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2011 DIGILAW 1966 (MAD)

Elezabeth Philip v. Stephen John

2011-04-06

V.RAMASUBRAMANIAN

body2011
Judgment :- 1. Pending Suit for partition of the Suit schedule property by metes and bounds and for the allotment of 3/4th shares in the said property, the Plaintiffs seek (i) an interim order of injunction restraining the Respondent from alienating or creating any encumbrance on the suit schedule property; and (ii) an interim order of injunction restraining the Respondent from in any manner interfering with the Plaintiff’s peaceful possession and enjoyment of the suit schedule property. Schedule All that piece and parcel of land measuring 12.09 grounds comprised in T.S.No.5/1, Block No.09, Situated at Cart Tract Road (Gokulakrishnan Road, renamed as Cart Track Road) Vandikaran Street), bearing New No.15, Old No.51, at Velachery Chennai-32 together with superstructure thereon bounded on the – North by : Cart Track Road South by : Land comprised in S.Nos.4/1, 6/8 & 6/10 (Residential Flats) East by : Land comprised in S.No.5/2 comprising of a Private Temple West by : Land comprised in S.No.3/3 situate within the Sub-Registration District of Velachery and Registration District of Chennai South. 2. Heard Mr. P.M. Subramaniam, learned Counsel for the Applicants/Plaintiffs and Mr. M.L. Ganesh, learned Counsel for the Respondent/Defendant. 3. The case of the Plaintiffs in brief is that M.N. Philip, husband of the First Plaintiff and father of Plaintiffs 2 to 4 entered into a partnership on 1.1.1979 with the Defendant; that it was earlier a proprietary concern run by M.N. Philip; that the capital of the partnership was fixed at Rs.1.00 lac, out of which Rs.40,000/- was contributed by way of cash by M.N. Philip and Rs.60,000/- was contributed by way of the Defendant bringing into the partnership, the suit schedule property owned by him; and that under the deed of partnership, the profits and losses were to be shared between M.N. Philip and the Defendant in the ratio of 3:1 (75% for M.N. Philip and 25% for the Defendant). 4. It is the further case of the Plaintiffs that M.N. Philip died intestate on 30.1.2002, leaving behind the Plaintiffs as his legal heirs. After the death of M.N. Philip, the Fourth Plaintiff and her husband have been maintaining property by paying all taxes and electricity charges. 4. It is the further case of the Plaintiffs that M.N. Philip died intestate on 30.1.2002, leaving behind the Plaintiffs as his legal heirs. After the death of M.N. Philip, the Fourth Plaintiff and her husband have been maintaining property by paying all taxes and electricity charges. Without reference to the Plaintiffs, the Defendant attempted to sell the Suit schedule property and the Plaintiffs came to know about it through a public notice that appeared in the Hindu on 27.2.2011 issued by a person claiming to be a proposed purchaser. Therefore, the Plaintiffs issued a legal notice to the person who issued the public notice, apart from publishing a public notice themselves on 5.3.2011. But, another public notice appeared in the Hindu on 6.3.2011, at the instance of the Defendant, which compelled the Plaintiffs to come up with the above Suit.5. In the Counter Affidavit filed by the Respondent, he has raised three substantial issues, viz., - (i) that the partnership business had come to an end in 1988 itself and that a Suit filed by M.N. Philip in C.S.No.528 of 1993 (Later transferred to the City Civil Court and re-numbered as O.S.No.10024 of 1996) for dissolution of firm, was dismissed for non-prosecution and that therefore, the present Suit praying for similar reliefs is barred by res judicata; (ii) that inasmuch as the Plaintiffs have come to the Court after nine years of the death of M.N. Philip, claiming a right to partition, their claim is barred by limitation; and (iii) that by their failure to disclose the litigation that M.N. Philip initiated in 1993, they have come to Court with unclean hands. 6. Apart from the above contentions, Mr. M.L. Ganesh, learned Counsel for the Respondent also raised another contention, in the course of hearing of the Application that what was brought into partnership firm by the Defendant was only a part of the Suit schedule property (viz., 6 grounds out of 12 grounds) and that therefore, the Plaintiffs have no right over the remaining portion of the suit schedule property, other than what was brought into the partnership firm. 7. The Plaintiff has filed a set of about 48 documents. The first document is the deed of partnership dated 1.1.1979 entered into between M.N. Philip and the Defendant. 