Bombay High Court
Valji Shamji Chheda vs Bhuderbhai Bajidas Patel on 6 November, 2012
Bench: S. J. Kathawalla
KPP 1 NM (L) No. 2281 OF 2012
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION (L) NO. 2281 OF 2012
IN
SUIT (L) NO. 1806 OF 2012
1. Valji Shamji Chheda )
Adult, Occ. Business )
2. Bhavesh Valjibhai Chheda )
Adult, Occ. Business )
3. Chhayaben Valjibhai Chheda )
Adult, Occ. Business )
Adult, Occ. Business
4. Satishbhai Dahyabhai Patel )
)
5. Promodbhai Dahyabhai Patel )
Adult, Occ. Business )
6. Harshadbhai Dahyabhai Patel )
Adult, Occ. Business )
7. Jitenkumar Satishbhai Patel )
Adult, Occ. Business )
All are having office address as Laxmi Developers, )
Sminu Building, near Mandapeshwar Industrial Estate, )
near Prem Nagar, S.V. Road, Borivli (West), Mumbai-400 092 )...Plaintiffs
vs.
1. Bhuderbhai Bajidas Patel, )
residing at 4-A, Himanshu Apartment, )
Opp. Mayur Apartment, Sodawala Lane, Mumbai-400 092 )
2. Dwarkabhai Bajidas Patel )
3. Mahendrabhai Bajidas Patel )
4. M/s. Kamla Sons )
Defendant Nos. 2 to 4 are having address )
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at Mayur Tower, Junction of Chandavarkar Road and )
Eksar Road, Borivli (West), Mumbai-400 092 )
5. Alta Construction Pvt. Ltd. )
Shop No. B/1, Shri Sai Tower, End of Sodawala Lane, )
Near Fruit Market, Borivli (West), Mumbai-400 092 )
6. The Municipal Corporation of Greater Mumbai, )
having its office at Mahapalika Bhavan, )
Mahapalika Marg, Fort, Mumbai-400 001 )...Defendants
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.
CORAM : S. J. KATHAWALLA, J.
Reserved on : 8th October, 2012
Pronounced on: 6th November, 2012
JUDGMENT:
1. In the above Notice of Motion, the Plaintiffs have moved this Court for
ad-interim 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
- Laxmi Developers, the present suit is barred under Section
69 of the Indian Partnership Act, 1932".
2. According to the Plaintiffs, a Partnership Deed was executed on 11 th
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August 1986, between the Plaintiffs and Defendant Nos. 1 to 3. By the said
Partnership Deed, the Partnership Firm was constituted under the name and style of
"Laxmi Developers" for conducting the business of investment in properties,
development of the same and also for sale of shops, flats, commercial premises and
to acquire open spaces for development.
3. According to the Plaintiffs, after the constitution of the said
Partnership Firm, an application for registration in the prescribed Form A was filed
on 16th September 1986, before the Registrar of Firms. The said application was
signed by all the Partners including Defendant Nos. 1 to 3. 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 Column "D" instead of Column "G". Therefore, the Registrar of
Partnership Firms issued a notice dated 1st January 1986 addressed to Arvind Raman
& Company, Chartered Accountants of the said Laxmi Developers to the effect that in
the application form dated 16th September 1986, there is an objection which is
required to be removed. A reminder was also sent on 11 th December 1989. The
Plaintiffs have produced the Income-Tax Returns of Laxmi Developers for the
Accounting Years 1987-1988 and 1988-1989, which were filed on 11 th August 1986
and also a declaration dated 31 st August 1989 under Section 184 (7) filed with the
Income-Tax Department for continuation of its registration. The said declaration is
also signed by Defendant Nos. 1 to 3 herein. In the Income-Tax Returns, the
balance-sheet of the Partnership Firm is also filed for the years 1987-1988 and 1988-
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1989. The Plaintiffs have also produced a certificate dated 9 th June 2012 issued by
Vijay M. Dhanak, Partner of M/s.Arvind Raman and Company, Chartered
Accountants of the said Partnership Firm Laxmi Developers to the effect that the
Partnership Deed dated 11th August 1986 was signed by all the Partners including
Defendant Nos. 1 to 3 in his presence and the said Chartered Accountant Firm has
also applied for registration of the Partnership Firm, and has received a Permanent
Account Number for the said Partnership 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 re-development 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
KPP 5 NM (L) No. 2281 OF 2012
approach road from the adjoining plot of land, it was not possible to develop the suit
property. Thus the suit property remained as it is.
