Calcutta High Court
Fox & Mandal vs Somabrata Mandal & Ors on 28 July, 2025
IN THE HIGH COURT AT CALCUTTA
ORIGINAL SIDE
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
C.S. (Com) No. 408 of 2024
(Old No. C.S. 178 of 2022)
With
GA No. 1 of 2022
Fox & Mandal
Vs.
Somabrata Mandal & Ors.
Mr. S. N. Mookherjee, Sr. Adv.
Mr. Paritosh Sinha, Adv.
Mr. Soumya Roy Chowdhury, Adv.
Mr. Deepan Kumar Sarkar, Adv.
Ms. Deepti Priya, Adv.
Mr. Susrea Mitra, Adv.
...for the plaintiff
Mr. Krishnaraj Thaker, Sr. Adv.
Mr. Indranil Munshi, Adv.
2
Ms. Anushka Sarkhel, Adv.
...for the defendant No.1
Hearing Concluded On : 17.07.2025
Judgment On : 28.07.2025
Krishna Rao, J.:
1. The plaintiff has filed the present suit praying for the following reliefs:
a) Declaration that the defendant No. 1 is entitled to a
sum of Rs. 1,07,03,773/- in the particulars given in
paragraph 22 above being his share in the amount
payable to the erstwhile senior partner of the
plaintiff, Late Dinabandhu Mandal in terms of
clause 17 of the Partnership Deed dated 27th
October, 2014 and to no other amount;
b) Declaration that the defendant No. 1 is only entitled
to claim in terms of clause 17 of the Partnership
Deed dated 27th October, 2014;
c) Decree of perpetual injunction restraining the
defendant No. 1 from claiming any amount of
money against the share of Late Dinabandhu
Mandal other than Rs. 1,07,03,773/- as pleaded in
paragraph 22 above in terms of clause 17 of the
Deed of Reconstitution dated 27th October, 2014;
d) Decree of perpetual injunction restraining the
defendant No. 1 from claiming any sum from the
plaintiff other than in accordance with clause 17 of
the Deed of Reconstitution dated 27th October,
2014;
e) Decree of perpetual injunction restraining the
defendant No. 1 from issuing any email or notice or
letter or communication containing the allegations
similar to those contained in the notices/emails
dated 21st March, 2022 and 14th May, 2022
annexed hereto and marked with the letters "M"
and "P" respectively;
f) Receiver;
g) Injunction;
h) Attachment;
i) Costs;
j) Such further and/or other relief or reliefs.
2. The defendant no.1 has filed an application being G.A. No. 4 of 2023
praying for extension of time to file written statement but the same was
dismissed on 14th June, 2024. After dismissal of the application, the
plaintiff prays for arguing the matter on merit for grant of decree in
terms of Order VIII, Rule 10 of the Code of Civil Procedure, 1908.
3. The plaintiff is a registered partnership firm carrying on business as
Solicitors and Advocates. The plaintiff firm was established in the year
1896 with two partners, namely, Mr. J.K. Fox and Mr. G.C. Mandal.
The last reconstitution of the plaintiff firm took place on 30th March,
2022 by way of Deed of Reconstitution. One of the erstwhile partner,
Late Dinabandhu Mandal died intestate on 30th June, 2020, leaving
behind his wife Kabita Mandal and three sons, namely, Shuvabrata
Mandal, Shouryabrata Mandal and the defendant no.1. Kabita Mandal
also expired on 5th March, 2022.
4. As per Clause 17 of the Deed of Reconstitution, the plaintiff firm offered
the defendant no.1 his share i.e. 1/4th share as one of the legal heirs of
Late Dinabandhu Mandal being a sum of Rs. 1,07,03,773/-. As regard
to the share of Late Kabita Mandal, it was informed to the legal heirs
that the same would be made over to the person who succeeds to her
estate. The other two sons of Dinabandhu Mandal, namely, Shuvabrata
Mandal and Shouryabrata Mandal have accepted their respective
shares but the defendant no.1 refused to accept the share of Rs.
