purports to sign a declaration saying that he has surrendered his right, title and interest in the land after a survey was done. On what date was the survey done? Who were all informed about this survey ? Who decided about this survey ? Did he call a meeting of the partners to consider whether the agreement has been worked out and whether the times has come for the purpose of surrendering the right, title and interest in the land ? On all these questions defendant No. 1 is totally silent. 18. In fact the notice of motion was argued before me on December 3, 1987 and Mr. C.D. Mehta appearing for defendant No. 1 had made a submission that he will submit to the orders of the Court. Since he did not advance any argument I expressed an opinion that as a matter of course receiver will have to be appointed. But the arguments could not be over on that day. Before the arguments could be resumed, the defendant No. 1 become wiser and brought Mrs. Shenoy on December 8, 1987. She made a request that she be permitted to argue, which was granted. Mrs. Shenoy submitted that defendant No. 1 surrendered his rights as per the agreement and that surrender was not with any ulterior motive. She also submitted that the parties to the agreement were defendants Nos. 1 2 only, and that the parties to the agreement decided to put an end to the agreement. She further submitted that the ground has been levelled and the agreement has come to an end. She also submitted this land, under the said agreement, was never an asset of the partnership. Needless to say that all these arguments have been made to support a contention which is prima facie untanable viz., that defendant No. 1 could surrender the assets of the firm without any reference to the other partners. The collusion is apparent. In the result this motion will have to be allowed. 19. I, therefore, pass the following order: The notice of motion is made absolute in terms of prayers (a), (b) and (c). Defendants Nos. 1 2 will pay the costs of this motion to the plaintiff. At the request of Mr. The collusion is apparent. In the result this motion will have to be allowed. 19. I, therefore, pass the following order: The notice of motion is made absolute in terms of prayers (a), (b) and (c). Defendants Nos. 1 2 will pay the costs of this motion to the plaintiff. At the request of Mr. Bajaj at this stage the order of appointment of Receiver is stayed for a period of four seeks from today. Further, at the request of Mr. Bajaj the order of the Appellate Court dated May 28, 1985 will continue for a period of four weeks from today and till than this order passed by me will not be operative. However, I make it clear that this order passed by me will not render the order passed in the Notice of Motion No. 880 of 1986 inoperative. Order accordingly. -----