6. As set out in the plaint, the Defendant No.1 by misrepresenting that he
is the owner of the suit property executed a Joint Venture Agreement dated 1 st July
2005 in favour of Defendant No.4 which later stood terminated and a fresh Joint
Venture Agreement dated 29th November 2011 was executed by Defendant No.1 in
favour of Defendant No.5.
7. According to the Plaintiffs, the Partnership Deed between the Plaintiffs
and Defendant Nos. 1 to 3 is duly notarized but not registered. At no point of time
was the Partnership Firm dissolved nor was the Partnership Deed cancelled either by
the Plaintiffs or by Defendant Nos. 1 to 3. As such, the Partnership Firm continues to
be the owner of the suit property.
8. Upon coming to know of the aforesaid facts, the Plaintiffs through
their Advocate issued a notice dated 19 th April 2012 to the Defendants inter alia
recording that the Joint Venture Agreements dated 1 st July 2005 and 29th November
2011 executed by Defendant No.1 in favour of Defendant Nos. 4 and 5 on the basis
of false statements and representations are not legal and valid documents and not
binding upon the Plaintiffs and their Partnership Firm - Laxmi Developers. Shri R.R.
Nagda, Advocate for the Defendants, vide his letter dated 9 th May 2012 replied to
the Plaintiffs' Advocate's notice dated 19 th April, 2012 wherein he inter alia recorded
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as follows:
"4. .... ...my client states that no partnership Firm in the name
and style of M/s. Laxmi Developers had ever existed legally inter
alia because neither such Firm in which your client purportedly
claims partnership and my client was registered under the Indian
partnership Act nor it is registered under the provisions of the
Income Tax Act nor any business much less in respect of plot of
land bearing C.T.S. No. 443, Borivli has ever been conducted in
such name nor any returns have ever been filed under the said
Income Tax Act nor any other business activity whatsoever has
ever been carried on in the name or style of such so-called "Laxmi
Developers" during last about 25 years all which are true facts to
the knowledge of your said clients. Your clients have also
suppressed from you a further true fact to the effect that they
have executed an agreement long back inter alia recording the
abovementioned facts disentitling them from the alleged claims,
as falsely narrated in your said letter under reply."
9. The Advocate for the Plaintiffs vide his letter dated 28 th 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
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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 reiterated and
confirmed that any agreement executed by Defendant No.1 in respect of the suit
property, in favour of Defendant Nos. 4 and 5, is illegal and not binding upon the
Plaintiffs. According to the Plaintiffs, the stand taken by the Defendants is patently
false and contrary to the record. The Plaintiffs have submitted that the aforesaid
application form for registration of the Partnership Firm was forwarded to the
Registrar of Partnership Firms and the notice issued to the Firm by the Registrar
belies the claim of Defendant Nos. 1 to 3 that the Partnership Firm never existed.
The Plaintiffs have also pointed out that the stand taken by the Advocate for
Defendant Nos. 1 to 3 in response to the notice dated 19 th April 2012 viz. that the
said Partnership Firm is not registered under the Income Tax Act and has not filed
any returns is also false. It is submitted that Defendant No.1 has admitted his
signature on Form-A and the declaration filed before the Income-Tax Authorities
under Section 184 (7) of the Income-Tax Act, but has wrongly alleged that the
signatures of Defendant Nos. 2 and 3 are fabricated.
KPP 8 NM (L) No. 2281 OF 2012
10. The Plaintiffs have thereafter filed the above suit and moved for urgent
reliefs.
11. Clauses (1) and (2) of Section 69 of the Act are relevant for deciding the
preliminary issue and are reproduced hereunder:
"69. Effect of non-registration.- (1) No suit to enforce a right arising
from a contract or conferred by this Act shall be instituted in any court
by or on behalf of any person suing as a partner in a firm against the
firm or any person alleged to be or to have been a partner in the firm
unless the firm is registered and the person suing is or has been shown
in the Register of Firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be
instituted in any Court by or on behalf of a firm against any third party
unless the firm is registered and the persons suing are or have been
shown in the Register of Firms as partners in the firm.
12. The Learned Advocates for the Defendants have submitted that prayer clauses
(b), (c ) and (d) of the Plaint are hit by Section 69 (2) of the Act. The learned
Advocate appearing for Defendant No.5 has submitted that the Plaintiffs' entitlement
to the above mentioned prayer clauses (b), (c ) and (d) arise out of a contract i.e.