7. The Plaintiff has filed a set of about 48 documents. The first document is the deed of partnership dated 1.1.1979 entered into between M.N. Philip and the Defendant. It is stated in the preamble in the said document that the parties showed interest in carrying on business in a partnership under the name and style of M/s. Right Plants and Equipments, ever since the year 1973 and that the Defendant had agreed to arrange for an industrial site for the factory. It is further stated therein that since there was delay in obtaining necessary sanction for the land, M.N. Philip was permitted to carry on business as a proprietary concern and that accordingly, he started business as a proprietary concern on 12.10.1977. Thereafter, the Defendant obtained necessary permission for the land to set up an industry and hence, the Deed of Partnership was executed on 1.1.1979. It is also stated in the document that the business carried on by M.N. Philip as a proprietary concern could be taken over as a running with all its assets and liabilities as on 31.12.1978. In Clause 5 of the Deed of Partnership, it is stated that the capital of the firm shall be Rs.1.00 lac, out of which Rs.40,000/- was contributed by M.N. Philip and Rs.60,000/- was contributed in the form of land by the Defendant. Clause 7 of the Deed of Partnership made M.N. Philip as the Managing Partner with powers to operate Bank Accounts and to borrow money and offer security for the discharge of the loans. Clause 8 prescribes that the profits and losses of business shall be shared in the ratio of 75% for M.N. Philip and 25% for the Defendant. Clause 9 prescribes that the partnership shall be one at will, determinable by mutual consent of the partners. 8. The partnership firm was also registered in terms of the Indian Partnership Act, 1932, as seen from the extract of the Register of Firms issued in Form A, filed as plaint document No.5. The Certificate of Registration issued by the Department of Industries and Commerce to the effect that the firm was small scale industry is filed as plaint document No.6. Several other documents are also filed to show that income tax returns were filed, payments were made and business was carried on in the name of the firm. The Certificate of Registration issued by the Department of Industries and Commerce to the effect that the firm was small scale industry is filed as plaint document No.6. Several other documents are also filed to show that income tax returns were filed, payments were made and business was carried on in the name of the firm. The Plaintiffs have also filed the Water and Sewerage Taxes Receipts, Property Tax Receipts and receipts for the payment of Electricity Bills to show that the Plaintiffs are in possession and management of the suit schedule property. In the course of hearing, the Plaintiffs filed copies of the Income Tax Returns for the years 1987-88 to 1991-92 and the statement showing the balance sheet and abstract of schedule of accounts. 9. The Defendant has also filed two sets of documents. The first set of documents contains (i) an order dated 20.8.1993 in Interlocutory Applications in C.S.No.525 of 1993 filed by M.N. Philip; (ii) the judgment and decree passed in O.S.No.10024 of 1996; (iii) the letter dated 18.11.2008 sent by an Advocate by name T.S. Sridharan; (iv) the property tax card with receipts; (v) metro water card with receipts; and (vi) E.B. Card. The second set of documents filed by the Defendant comprises of (i) a copy of the Plaint in C.S.No.525 of 1996; (ii) the counter filed in Interlocutory Applications in C.S.No.525 of 1996; (iii) Patta issued in 1979; and (iv) Patta issued in 1992. 10. From the pleadings as well as the documents filed by both sides, it is clear (i) that M.N. Philip and the Defendant carried on business in partnership with effect from 1.1.1979; and (ii) that the Defendant brought the suit schedule property as his contribution to the capital of the firm. Though the learned Counsel for the Defendant today raised a contention that only 6 grounds out of the total extent of 12 grounds was brought by him in the Partnership firm as his share of capital, it is not borne out by the Deed of partnership or even by the Counter Affidavit filed by the Defendant. Though the learned Counsel for the Defendant today raised a contention that only 6 grounds out of the total extent of 12 grounds was brought by him in the Partnership firm as his share of capital, it is not borne out by the Deed of partnership or even by the Counter Affidavit filed by the Defendant. Therefore, in the absence of a definite pleading and in the absence of any document to show that only a part of the suit schedule property was brought by the Defendant into the partnership firm towards his share of the capital, I am unable to accept the contention of the Defendant to the said effect. 