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2007 DIGILAW 1074 (BOM)

JAINARAYAN R. AGARWAL v. SEVARAM R. AGARWAL

2007-08-06

S.J.VAZIFDAR

body2007
S. J. VAZIFDAR, J. ( 1 ) THE suit is filed for a declaration that a deed of family settlement and distribution of the property dated 20. 11. 1981 executed between plaintiff No. 1, defendant No. 1 and their brothers is valid, subsisting and binding between the parties for a declaration that a deed of partnership dated 18. 6. 2002 and a deed of retirement in respect of the suit business - M/s. Queens wine Centre, being carried on from the suit premises and about twenty other documents all dated 18. 6. 2002 are valid, subsisting and binding. Various consequential reliefs based on the aforesaid documents have been sought. The plaintiffs have sought an order restraining the defendants from interfering with their use, occupation and possession of the business premises and for orders directing defendant No. 1 to perform his obligations under the aforesaid documents/deeds. The main relief for the purpose of the present notice of Motion is for an order directing defendant No. 1 to perform all acts in accordance with the said documents including those necessary for transferring the excise licences issued by the Collector of Mumbai, in the name of defendant No. 1 bearing Nos. FL II 62 and CL/fl/tod III 115 in favour of the plaintiffs, for constituting the plaintiffs as the holders thereof and for an order that two general powers of attorney executed by defendant No. 1 (Exhibit "d" and "e" to the plaint) may be acted upon by the plaintiffs inter alia for renewal of the said licences and for the purposes of carrying on the said business of M/s. Queens Wine Centre. Certain other reliefs have also been sought to enable the plaintiffs to operate the said licences. The plaintiffs have further sought an order restraining defendant No. 1 from creating any third party rights in respect of the suit premises, the said licences and for running/ conducting/carrying on the said business without the plaintiffs' prior permission. ( 2 ) PLAINTIFF No. 2 is the wife of plaintiff no. 1. Plaintiff No. 1 and defendant Nos. 1 and 2 are brothers. Defendant Nos. 3 to 20 are heirs of two pre-deceased brothers of plaintiff No. 1. Defendant Nos. 2 to 20 have not disputed the plaintiffs' claim. Defendant no. 1 is the only contesting party. ( 2 ) PLAINTIFF No. 2 is the wife of plaintiff no. 1. Plaintiff No. 1 and defendant Nos. 1 and 2 are brothers. Defendant Nos. 3 to 20 are heirs of two pre-deceased brothers of plaintiff No. 1. Defendant Nos. 2 to 20 have not disputed the plaintiffs' claim. Defendant no. 1 is the only contesting party. ( 3 ) A deed of family settlement and distribution of the properties (hereinafter referred to as the Family Settlement) dated 20. 11. 1981 was executed between all the brothers including plaintiff No. 1 and defendant No. 1. The properties belonging to the family were distributed between the parties to the agreement. I will refer only to that part of the family settlement which relates to the subject-matter of this suit. In the Family settlement plaintiff No. 1 is referred to as "party No. 3" and defendant No. 1 is referred to as "party No. 5. " Clause 1 and the relevant part of Clause 5 of the Family Settlement read as under :- "schedule OF PROPERTY ALLOTTED IN favour OF PARTY NO. 3 JAINARAYAN ratiram AGARWAL (Plaintiff)1 ). Running business along with the premises under the name and style of "m/s. Queen's wine Centre", situated at MG 8-1/1, Hirji monshi Chawl, Near Tara Punjab Hotel S. T. Road, Chembur, Bombay 400 071, having prohibition and Excise License, and various other licenses under Bombay Shops and Establishment act etc. (the above licenses stand in the name of Party No. 5 (defendant No. 1), sevaram Ratiram Agarwal, who agrees and undertakes to co-operate with the Party No. 3 (plaintiff No. 1), till all the licenses including the licence issued by Prohibition and excise Department is transferred in the name of the Party No. 3 (plaintiff No. 1), and also agrees not to interfere in day to day affairs of the business and also declare that he/his legal heirs shall have no rights, claims over the said licence/licenses and the same shall not be transferred to any other persons name other than the Party No. 3 (plaintiff No. 1) in any circumstances and the Party No. 5 (defendant No. 1), declares that he/his legal heirs shall in no circumstances make any application to the Excise department, BMC, in respect of the above licenses that may jeopardise the interest, stake rights, titles, and claims etc. of the Party No. 3 and his legal heirs.)5 ). of the Party No. 3 and his legal heirs.)5 ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . This deed of Family Settlement, is made with utmost satisfaction of the above mentioned parties so that in future there should not be any dispute amongst the family members. The above parties have agreed to execute all the necessary documents in favour of each individual parties for their respective requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " ( 4 ) PAUSING here, it must be noted that defendant No. 1 has denied the execution of the said Family Settlement. Defendant No. 2 however has admitted the execution of other documents, which I shall refer to next, in two of which the Family Settlement is expressly referred to. This would at least prima facie establish that the Family Settlement was executed by all the parties thereto including defendant No. 1. The only contention in respect of these documents is that they were executed under coercion and undue influence. I will also deal with the grounds on which the case of coercion and undue influence is sought to be substantiated. Suffice it to state at this stage that I have not accepted the contention of defendant No. 1 in this regard. ( 5 ) A set of twenty two documents were executed on 18. 6. 2002 pursuant to and essentially to effectuate the Family Settlement dated 20. 11. 1981. It is clear from the facts on record that there was no impediment to the Family Settlement being implemented till that date. Pursuant to the Family Settlement plaintiff No. 1 was put in exclusive use, occupation and possession of the suit premises. Defendant No. 1 was not in the suit premises or concerned with the suit business atleast after the Family Settlement was arrived at. Defendant No. 1 in fact co-operated with the plaintiffs carrying on the said business in terms of the Family Settlement. For instance, he signed the affidavits, declarations, applications and challans for renewing the said licences from 1980-1981 till 2005 when disputes arose between the parties. Defendant No. 1 in fact co-operated with the plaintiffs carrying on the said business in terms of the Family Settlement. For instance, he signed the affidavits, declarations, applications and challans for renewing the said licences from 1980-1981 till 2005 when disputes arose between the parties. ( 6 ) PRIOR to 2005 also, defendant No. 1 had objected to the plaintiffs appointing one H. G. Bhat as a conductor of the said business. Defendant No. 1 sought to review the entire Family Settlement. With the intervention of relatives and friends however the differences were sorted out. It is in these circumstances that the said twenty two documents were executed on 18. 6. 2002 inter alia by defendant No. 1. ( 7 ) I will refer to only some of these documents. By a sale-deed, the suit premises were sold to the plaintiffs for Rs. 1,00,000/ -. An irrevocable power of attorney was executed by defendant No. 1 in favour of the plaintiffs to enable them to exercise the powers mentioned therein to transfer the said premises to the plaintiffs. Defendant No. 1 executed an affidavit confirming that he had no right, title and/or interest in the said property and that only the plaintiffs would be entitled to the same. ( 8 ) ANOTHER irrevocable power of attorney was executed by defendant No. 1 to enable the plaintiffs to run the said business and to operate the licences. Clauses 1,5,6,7,23 and 26 of the power of attorney read as under:- " 1. To run the business, make purchases and conduct sales on the strength of the said Licences in connection with the said business. 5. To sign all papers for deleting the name of any person, including my own name, on or from the said Excise Licences and all other licences of the business. 6. To make the necessary applications, affidavits, declarations, representations etc. as may be required by the State Excise Authorities or Municipal Authorities or any other authorities from time to time. 7. To apply for transfer of all the said licences of the business from my name to the name of any person of their choice and to make the necessary declaration, affidavits etc, as may be required by the relevant and concerned authorities from time to time. 23. 7. To apply for transfer of all the said licences of the business from my name to the name of any person of their choice and to make the necessary declaration, affidavits etc, as may be required by the relevant and concerned authorities from time to time. 23. To sign all documents or deed of dissolution to effect my retirement from the said partnership firm and to sign all forms, applications etc. in relations to the change in constitution of the firm to the Registrar of Firms. To do all such consequential acts, deeds, executing of documents forms, etc. as may be required for effectively ensuring and effecting our retirement from the said business of retail sale of Foreign and Country Liquor. 