Agreement dated 31st August 1986, under 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:
KPP 9 NM (L) No. 2281 OF 2012
" 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 decisions relied upon by
the Plaintiffs lends no assistance to the Plaintiffs.
13. The learned Senior Advocate appearing for the Plaintiffs has submitted that
the provisions of Section 69 of the Act are not attracted and do not apply to this suit
at all.
14. Prayer clause (a) of the plaint reads thus:
"(a) That this Hon'ble Court may be pleased to declare that the
Partnership Deed dated 11th August 1986 executed between the
Plaintiffs and the Defendants Nos. 1 to 3 is legal, valid and subsisting
and binding upon the Partners of the said Partnership Deed;
The Learned Senior Advocate appearing for the Plaintiff has submitted that the
relief in terms of prayer clause (a) of the Plaint is not a relief for enforcement of any
KPP 10 NM (L) No. 2281 OF 2012
contract. Relying on the decision of the Hon'ble Supreme Court in Mukund
Balkrishna Kulkarni vs. Kulkarni Powder Metallurgical Industries and another 1 it is
submitted that prayer clause (a) of the Plaint is maintainable and not hit by the bar
of Section 69 of the Act.
15. Prayer clause (a) of the Plaint is set out hereinabove, and it can be seen
therefrom that by the said prayer the Plaintiffs have sought a declaration that the
Partnership Firm of Laxmi Developers has come into existence and does exist and
that the Plaintiffs and Defendant Nos. 1 to 3 are Partners thereof. The said prayer
clause (a) therefore is not a relief for enforcement of any contract. The Plaintiffs
have correctly gained support from the decision of the Hon'ble Supreme Court in
Mukund Balkrishna Kulkarni vs. Kulkarni Powder Metallurgical Industries and another
(supra). The facts of that case are similar to the facts in the present case. In that
case the relief sought in the suit was for a declaration that the Defendant No.1
therein was a partnership business in which the Appellant and the Respondent No.2
had equal shares. The suit also prayed for dissolution of the firm and for accounts
and payments. The Respondents therein contended that there was no partnership as
claimed by the Appellant; that the Respondent No.1 was a sole Proprietor of
Respondent No.2 and, further, since the partnership had not been registered, the Suit
was barred under Section 69 of the Act. The trial Court and the First Appellate Court
answered the issue in favour of the Plaintiffs and the Appellant. However, the High
Court in further Appeal held that the suit was not maintainable under Section 69 of
1(2004) 13 SCC 750
KPP 11 NM (L) No. 2281 OF 2012
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 sub-section contains embargos which must coexist before a
plaintiff can be non-suited under that sub-section. 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 not debarred under the provisions of Section
69 (1). Furthermore, what was in fact being prayed for by the
appellant was a declaration of the existence of a contract between the
parties. That could not be said to be a suit to enforce a right arising
from a contract. The second prayer of the appellant was not to
continue as a partner of the firm but to dissolve the firm. To that
extent the appellant was suing "as a partner". This he was entitled to
do under Section 69 (3) (a) which insofar as it is relevant, reads as
follows:
"69 (3) The provisions of sub-sections (1)... shall not affect-
(a) the enforcement of any right to sue for the dissolution of a firm
or for accounts of a dissolved firm, or any right or power to realise the
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property of a dissolved firm."
The question of Section 69 (3) of the Act is not relevant to the case at hand because
that provision deals with a right to sue for dissolution of a firm which question does
not arise for consideration in the present case.
16. I am therefore of the view that in the instant suit prayer (a) of the Plaint is
maintainable and not hit by the bar of Section 69 of the Act.
17.
Prayer clause (b) of the Plaint reads thus:
(b) That this Hon'ble Court may be pleased to declare that the said
Agreement dated 31st August 1986 in respect of the suit property is
legal, valid and subsisting and binding upon the Defendants and that
pursuant to the said Agreement of Sale dated 31 st August 1986, the
suit property vest and belong to the said Partnership Firm i.e. Laxmi
Developers;
18. The Learned Senior Advocate appearing for the Plaintiffs has submitted that
in the said prayer, the Plaintiffs do not seek to enforce any right in any contract
through the institution of the present suit. The declaration is only in respect of a
right and title already acquired by the Partnership Firm. The reference to the
Agreement dated 31st August 1986 is only a historical fact to show that the
Partnership Firm has acquired rights in the suit property. It is submitted that a
contract can be enforced only against the counter party to the contract. The
counter party to the Agreement dated 31 st August 1986 are the original vendors viz.