11. As seen from plaint document No.1, the partnership was one at will and determinable by mutual consent of the partners. Section 7 of the Indian Partnership Act, 1932 defines “a partnership at will” to be one where no provision is made by contract between the partners (i) for the duration of their partnership; (ii) for the determination of their partnership. The Partnership Deed also provides under Clause 14 that any of the partners was entitled to retire from the firm by giving three months’ notice to that effect in writing to the other partner. 12. Unfortunately for the Defendant, the partnership was not dissolved (i) either by mutual consent; or (ii) by M.N. Philip or the Defendant, during the lifetime of M.N. Philip. As a mater of fact, even according to the Defendant, M.N. Philip attempted to have the firm dissolved by filing a Suit in C.S.No.525 of 1993 on the file of this Court. A copy of the plaint in C.S.No.525 of 1993 filed by the Defendant discloses that the relationship between the partners got strained even from December 1983 and that the Defendant issued a public notice in the newspaper on 30.8.1992. Therefore, M.N. Philip sought the reliefs of (i) dissolution of the partnership firm; (ii) appointment of the Receiver; and (iii) sale of the partnership properties and distribution of the sale proceeds in the ratio prescribed in the deed of partnership. Pending Suit, M.N. Philip also sought an interim order of injunction in O.A.No.356 of 1993 and an interim order for his appointment as the Receiver in O.A.No.357 of 1993. Pending Suit, M.N. Philip also sought an interim order of injunction in O.A.No.356 of 1993 and an interim order for his appointment as the Receiver in O.A.No.357 of 1993. Both these Applications were dismissed by an order dated 20.8.1993 on the ground that the prayer for an injunction is farfetched and the prayer for appointment of Receiver in respect of a business which came to a close in 1988, cannot be complied with. The copy of the judgment delivered in the said Suit (which was transferred to the 12th Assistant City Civil Court and re-numbered as O.S.No.10024 of 1996) is also filed by the Defendant as one of the documents. It discloses that the Defendant herein was already set ex-parte in the Suit. Thereafter, when the Suit was posted for ex-parte evidence, the Plaintiff M.N. Philip and his Counsel failed to appear. Therefore, the Suit was dismissed for default. It is relevant to be re-emphasized that the dismissed of the Suit for default was only after the Defendant was set ex-parte. 13. Therefore, it is clear that the partnership never got dissolved. Despite the prescription in Clause 9 of the Deed of Partnership that it was determinable by mutual consent, none of the partners ever attempted to dissolve the firm either by mutual consent or even by serving a notice as prescribed under Section 24(1) of the Act. Therefore, till the date of death of M.N. Philip on 30.1.2002, the firm continued to exist. The fact that the business of the firm came to a grinding halt in 1988 would not make the firm a non-entity after 1988. The discontinuance of the business of a partnership firm stands on a different footing from the dissolution of the firm. In the absence of any dissolution of the firm till the death of M.N. Philip on 30.1.2002, the firm continued to exist at least till his death. 14. Upon the death of M.N. Philip, Section 42(c) of the Act would come into play. Under the said provision, a firm is dissolved upon the death of a partner subject to contract between the partners. If I take it that there was no contract to the contrary between the partners, then it can be concluded that under Section 42(c), the firm stood dissolved upon the death of M.N. Philip. Under the said provision, a firm is dissolved upon the death of a partner subject to contract between the partners. If I take it that there was no contract to the contrary between the partners, then it can be concluded that under Section 42(c), the firm stood dissolved upon the death of M.N. Philip. But, even in cases where the death of one of the partners dissolve the firm, the rights of the deceased partner in the assets of the firm would not get extinguished as held by the Supreme Court in Khushal Khemgar Shah v. Khorshed Banu Dadiba Boatwalla, AIR 1970 SC 1147 . It is pointed out in the said case that the share of the deceased partner in the assets including the goodwill of the firm will dissolve upon his legal heirs in the absence of a contract to the contrary. Therefore, the claim of the Plaintiffs for a division of the assets of the partnership firm is fully justified on facts and in law. Having found this, let me now take up for consideration the three preliminary issues raised by the Defendant. Res Judicata: 15. Contending that the dismissal of the Suit filed by M.N. Philip constituted a bar for the institution of the present Suit, Mr. M.L. Ganesh, learned Counsel for the Respondent/Defendant relied upon the following decisions, viz., Y.B. Patil & Others v. Y.L. Patil, AIR 1977 SC 392 ; and Sulochana Amma v. Narayanan Nair, 1994 (2) SCC 14 . 