26. AND I do hereby covenant that this Power of Attorney shall be irrevocable till such time as the FL II and CL/ FL III Licences and all other subsidiary licences and other Municipal or other Licenses stand in my name. " ( 9 ) THE partnership deed was admittedly executed between the plaintiffs and defendant No. 1. The third recital of the partnership deed expressly refers to the Family arrangement the execution whereof is now denied by defendant no. 1. The partnership deed was constituted for carrying on the said business inter alia by operating the said licences. ( 10 ) DEFENDANT No. 1 executed an affidavit stating that he had made an application to the Collector for permission to enter into the said partnership. He further stated that he had no objection to the names of the plaintiffs being added on the said licences as partners. Two other affidavits were executed confirming the rights of the plaintiffs to the said premises. Defendant No, 1 also prepared a declaration to the authorities under the Bombay Prohibition Act, 1931 and an undated application to the Collector, Mumbai for taking the plaintiffs as partners of the said partnership firm. The plaintiffs also executed the documents confirming their benefits in this regard. ( 11 ) DEFENDANT No. 1 also executed a declaration-cum-indemnity bond. Clauses 2, 3, 9 to 13 read as under :- "2. I say that by a family settlement my brother mr. JAINARAYAN RATIRAM AGARWAL and his family had taken over the business of M/ s. QUEENS WINE CENTRE with effect from 1980. ( 11 ) DEFENDANT No. 1 also executed a declaration-cum-indemnity bond. Clauses 2, 3, 9 to 13 read as under :- "2. I say that by a family settlement my brother mr. JAINARAYAN RATIRAM AGARWAL and his family had taken over the business of M/ s. QUEENS WINE CENTRE with effect from 1980. It has now been decided to transfer and assign the business and premises to his family members (1) JAINARAYAN ratiram AGARWAL (ii) RAMAVATI jainarayan AGARWAL who have been managing the business subject to the condition that they undertake to indemnify and keep me indemnified from all liabilities of the business since 1980. 3. (i) JAINARAYAN RATIRAM AGARWAL and (ii)RAMAVATI JAINARAYAN AGARWAL are interested in taking over the said Licences and transferring the same to their names. Since I am not interested in the said business I have decided to transfer and assign the said licences to (i)JAINARAYAN RATIRAM AGARWAL and (ii)MRS. RAMAVATI JAINARAYAN AGARWAL are herein after for the sake of brevity referred to as my "said partners" . 9. I say and declare that as the Retiring Partner of the said business of retail sale of foreign and country liquor on the strength of FL II and CL/ fl III 115. I do hereby agree and undertake that all the terms and conditions as set out in the said Deed of Retirement are binding on and enforceable against me and against all my heirs, executors and administrators and I shall abide by all the conditions laid down in documents executed by me. 10. I further undertake that till such time as my name appear on the said licence Nos. FL ii 62 and CL/fl III 115 as Licences. I will do all such acts and deeds and execute/sign such documents as will help the said Partners to effectively carry on the business of retail sale of foreign and country liquor shop on the strength of FL II and CL/fl III Licences. 11. I say that I have agreed and undertaken that in the event of my death before the said licences are transferred to the names of the partners, my legal heirs will sign all such papers and documents as may be needed by the said Partners for the purposes of having the said business and licence transferred to the names of the Partners. ( 12 ) I do hereby undertake, declare and covenant that I will not under any circumstances whatever : (i ). interfered in the said business of retail sale of foreign 86 country liquor on the strength of excise licence Nos. FL II 62 and CL/fl III 115 in any way ; (ii ). Apply to the State Excise authorities for deleting the names of my said Partners from the FL II and CL/fl III excise licences ; (iii ). apply to the State Excise authorities for shifting / transferring the licences without the written consent of the said Partners ; (iv ). apply to the State Excise authorities for surrendering or depositing the licences with the excise authorities ; (v ). enter into any partnership or agreement with any person / persons or body in respect of the said business ; (vi ). apply to the State Excise authorities for not renewing the said licences ; (vii ). refuse to sign and execute any papers, documents, applications, declarations, etc. , as may be required by the State Excise Department or my Partners for the purposes of deleting my name from the said licences and transferring the said licences to their names ; (viii ). fail to pay and clear off all market liabilities and sales tax / income tax due pertaining to any other business carried on by me. ( 13 ) I further undertake to get the said Excise licences renewed every year (at the cost of my Partners) as required by the Excise authorities and hand over the same to my Partners for carrying on the said business of retail sale of foreign and country liquor. 