Manilal Vora, Navinchandra Vora and Valji Shamji Chheda in their capacity as
Vendors under the said Agreement with the Partnership Firm. Manilal Vora and
KPP 13 NM (L) No. 2281 OF 2012
Navinchandra Vora are not parties to the present 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 co-vendor 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 Property2 . He has also relied on the judgment dated 23 rd
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 Ahluwalia3), 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 Deepakkumar4, that a suit by an unregistered firm is
not affected by nor hit by the provisions of Section 69 (2) of the Act, if a statutory
right or even a common law right was being enforced by the suit. The Division
Bench in paragraphs 17 to 19 of its judgment held that the suit in question there,
claiming that the shares of defendant no.4 company was the property of the
partnership firm (which is similar to prayer (b) of the suit at hand) was not based
on any contract, and the suit was maintainable and not hit by Section 69 of the Act.
In paragraph 24, the Division Bench has held that in any event a part of the cause
2 AIR 1998 SC 3085
3 2009 (10) LJ Soft 26
4 (2003) SCC 250
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of action and reliefs claimed in the plaint were in any case beyond the scope of
Section 69 of the Act. The Learned Senior Advocate appearing for the Plaintiff
further submitted that the judgment of the Supreme Court in M/s. Raptakos Brett &
Co. Ltd. (supra) categorically holds that where a suit is based upon two causes of
action or a composite cause of action, even if one cause of action may be barred by
Section 69, but the other cause of action is not barred, the suit is still maintainable.
It is therefore submitted that assuming whilst denying that prayer clause (b) is hit
by Section 69 of the Act, the suit would still be maintainable so far as prayer clauses
(a) and ( c) and all other reliefs consequential to those prayers are concerned.
19. I have considered the submissions advanced on behalf of the Plaintiffs as
regards prayer clause (b) of the Plaint. From the said prayer clause (b), which is
reproduced hereinabove, it is clear that the declaration sought by the Plaintiffs is
that the Agreement dated 31st August 1986 (whereby the Partnership Firm
purchased the suit property) is legal, valid and binding on the Defendants and the
rights in the suit property subsists in and belong to the Partnership Firm. The
Plaintiffs are therefore correct in their submission that prayer (b) is sought for a
declaration of the title of the Partnership Firm in respect of the suit property and
does not seek to enforce any right in any contract by way of the present suit. The
declaration is only in respect of a right and title already acquired by the Partnership
Firm. The reference to the Agreement dated 31 st August 1986, is only by way of a
historical fact to show how the Partnership Firm acquired rights in the suit property.
If the suit would have been for enforcement of the contract, the original vendors of
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the suit property would have been joined as party Defendants 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 Deepakkumar (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 detail analysed as to what the Legislature meant
when it used the words "arising from a contract" in Section 69 (2) of the Act.
Paragraphs 21, 22 and 23 of the said decision read thus:
"21. The above Report and provisions of the English Acts, in
our view, make it clear that the purpose behind Section 69 (2)
was to impose a disability on the unregistered firm or its
partners to enforce rights arising out of contracts entered into
by the plaintiff firm with third party-defendant in the course of
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the firm's business transactions.
22. In Raptokos Brett and Co., (1998 (7) SCC 184) it was
clarified that the contractual rights which are sought to be
enforced by the plaintiff firm and which are barred under
Section 69 (2) are "rights arising out of the contract" and that
it must be a contract entered into by the firm with the third
party defendants. Majumdar, J. stated (at p. 191) as follows:
" A mere look at the aforesaid provision shows that the suit
filed by an unregistered firm against a third party for
enforcement of any right arising from a contract with such a
party would be barred."
From the above passage it is firstly clear that contract must be a
contract by the plaintiff firm and not with anybody else but
with the third party defendant.
23. The further and additional but equally important aspect
which has to be made clear is that, the contract by the
unregistered firm referred to in Section 69 (2) must not only be
one entered into by the firm with the third party-defendant but
must also be one entered into by the plaintiff firm in the course
of the business dealings of the plaintiffs firm with such third
party-defendant."
