Andhra Pradesh High Court - Amravati

Sri Varalakshmi Jute Twine Mills ... vs Grandhi Naveen Babu on 12 May, 2023

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       HON'BLE SRI JUSTICE D.V.S.S.SOMAYAJULU
                                   and
               HON'BLE SRI JUSTICE V. SRINIVAS

                  APPEAL SUIT No.321 of 2020

ORDER: (per D.V.S.S.Somayajulu, J)

       At request of Sri P. Veera Reddy, learned Senior

Counsel      appearing     for     the   appellant   the   issue    of

maintainability of the suit and the appeal was taken up.

       2)     Sri Gudapati Venkateswara Rao, learned counsel

appearing for the respondent No.1 and Sri Papudippu

Sashidar Reddy, learned counsel appearing for the

respondent Nos.4, 5, 8, 10 and 15 to 22.

3) The factual background necessary for deciding this

case is as follows:

i) The present appeal is filed by the appellant after

securing leave of this Court to challenge the judgment and

preliminary decree dated 17.12.2019 in O.S.No.39 of 2014 on

the file of Special Judge for Trial of Cases under SCs & STs

(PoA) Act-cum-IV Additional District Judge at Srikakulam.

ii) The suit in O.S.No.39 of 2014 is filed for a

partition of a vacant site measuring 4452 Sq.yards. The

plaintiff claims to have acquired a share in a partnership firm

through four sale deeds executed on 08.01.2013, 12.03.2013,

30.03.2013 and 20.05.2013. It is also mentioned that the

firm purchased the property through a sale deed dated

26.03.1985 and another sale deed dated 06.03.1986.

Thereafter, a theater known as Vasavi Theater was

constructed thereon. The Firm became defunct thereafter,

and no business was being carried on. Hence, the suit was

filed for partition of the property into 100 shares and to allot

15 shares to the plaintiff.

iii) Basing upon a Memo of compromise filed

and after considering the material on record, a preliminary

decree was passed on 17.12.2019 dividing the plaint schedule

property into 100 shares and allotting 15 shares to the

plaintiff. The other shares were allotted to the other

defendants.

iv) The appellant on coming to know of this applied

for the leave of the Court, as mentioned earlier. His

contention is that the plaint schedule property belongs to a

partnership firm. The appellant joined in the firm on

19.11.2018 by virtue of a Deed of Reconstitution and is a 20%

shareholder of the firm. The judgment is challenged on the

ground that the suit for partition does not lie as the property

belongs to a firm. Other legal and factual issues are also

raised.

4) Questioning the maintainability of the suit and the

decree passed, arguments were advanced. During the course

of hearing Sri P. Veera Reddy, learned Senior Counsel relied

upon a Division Bench judgment of this Court reported in

Ketineni Chandrasekhar Rao and Ors., v Boppana

Seshagiri Rao and Ors.,1 to argue that the suit for partition

does not lie in case of partnership property. At best the

partner can seek a decree for dissolution of the partnership

and rendition of accounts etc., for his share in the firm.

Therefore, it is submitted that the entire suit is misconceived,

as the property has lost its characteristic of individual

property and is a property of the firm. Sri P. Veera Reddy

also points out that this judgment is based upon the

judgment of the Hon'ble Supreme Court of India in Addanki

Narayanappa and Another v Bhaskara Krishtappa and

AIR 2017 AP 30

13 others2. Learned senior counsel points out that despite

being aware of this Reconstituted Partnership Deed, dated

19.11.2018, the other defendants also have kept quiet and

have not brought this fact to the notice of this Court, as a

result of which the decree was passed in the said manner.

He, therefore, submits that the decree should be set aside or

in the alternative the matter should be remanded to the trial

Court for a fresh decision in accordance with law since the

judgment is contrary to the law and Her also submits that the

conduct of the respondents/defendants in suppressing the

facts amounts to a fraud on the Court.