12. Considering the above documents, I have little hesitation in coming to at least a strong prima facie finding that the family arrangement was in fact executed by defendant No. 1. Admittedly there were disputes even in the year 2002. Despite the same, the said documents were executed on 18. 6. 2002. Two of the documents expressly refer to the family arrangement. In these circumstances, it is difficult to come to the conclusion, at least at the prima facie stage, that the family arrangement was not executed by defendant No. 1. 13. Mr. Despite the same, the said documents were executed on 18. 6. 2002. Two of the documents expressly refer to the family arrangement. In these circumstances, it is difficult to come to the conclusion, at least at the prima facie stage, that the family arrangement was not executed by defendant No. 1. 13. Mr. Savant, the learned Counsel appearing on behalf of defendant No. 1 relied upon the averments in paragraphs 2 (a) and (b) of the affidavit in reply in support of his contention that the Family Arrangement had not been entered into. ( 14 ) FIRSTLY, the averments are without any particulars. There are no facts mentioned which persuade me to come to a conclusion that the Family Arrangement was not executed despite the fact that the same has been expressly referred to in some of the documents executed on 18. 6. 2002. ( 15 ) IN paragraphs 2 (d) and 7 of the affidavit in reply, defendant No. 1 contended that he had separated from the family prior to 1955 and therefore, the question of entering into the Family Arrangement for distribution of the properties and assets of the H. U. F. did not arise. In paragraph 23 of the affidavit in rejoinder, the plaintiffs have pointed out that in 1955 defendant No. 1 was only about 13 to 14 years old. The question therefore of his having separated from the family could not have arisen. I am therefore not inclined to accept the first defendant's contention in this regard. ( 16 ) ADDED to this is the fact that recital (iii) to the partnership deed, (Exhibit "g") and clause 2 of the declaration-cum-indemnity bond (Exhibit "h") expressly refer to the Family Settlement. I am therefore of the view that the family arrangement was executed by all the parties including defendant No. 1 thereto. ( 17 ) NOR am I inclined to accept the first defendant's contention that the said 22 documents dated 18. 6. 2002 were executed under coercion and undue influence. There is nothing in the pleading even remotely which persuades me to accept the contention at the interlocutory stage for more than one reason. (A ). The documents were first challenged by defendant No. 1 only in the year 2005 when he filed Suit No. 2639 of 2005. (B ). 6. 2002 were executed under coercion and undue influence. There is nothing in the pleading even remotely which persuades me to accept the contention at the interlocutory stage for more than one reason. (A ). The documents were first challenged by defendant No. 1 only in the year 2005 when he filed Suit No. 2639 of 2005. (B ). It is important to note that in the said suit, defendant No. 1 filed Notice of Motion no. 2926 of 2005 for interim reliefs. The learned Judge refused to ignore the fact of execution of the aforesaid documents. The learned Judge however only accepted the undertaking of the defendants therein (plaintiffs herein) that till the hearing and final disposal of the notice of Motion they would not alienate, encumber or create any third party rights, title and/or interest in respect of the said shop or surrender the said licences. The notice of Motion was accordingly disposed of. (C ). In an Appeal filed by defendant No. 1 against the said order, being Appeal No. 1117 of 2005, a Division Bench by an order dated 23. 12. 