In the instant case the Plaintiffs or the Partnership Firm have admittedly not entered
into any contract with the Defendant Nos. 4 and/or 5 (third parties). The contract is
entered into by Defendant No.1 only with Defendant Nos. 4 and 5 pertaining to the
property which according to the Plaintiffs is the Partnership Property, and Defendant
No.1, in his individual capacity had no right to enter into any contract qua the same
with any person/party including the Defendant Nos. 4 and/or 5. Therefore, in my
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view, the submission advanced on behalf of Defendant No.5 cannot be accepted.
Therefore, in my view, it cannot be said that prayer clause (b) is hit by Section 69 of
the Act.
21. Prayer clause (c ) of the Plaint reads thus:
(c ) That this Hon'ble Court may be pleased to declare that the
Joint Venture Agreements dated 1 st July 2005 at Exhibit "C" hereto
and Joint Venture Agreement dated 29 th 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 against a third party/interloper who seeks to set up a claim adverse to the
owner of the property. Relying on the Judgments already dealt with hereinabove, it
is submitted that even prayer clause (c ) is not hit by Section 69 of the Act.
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22. As can be seen from prayer clause (c ) of the Plaint, the Plaintiffs seek a
declaration that the Joint Venture Agreements at Exhibits-C and D to the Plaint are
null and void and not binding upon the Plaintiffs. These Agreements have been
entered into by Defendant No.1 in his purported capacity as the sole owner of the
suit property. The Agreement at Exhibit-D has been entered into by Defendant No.1
with Defendant No.5. The Partnership Firm or any of the Partners are not parties
thereto. By the said prayer clause ( c), the Plaintiffs do not seek to enforce any rights
arising out of the contract of Joint Venture Agreements. There is no question of the
Plaintiffs enforcing any right under the Joint Venture Agreements because the
Plaintiffs are not parties thereto and are in fact disputing the Joint Venture
Agreements and seeking to have them declared null and void and not binding on the
Plaintiffs. The relief in prayer clause (c ) of the Plaint is therefore also based upon
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 an owner of a property against a
third party/interloper who seeks to set up a claim adverse to the owner of the
property. Therefore, in my view, prayer clause (c ) is also not hit by Section 69 of the
Act.
23. Prayer clause (d) is for injunction by way of a consequential prayer in the
plaint and prayer clauses (e) to (k) are all interim prayers arising out of the
substantive prayers (a) to (d) of the Plaint. I am therefore satisfied that the reliefs
sought in prayer clauses (a) to (d) of the Plaint are outside the ambit of Section 69
of the Act and I answer the above issue in the negative.
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24. The Learned Advocates appearing for the parties on 8 th October 2012 made
their aforestated submissions on the above preliminary issue framed by the Court
and also submitted that though they started with an application seeking ad-interim
reliefs, they would have no objection if the submissions on the Notice of Motion are
heard finally on the basis of denials. In view thereof, the Notice of Motion was also
finally heard with the consent 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
KPP 20 NM (L) No. 2281 OF 2012
ever been filed by or on behalf of the so-called Firm and that the Proprietory
Concern of Defendant No.1, M/s. Laxmi Corporation, has been exclusively and
single handedly looking after various affairs in respect of the development of the
suit property and related matters during the past about 17 years, and has
continuously incurred various expenses for acquiring 5 adjoining properties and for
evicting hutments etc. on all the six properties. It is submitted that after going
through Exhibit-A of the Plaint, Defendant No. 1 recollected that at the material
time in the year 1986, the Plaintiff Nos. 1 and 4 and Defendant No.1, " had
initially, just tentatively, desired to form a partnership of M/s. Laxmi Developers, I had
in good faith put my signatures at the very first instant on several papers which now
appear on page Nos. 39, 123 and 124 of the plaint, when no one else had put their
signatures thereon.....". It is submitted on behalf of Defendant No. 1 that without
admitting that the document at Exhibit-A was indeed signed by all the persons
named therein, the said document has not been acted upon for the last about 25
years. It is further submitted that Plaintiff No. 4 had, some time in 1993-94
borrowed a personal loan from one Jayantilal D. Shah to the extent of Rs. 17 lakhs
but he could not repay the same and therefore he signed a purported allotment
letter for an area of 1156 sq.ft. in favour of the said Mr. Shah by adjusting the said
loan amount. Thereafter when Plaintiff No.4 was disinterested in the said project, he
settled his investment in the project by requesting Defendant No.1 to give allotment
of flats to the said Mr. Shah by adjusting the said amount of Rs. 17 lakhs as receipt
of part purchase price towards the said allotment. Thus Plaintiff No.4 settled his
account and Defendant No.1 allotted an area of 1400 sq.ft. in favour of the son and
KPP 21 NM (L) No. 2281 OF 2012
the wife of the said Mr. Shah. It is submitted that similarly in January, 1995, Plaintiff
No.1 also arrived at a settlement with Defendant No.1 wherein Defendant No.1
agreed to allot to him an area of 600 sq.ft. in the project. In support of his
contention, Defendant No.1 has relied on a MoU dated 1 st January, 1995. It is
therefore submitted on behalf of Defendant No.1 that no case is made out for
interim reliefs by the Plaintiffs and that no reliefs can be granted to the Plaintiffs
also due to the delay and laches on their part.