5) In reply to this, Sri G.Venkateswara Rao argues

the matters and states that the petitioner's locus itself is an

issue. It is his contention that the petitioner has not filed the

Deed dated 19.11.2008, under which he claims a share in the

Firm. He points out that despite a direction given the said

Deed is not produced. Therefore, he contends that the

petitioner has no locus standi, to question the said judgment

and it is the affected parties like other defendants, who could

have questioned the same. He also submits that since there

AIR 1966 SC 1300

is a compromise leading to the preliminary decree this Court

should not interfere and / or decide the issue of

maintainability. Learned counsel relies upon the judgment of

the Hon'ble Supreme Court of India reported in Baldev Singh

v Surinder Mohan Sharma and others3 to support his

contentions.

6) This Court, after considering the submissions,

notices that the petitioner is before this Court is stating that

he has become a partner of the firm Grandhi Enterprises,

which is the owner of the suit schedule property. It is his

specific case that he has become a member of the said firm by

virtue of a deed of reconstitution of partnership, dated

15.11.2008. A photocopy of the said deed is on the file,

however, the original is not produced. But interestingly in

this appeal itself G.V.Ramana Murthy, who is the defendant

No.4 in O.S.No.39 of 2014 and respondent No.5 in the Appeal,

has filed an affidavit clearly mentioning therein that the

appellant became a partner in the partnership firm by virtue

of the reconstituted deed of partnership, dated 19.11.2008. It

is also clearly asserted that as on the date of the affidavit the

(2003) 1 SCC 34

appellant has 20% shareholding in the firm. He reiterates

that all the reconstituted deeds were executed legally and

signed by all the parties from time to time. Hence the

objection raised by the learned counsel for the respondent

that the deed is not produced need not deter this Court,

because the defendant in the suit has admitted that the Deed

was entered into and the appellant is a shareholder. If it is

the property of the firm the appellant's rights will be affected

and so he is a party affected. He has the locus to file this

appeal.

7) What is, however, interesting is that the deponent

of this affidavit G.V.Ramana Murthy, who has filed a written

statement in the suit O.S.No.39 of 2014 does not mention this

fact of reconstitution on 19.11.2008 in his pleading. On the

other hand, he takes a plea that the share of late Mangaraju

devolved upon his granddaughters as per a family settlement.

The written statement is silent about the reconstitution.

Similarly an examination of the deed filed before this Court

some of the defendants in the suit are also parties to this

deed of reconstitution. Their conduct in the trial court also

has to be seen vis-a-vis the deed of reconstitution, dated

19.11.2008 since none appear to have taken the plea that the

property belongs to the firm and that a suit for partition does

not lie.

8) The law on the subject is also very clear. The

judgment relied upon by the learned senior counsel reported

in Ketineni Chandrasekhar Rao case (1 supra) is

applicable to the facts. It is clearly mentioned that once the

property is thrown into the partnership stock it becomes the

property of the firm and the partner is only entitled to a share

of the profits accruing to the partnership firm or upon

dissolution of share in the money representing the value of

the property. It is clearly held that the plaintiff being a

partner cannot claim a partition or demand his share of the

property. To the same effect is the judgment of the Hon'ble

Supreme Court of India reported in Addanki Narayanappa

case (2 supra) in paragraph-7 the following is held:

"7. It seems to us that looking to the scheme of the Indian Act no other view can reasonably be taken. The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done whatever is brought in would cease to be the trading asset of the person who brought it in. It would be the trading asset of the partnership in which all the partners would

have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated, his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities and prior charges. It is true that even during the subsistence of the partnership a partner may assign his share to another. In that case what the assignee would get would be only that which is permitted by Section 29(1), that is to say, the right to receive the share of profits of the assignor and accept the account of profits agreed to by the partners."

9) It appears none of the defendants has taken a

clear plea about the status of the property. To effect a

partition of the property it must first be concluded that it is

capable of being partitioned. If it is partnership property it

cannot be "partitioned" in view of the law. Along with the

status of the property (joint family/partnership etc) the

conduct of the defendants has to be examined to decide if

there was suppression of facts etc.

10) This Court is, therefore, of the opinion that this is

a fit case which should be remanded back to the trial court

with a direction to enquire threadbare into the issue and then

decide if the suit itself is maintainable or not based on the