2005 also noted that the plaintiffs herein had been carrying on the said business under the said licences. The Appeal court also noted the fact that defendant No. 1 had made an application to the Collector for transfer of the licences in the names of the respondents and for executing the indemnity bond. The Appeal Court therefore refused to interfere with the said order. ( 18 ) IN fact in view of the aforesaid orders, it would not be open for me to ignore the documents now relied upon by the plaintiffs. In any event, I am even otherwise not inclined to ignore the same. ( 19 ) THE case of coercion and undue influence has not been carried any further in the affidavit in reply filed in the present Notice of Motion. In these circumstances, I am not inclined to accept the first defendant's case of coercion and undue influence. ( 20 ) MR. Savant then submitted that the documents and the agreements contained therein are illegal. In the alternative Mr. In these circumstances, I am not inclined to accept the first defendant's case of coercion and undue influence. ( 20 ) MR. Savant then submitted that the documents and the agreements contained therein are illegal. In the alternative Mr. Savant submitted that the application for transfer or assignment of the said licences can be made only by the licence holder and no other person and that as defendant No. 1 is not agreeable to make the application the Court has no power to compel him to do so. (A ). In support of his contention, Mr. Savant relied upon Rule 40 of the Bombay Foreign liquor Rules, 1953. It would be convenient at this stage to refer to Rules 40 and 61-A of the said Rules which read as under :-"40. Regulation of business of licensee.- (1)No person shall be recognized as partner of the holder of a vendor's licence for the purposes of his licence, unless the partnership has been declared to the Collector before the licence is granted and the names of the partners have been entered jointly in the licence or if the partnership is entered into after the granting of the licence, unless the Collector agrees on application made to him, to alter the licence and (to add the name or names of the partner or partners in the licence. 61-A. Transfer of licence from one name to another.- For the purpose of transfer of licence granted under Rules, 5, 25 or 45, in the name of a person other than the licence holder, the provisions laid down in the respective rules relating to the grant of licence shall apply mutatis mutandis. " ( 21 ) ADMITTEDLY the transfer of the said licences is not prohibited by the Bombay Prohibition Act, so long as it is done with the permission of the concerned authorities. The question is whether the aforesaid Rules prohibit the transfer of the licences even with the permission of the authorities. I think not. ( 22 ) RULE 40 itself contemplates that a licence may be transferred with the permission of the licensing authority. There is no other purposes otherwise for Rule 40. In fact rule 40 militates against the submission that there is an absolute bar against the transfer of a licence. I think not. ( 22 ) RULE 40 itself contemplates that a licence may be transferred with the permission of the licensing authority. There is no other purposes otherwise for Rule 40. In fact rule 40 militates against the submission that there is an absolute bar against the transfer of a licence. It does not bar a person from being recognized as a partner of the holder of the vendor's licence "for the purpose of his licence". Rule 40 merely provides the manner in and the conditions on, which a person can be recognized as a partner of a holder of a vendor's licence "for the purpose of the licence". It is axiomatic therefore that if the conditions in Rule 40 are complied with a person can be recognized as a partner of a vendor "for the purpose of his licence. " ( 23 ) NOR does Rule 40 prohibit an application after the licence is issued. This is clear from the words ". . . . . . or if the partnership is entered into after the granting of the licence, unless the Collector agrees on application made to him, to alter the licence and to add the name or names of the partner or partners in the licence". ( 24 ) THE doubt if any, in this regard is set it rest by a reference to Rule 61-A which expressly recognises the transfer of a licence. Rule 61-A in fact provides the mechanism for transfer of a licence granted inter alia under Rule 25. The suit licences were admittedly issued under Rule 25. It is axiomatic again that if the conditions in Rule 61 -A are complied with a licence may be transferred. ( 25 ) THERE is nothing in either the Act or the Rules which contemplate an application being made only by the licence holder and prohibits the Court from ordering a licence holder to make an application for transfer in compliance with a decree for instance of specific performance and in the event of his failing to do so to appoint a Receiver or any other person to do so on his behalf. ( 26 ) MR. Savant's submission that defendant No. 1 being unwilling to make an application for transfer of the licences the agreement cannot be enforced requires merely to be stated to be rejected. ( 26 ) MR. Savant's