27.
The learned Advocate appearing for Defendant 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 socalled 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 1 st January, 1995. It is
submitted that Defendant No.1 himself has been filing returns in respect of the
KPP 22 NM (L) No. 2281 OF 2012
business as a Proprietory Concern. It is submitted that Defendant No.5 has only
entered into a Joint Venture Development Agreement on the basis of the document
which clearly shows that the Plaintiffs have no right in respect of the suit property
and as such the Notice of Motion be dismissed.
28. The Learned Senior Advocate appearing for the Plaintiffs has denied and
disputed the aforestated allegations made by the Defendants. He has submitted that
the MoU pertains to a different property. He has submitted that Plaintiff No.4 has not
even signed the said MoU. He has submitted that the Plaintiffs have not given up
any of their rights in the Partnership Firm and/or the property of the Partnership
Firm. He has submitted that the Partnership Firm has ten partners and by no stretch
of imagination the Defendant No.1 can contend that he has become the sole
Proprietor of the Partnership Firm. He has submitted that all the contentions on
behalf of the Plaintiffs and Defendant No. 5 fall in view of the title certificate issued
by Advocate R.R. Nagda dated 6 th August, 2009 wherein he has categorically
certified that M/s. Laxmi Developers, a Partnership Firm, has furnished to him
various records such as agreement, Power of Attorney, property card etc. in relation
to the suit property and has certified that in view of the documents referred to by
him in the Certificate and the information received by him, he is of the opinion that
the title of the said M/s. Laxmi Developer in respect of the suit property (captioned
property) are clear and marketable and free from reasonable doubts and
encumbrances.
KPP 23 NM (L) No. 2281 OF 2012
29. The Learned Senior Advocate appearing for the Plaintiffs has further
submitted that the said title certificate was issued by Advocate R.R. Nagda for the
purpose of obtaining an IOD from the Mumbai Municipal Corporation to commence
construction work on the suit property. He has submitted that apart from the fact
that in the Agreement between Defendant No.1 and Defendant No.5 dated 29 th
November, 2011, it is categorically mentioned that an agreement dated 31 st August
1986 was entered into between the Original Vendors and M/s. Laxmi Developers in
respect of the suit property. It is also specified that the Municipal Corporation of
Greater Mumbai has issued an I.O.D, bearing No. CHE/A-4780/BP(WS)AR dated 26
th August 2010 approving plans for development of the suit property. It therefore
cannot be contended 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 11 th 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
KPP 24 NM (L) No. 2281 OF 2012
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 column "D" instead of column "G" of the
said printed form A. Therefore, the Registrar of Partnership Firms issued a notice
dated 1st January, 1986 addressed to Arvind Raman and Company, Chartered
Accountants of the Partnership Firm - Laxmi Developers, pointing out the said
objection. A certificate is also issued by Mr. V.M. Dhanak, Chartered Accountant,
certifying that the Partnership Deed dated 11 th August 1986 of M/s. Laxmi
Developers was signed by all the Partners i.e. 7 Plaintiffs (including the minor), and
Defendant Nos. 1 to 3 in his presence. The Plaintiffs have also produced the Income-
Tax Returns of the Partnership Firm for the Accounting Years 1987-88 and 1988-89,
which were filed on 11 th August, 1986 and also declaration dated 31 st August, 1989,
under Section 184 (7) filed with the Income Tax Department for continuation of its
registration. The said declaration is also signed by Defendant Nos. 1 to 3. In the
Income-Tax Returns, the balance-sheet of the Partnership Firm is also filed for the
years 1987-88 and 1988-1989. The suit property is purchased by the Partnership
Firm-Laxmi Developers under an agreement for sale dated 31 st August, 1986. The
Agreement for Sale is signed by the Plaintiff No.4 on behalf of the Firm.