16. But, as pointed out earlier, M.N. Philip filed C.S.No.525 of 1993 against the Defendant herein, both for dissolution of partnership and for the sale of the partnership assets and the distribution of the proceeds thereof The Defendant remained ex-parte. Thereafter, the Suit was dismissed for non prosecution. Therefore, it is fundamental to the Principle of res judicata that such a decision would not bar a fresh Suit from being instituted. 17. For the application of principles of Section 11, C.P.C., the matter should have been heard and finally decided between the parties. This is made clear in several decisions of the Apex Court, including the one relied upon by Mr. P.M. Subramaniam, learned Counsel for the Defendant in State of U.P. v. Jagdish Sarab Agarwal, 2009 (2) SCJ 395. Therefore, the first contention fails. Barred by Limitation: 18. The second contention that the Suit is barred by limitation cannot also be accepted. This is made clear in several decisions of the Apex Court, including the one relied upon by Mr. P.M. Subramaniam, learned Counsel for the Defendant in State of U.P. v. Jagdish Sarab Agarwal, 2009 (2) SCJ 395. Therefore, the first contention fails. Barred by Limitation: 18. The second contention that the Suit is barred by limitation cannot also be accepted. Upon the death of M.N. Philip on 30.1.2002, his legal heirs, viz., the Plaintiffs herein, became entitled to a share in the assets of the partnership firm. Since the suit schedule property belong to the partnership firm, the Plaintiffs became co-owners with the Defendant, if the firm is taken to have been dissolved in terms of Section 42(c). Even if the Defendant had started making claims adverse to that of the Plaintiffs, a period of 12 years ought to have expired from then. Till the accounts of the firm were finally drawn and the Plaintiffs had been put on notice, the period of limitation could not have started running against the Plaintiffs. Therefore, the second contention that the Suit was barred by limitation is also bound to fail. Non Disclosure of Details: 19. The third contention is that the Plaintiffs did not disclose in their plaint the details of the cases filed by M.N. Philip. But, I do not think that the Plaintiffs can be held to be guilty of coming to Court with unclean hands, solely on that basis. There is nothing on record to show that the Plaintiffs were aware of the institution of the Suit by M.N. Philip and the dismissal of the same for non-prosecution. The institution of the Suit was in 1993 and its dismissal for non-prosecution was on 16.11.1999. M.N. Philip died on 30.1.2002. Therefore, unless the Defendant establishes in the course of arguments that the Plaintiffs had knowledge of the previous proceedings, he cannot accuse the Plaintiffs of coming to Court with unclean hands. Therefore, the third contention fails. 20. The institution of the Suit was in 1993 and its dismissal for non-prosecution was on 16.11.1999. M.N. Philip died on 30.1.2002. Therefore, unless the Defendant establishes in the course of arguments that the Plaintiffs had knowledge of the previous proceedings, he cannot accuse the Plaintiffs of coming to Court with unclean hands. Therefore, the third contention fails. 20. Once it is found that the Plaintiffs are entitled to succeed to the share of M.N. Philip in the assets including the suit schedule property of the firm and once it is found that all the technical objections raised by the Defendant are bound to fail, then the question to be considered is as to whether the Plaintiffs are found to be in possession and as to whether the Plaintiffs have made out a prima facie case and the balance of convenience is in their favour for the grant of an order of injunction. 21. As stated earlier, the Plaintiffs have filed: (i) the Property Tax Payment Receipt dated 24.12.2001 as document No.22; (ii) the Water and Sewerage Tax Payment Receipts dated 30.6.2003 and 25.8.2003 for the half years 2/1999-2000 to 2/2001-2002 as document Nos.25 and 26; (iii) the Property Tax Payment receipt dated 4.9.2006 for the half year 1/2006-2007 as document No.27; (iv) the Water and Sewerage Tax Payment Receipt dated 18.2.2008 for the half years of 2006 and 2007 as document No.31; (v) the Water and Sewerage Tax Payment Receipts dated 27.9.2008, 13.3.2009, 7.9.2009, 8.3.2010 and 21.9.2010 for the half years of 2008, 2009 and 2010 as document Nos.34 to 38; (vi) the Water and Sewerage Tax cum Water Charges Card Entries as document Nos.42 to 44. (vii) the receipts for payment of Electricity Charges dated 3.11.2007, 15.12.2007, 12.12.2008, 15.4.2008, 12.6.2008 and 9.11.2007 as document Nos.28 to 30, 32, 33 and 39 and (viii) Meter Card for Industrial and Commercial Services 25 HP and above as document Nos.40 and 41. 