submission that defendant No. 1 being unwilling to make an application for transfer of the licences the agreement cannot be enforced requires merely to be stated to be rejected. There are several instances where a party refuses to abide by his obligations which may include an obligation to seek the permission of the concerned authorities before the agreement can be given effect to. If the Court finds that the agreement is valid, subsisting and capable of specific performance it is always open to the Court to decree the suit for specific performance and to direct the defendant to do and perform all acts, deeds and things and to execute all documents, writings and deeds as may be necessary to effectuate the agreement. Further if the party refuses to do so, in addition to any other action, the Court would be not only entitled but in fact required to appoint a Court Receiver or any other person to do the same on behalf of such a defendant. ( 27 ) FACED with this, Mr. Savant submitted that the said Rule contemplates the permission as a condition precedent. ( 28 ) I will presume that permission from the authorities is a condition precedent for an assignee of a licence to operate the same. A person operating a licence under the said act is a different thing altogether from a person entering into an agreement for transfer of a licence. There is nothing either in the act or in the Rules which prohibits a party from entering into an agreement for transferring the licence. The execution of such an agreement is not prohibited as being illegal or against public policy. Such an agreement would naturally be subject to the parties obtaining the permission from the licensing authority. In other words, though an agreement for transfer of a licence is entered into, the transferee or the assignee of the licence will not be entitled to operate the same without the permission of the licensing authority. ( 29 ) IT is clarified that by this order, I do not intend transferring the licence which stands in the name of defendant No. 1 to the name of the plaintiff. ( 29 ) IT is clarified that by this order, I do not intend transferring the licence which stands in the name of defendant No. 1 to the name of the plaintiff. Nor do I intend directing the licensing authority to transfer the licences in the names of the plaintiffs or to permit the plaintiffs to operate the licences irrespective of the plaintiffs complying with the requirements of law. That is an issue for the licensing authority to decide in accordance with law. All that I intend doing is appointing a Court Receiver in respect of the said licences and directing him to make an application to the licensing authority to permit the plaintiffs, as agents of the Court Receiver to operate the said licences as they having been doing so far. The defendants however shall not be entitled to object to the same. ( 30 ) MR. Savant then submitted that in view of section 69 of the Indian Partnership Act the plaintiffs are not entitled to any right under the Partnership Deed dated 18. 6. 2002 or pursuant to the partnership constituted thereunder as the firm is not registered under the said Act. ( 31 ) FOR the purpose of this Notice of Motion, I will presume that the submission based on section 69 of the Indian Partnership Act is well founded. ( 32 ) IT is however, not necessary for the plaintiffs to rely upon the said partnership deed or the retirement of defendant No. 1 from the said partnership firm. The family arrangement itself requires defendant No. 1 to execute all documents and to do all acts, deeds and things as may be necessary for the purpose of transferring the licences in favour of the plaintiffs. Similarly the various documents executed on 18. 6. 2002 also require defendant No. 1 to do the same. This is established inter alia by the general power of attorney (Exhibit "e" to the plaint) and the declaration-cum-indemnity (Exhibit "h" to the plaint ). ( 33 ) THE right to a transfer/assignment of the said licences is created in favour of the plaintiffs both in their individual capacity as well as under the said deed of partnership. The transfer/assignment of the licences by defendant No. 1 in favour of the plaintiffs individually would still be valid. ( 33 ) THE right to a transfer/assignment of the said licences is created in favour of the plaintiffs both in their individual capacity as well as under the said deed of partnership. The transfer/assignment of the licences by defendant No. 1 in favour of the plaintiffs individually would still be valid. ( 34 ) IN the circumstances, the Notice of motion is made absolute in terms of prayers (a) to (e) except the words bracketed in red in prayer (d ). The Notice of Motion is accordingly disposed of.