31. From the aforesaid it is clear that the Defendant No.1 has made incorrect
statements in his reply dated 9 th May, 2012 in response to the notice dated 19 th
April, 2012 by the Advocate for the Plaintiffs that " no partnership firm in the name
KPP 25 NM (L) No. 2281 OF 2012
and style of M/s. Laxmi Developers had ever existed legally inter alia because neither
such firm in which your client purportedly claims partnership with my client was
registered..... nor it is registered under the provisions of the Income Tax Act...... nor any
returns have ever been filed under the said Income Tax Act.... during the last about 25
years....". It is stated only in the affidavit-in-reply filed by the Defendants in the
Notice of Motion, that he now recollects having signed the documents which were
later forwarded to the Registrar of Firms and Income Tax authorities. However, he
has alleged that he had signed the said documents in blank and that Defendant Nos.
2 and 3 as well as Plaintiff Nos. 2 and 3 had not signed the documents, and that
their signatures are fabricated and forged. Apart from the fact that Plaintiff Nos. 2
and 3 have submitted that their signatures are neither fabricated 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
KPP 26 NM (L) No. 2281 OF 2012
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 spend on the said Partnership Property.
32. As regards the allegation advanced on behalf of Defendant Nos. 1 to 3 to the
effect that Plaintiff Nos. 1 and 4 have given up their right in the said property, firstly
I find that in the reply letter of the Advocate for Defendant Nos. 1 to 3 dated 9 th
May 2012 he has not made any such allegation but has only stated that, 'your clients
have also suppressed from you a further true fact to the effect that they have executed
an agreement long back inter alia recording the aforementioned facts disentitling them
from the alleged claims, as falsely narrated in your letter under reply". It is clarified in
paragraph 1 of the said letter that "your clients" includes all the seven plaintiffs.
However, it is pertinent to note that the alleged agreement allegedly signed by all
the Plaintiffs regarding the alleged facts, disentitling them from their alleged claims,
is even at this stage not produced before this Court. Instead, a MoU is sought to be
produced before the Court which is only signed by Plaintiff No.1 and where the
description of the property is different. Some other documents which did not find
any mention in the reply letter dated 9th May 2012, by the Defendants Advocate,
are relied upon to show that certain amounts were paid by Defendant No.1 to
Defendant No.4, for which Defendant No.4 signed letters stating that he has settled
his investment in the project and requesting Defendant No.1 to give allotment of
flats to Mr. Shah. Even assuming that one or two of the Plaintiffs have created
certain rights in favour of Defendant No.1, Defendant No.1 cannot contend that the
KPP 27 NM (L) No. 2281 OF 2012
suit property has ceased to be the property of the Partnership Firm in which there
are 10 Partners including the seven Plaintiffs. The learned Advocate appearing for
Defendant Nos. 1 to 3 has on a specific query raised by the Court, admitted that Mr.
Nagda has issued a detailed title certificate dated 6 th August 2009 wherein Mr.
Nagda has inter alia certified as follows:
"1. My client M/s. Laxmi Developers, a partnership firm having
its office at shop No.2 Sminu Building, near Prem Nagar, S.V.
Patel Road,Borivli West, Mumbai-400 092, has furnished to me
various records such as agreement, power of attorneys, property
card etc. in relation to the captioned property. My said client has
requested me to certify the titles on the basis of the said records
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-
KPP 28 NM (L) No. 2281 OF 2012
2009 came to be registered with Sub-Registrar of
Assurances,Borivli -6 on 28-05- 2009 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 respect of
the captioned property are clear and marketable and free from
reasonable doubts and encumbrances"
Even today, Mr. Nagda is representing Defendant Nos. 1 to 3 before this Court.
However, neither Mr. Nagda nor the learned Senior Counsel appearing for
Defendant Nos. 1 to 3 is in a position to explain as to why the title certificate issued
on 6th August 2009 certifies that the suit property belongs to the Partnership Firm
of M/s. Laxmi Developers. Therefore in any event, the said title certificate dated 6 th
August, 2009 admittedly issued by Shri Nagda representing Defendant Nos. 1 to 3,
belies the entire case advanced by Defendant Nos. 1 to 3 viz. that the suit property
has ceased to be the property of the Partnership Firm since 1995 and that Defendant
No.1 is the sole owner of the suit property since 1995, and is therefore entitled to
deal with the same. In view thereof, the question of the Plaintiffs being disentitled to
any relief on the ground of delay and laches and/or suppression also does not arise.