22. In contrast, the Defendant has filed the following documents: (i) Certificate of Extract from the Permanent Land Register dated 23.10.1992, issued by the Tahsildar, Mambalam-Guindy Taluk. (ii) Certificate of Extract from the Permanent Land Register dated 17.9.1979, issued by the Tahsildar, Mambalam-Guindy Taluk. (iii) The Property Tax demand Card. (iv) Metro water card. (v) Electricity Board Card. 23. 22. In contrast, the Defendant has filed the following documents: (i) Certificate of Extract from the Permanent Land Register dated 23.10.1992, issued by the Tahsildar, Mambalam-Guindy Taluk. (ii) Certificate of Extract from the Permanent Land Register dated 17.9.1979, issued by the Tahsildar, Mambalam-Guindy Taluk. (iii) The Property Tax demand Card. (iv) Metro water card. (v) Electricity Board Card. 23. The Certificates of Extract from the Permanent Land Register issued in 1979 and 1992 in favour of the Defendant, cannot be taken to be an evidence of his possession of the property as on date. The partnership itself was constituted only in 1979 and it is admitted that the property was brought into the partnership by the Defendant as his share of capital. Even in the Counter filed in the Interlocutory Applications in C.S.No.525 of 1993, which is filed as one of the documents on the side of the Defendant, the Defendant has admitted that M.N. Philip continued to be in possession till 1992 and let out the factory premises to one M/s. Magna Cranes Pvt. Ltd. In paras 6 and 8 of the Counter Affidavit filed in those Interlocutory Applications, the Defendant had admitted that the said third party was in possession of the property. None of the documents filed by the Defendant now show as to how he regained possession. In the Property Tax Card filed by the Defendant, there is only one entry, which shows that a sum of Rs.1,20,971/- was paid under Demand Draft No.881735 dated 15.2.2001 for the period from the first half of 2005-2006 to 2010-2011. Similarly, the receipt dated 8.10.2010 shows that a sum of Rs.10,926/- was paid on that date towards Urban Land Tax. The receipt issued by CMWSS Board on 24.3.2011 shows that a sum of Rs.3,591/- was paid by the Defendant for the second half of the year 2010. The Electricity Meter Card and the receipts filed as additional documents show that payments were made for the first time in January and February 2011. Therefore, it is clear that the Defendant attempted to pay the Property Tax, Urban Land Tax, Metro Water and Sewerage Tax and Electricity Charges for the property, for the first time after October 2010 and mostly in January and February 2011. Hence, these payments do not inspire the confidence of this Court, to come to the conclusion that the Defendant is in possession of the property. Hence, these payments do not inspire the confidence of this Court, to come to the conclusion that the Defendant is in possession of the property. On the contrary, the documents filed by the Plaintiffs show that they have been in continuous possession and enjoyment of the property. The Defendant is admittedly a permanent resident of Cochin. Therefore, by making bulk payments as a one time measure, the Defendant cannot claim to be in possession. 24. Thus, the Plaintiffs have established a prima facie case that the Suit schedule property belonged to a partnership firm, of which their predecessor M.N. Philip and the Defendant were partners. After the death of M.N. Philip, his rights in the assets of the firm devolved upon the Plaintiffs and the Plaintiffs are therefore entitled to 3/4th share in the suit schedule property. It is clear from the paper advertisements issued by prospective purchasers that the Defendant is staking a claim over the entire property and is also attempting to sell the same to third parties, to the exclusion of the Plaintiffs. Therefore, the rights of the Plaintiffs who have 3/4th share in the property have to be safeguarded and third party rights cannot be allowed to be created by the Defendant. Hence, an injunction restraining the Defendant from alienating, selling or transferring or creating any encumbrance over the Suit schedule property is bound to follow. The Plaintiffs have also established that they are in possession of the property. Therefore, their possession is obviously a settled possession. As persons, who are entitled to be in possession and as persons, who are actually in possession, the Plaintiffs are entitled to an injunction restraining the Defendant from interfering with their possession and enjoyment of the suit property. 25. Therefore, both these Applications are allowed. However, there will be no order as to costs.