33. I also do not agree with the submission advanced on behalf of Defendant No.5
that Defendant No.5 has entered into a Joint Venture Agreement dated 29 th
November, 2011 without notice. The document dated 29 th November, 2011 entered
into between Defendant No.1 and Defendant No.5 itself mentions that the suit
KPP 29 NM (L) No. 2281 OF 2012
property belonged to the Partnership Firm i.e. Laxmi Developers. In the said
agreement it is also recorded that an agreement dated 31 st August 1986 was
entered into between the Original Vendors and M/s. Laxmi Developers in respect of
the suit land. It is also specified that the Municipal Corporation of Greater Mumbai
has issued I.O.D, bearing No. CHE/A-4780/BP(WS)AR dated 26 th August 2010
approving plans for development of the suit property. It therefore cannot be
contended by Defendant No.5 that he has not seen the IOD documents before
entering into the Joint Venture Agreement. I am therefore not willing to accept at
this prima facie stage, that Defendant No.5 has entered into Joint Venture
Agreement without notice.
34. In the circumstances, in my view the Plaintiffs have made out a prima facie
case for grant of interim relief in their favour. The balance of convenience is also in
favour of the Plaintiffs and against the Defendants. In view thereof, pending the
hearing and final disposal of the suit, the Defendants are directed to maintain status
quo as of date in regard to the suit property. The Notice of Motion is accordingly
disposed of. However, the hearing of the Suit is expedited. The Defendants are
directed to file their respective written statements within a period of four weeks
from today. Place the Suit for framing of issues on 3rd December, 2012.
(S. J. KATHAWALLA, J.)
KPP 30 NM (L) No. 2281 OF 2012
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION (L) NO. 2281 OF 2012
IN
SUIT (L) NO. 1806 OF 2012
1. Valji Shamji Chheda )
Adult, Occ. Business )
2. Bhavesh Valjibhai Chheda )
Adult, Occ. Business )
3. Chhayaben Valjibhai Chheda )
Adult, Occ. Business )
Adult, Occ. Business
4. Satishbhai Dahyabhai Patel )
)
5. Promodbhai Dahyabhai Patel )
Adult, Occ. Business )
6. Harshadbhai Dahyabhai Patel )
Adult, Occ. Business )
7. Jitenkumar Satishbhai Patel )
Adult, Occ. Business )
All are having office address as Laxmi Developers, )
Sminu Building, near Mandapeshwar Industrial Estate, )
near Prem Nagar, S.V. Road, Borivli (West), Mumbai-400 092 )...Plaintiffs
vs.
1. Bhuderbhai Bajidas Patel, )
residing at 4-A, Himanshu Apartment, )
Opp. Mayur Apartment, Sodawala Lane, Mumbai-400 092 )
2. Dwarkabhai Bajidas Patel )
3. Mahendrabhai Bajidas Patel )
4. M/s. Kamal Sons )
Defendant Nos. 2 to 4 are having address )
KPP 31 NM (L) No. 2281 OF 2012
at Mayur Tower, Junction of Chandavarkar Road and )
Eksar Road, Borivli (West), Mumbai-400 092 )
5. Alta Construction Pvt. Ltd. )
Shop No. B/1, Shri Sai Tower, End of Sodawala Lane, )
Near Fruit Market, Borivli (West), Mumbai-400 092 )
6. The Municipal Corporation of Greater Mumbai, )
having its office at Mahapalika Bhavan, )
Mahapalika Marg, Fort, Mumbai-400 001 )...Defendants
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.
CORAM : S. J. KATHAWALLA, J.
Reserved on : 8th October, 2012
Pronounced on: 6th November, 2012
P.C.
For the reasons separately recorded in the judgment, the Court passes the
following order:
"34. In the circumstances, in my view the Plaintiffs have made
out a prima facie case for grant of interim relief in their favour.
The balance of convenience is also in favour of the Plaintiffs and
against the Defendants. In view thereof, pending the hearing and
final disposal of the suit, the Defendants are directed to maintain
status quo as of date in regard to the suit property. The Notice of
Motion is accordingly disposed of. However, the hearing of the
Suit is expedited. The Defendants are directed to file their
respective written statements within a period of four weeks from
today. Place the Suit for framing of issues on 3 rd December,
2012."
(KPP Nair)
Sr. P. S.