1,07,03,773/-.
5. The plaintiff has also filed an application being G.A. No. 1 of 2022
praying for allowing the plaintiff to deposit the sum of Rs.
1,07,03,773/- with this Court being the share of the defendant no.1 or
in the alternative to appoint a Special Officer to deposit the said
amount with the Special Officer. The said application is still pending for
adjudication. In the said application, the defendant no. 1 has filed
Affidavit-in-Opposition.
6. The defendant no.1 failed to file written statement even within the outer
period of 120 days. The application filed by the defendant no.1 for
extension of time to file written statement was dismissed and the case
is proceeded as "undefended suit" against the defendant no.1.
7. Mr. S. N. Mookherjee, Learned Senior Advocate representing the
plaintiff submits that in the present suit no question of facts is
involved. The entire scope of adjudication is interpretation of Clause 17
of the Deed of Reconstitution dated 27th October, 2014. Mr. Mookherjee
submits that as per the provisions of Order VIII, Rule 3A of the Code of
Civil Procedure, 1908, as amended under the Commercial Courts Act,
2015, denial shall be in the manner provided under sub-rules (2), (3),
(4) and (5) of the said Rule but in the present case the defendant no.1
has not filed any written statement.
8. Mr. Mookherjee submits that Order VIII, Rule 4 of the Code of Civil
Procedure, 1908, as amended under the Commercial Courts Act, 2015
provided evasive denial and specific denial but the defendant has not
filed written statement, thus question of evasive denial or specific
denial does not arise. He submits that where the defendant has not
filed a pleading, it shall be lawful for the Court to pronounce judgment
on the basis of the facts contained in the plaint, except as against the
person under the disability, but the Court may, in its discretion,
require any such fact to be proved.
9. Mr. Mookherjee submits that all statements in the plaint stand
admitted in the light of the provisions of Order VIII, Rule 3A read with
Rule 5(1) and (2) of the Code of Civil Procedure, 1908, as amended
under the Commercial Courts Act, 2015.
10. Mr. Mookherjee submits that the contractual dues of the defendant
no.1 in terms of Clause 17 of the Deed has been duly quantified and
the plaintiff has offered the defendant no.1 to pay the quantified
amount but the defendant no.1 refused to accept the same. The other
legal heirs of Late Dinabandhu Mandal have accepted their respective
shares.
11. Mr. Mookherjee submits that the sole contention of the defendant no.1
is that the defendant no.1 in addition to the aforesaid amount is also
entitled to an additional sum on account of goodwill, which was
contractually payable in terms of Clause-17 of the Deed, but the
defendant no.1 has not made any case as to what amount is payable to
him on account of goodwill.
12. Mr. Mookherjee submits that no question of fact is required to be
decided in the present case. The Court has to interpret Clause 17 of the
Deed dated 27th October, 2014. In support of his submissions, he has
relied upon the judgment in the case of SK. Bhikan Vs.
Mehamoodabee and Others reported in (2017) 5 SCC 127 and
submitted that when the Court is called upon to interpret the
documents and examine its effects, it involves question of law and it is
obligatory upon the Court to decide such question on merit.
13. Mr. Krishna Raj Thaker, Learned Senior Advocate representing the
defendant no.1 submits that this Court also to determine whether the
particulars given in paragraph 22 of the plaint determining the share of
the defendant no.1 and share actually works out to Rs. 1,07,03,773/-.
He submits that the plaintiff voluntarily has not chosen to adduce any
evidence and there is no evidence to settle the moot issue, how the
plaintiff has arrived at the sum of Rs. 1,07,03,773/-.
14. Mr. Thaker submits that the Court has not to act blindly upon the
admission of a fact made by the defendant in his written statement nor
should the court proceed to pass judgment blindly merely because a
written statement has not filed by the defendant. In support of his
submissions, Mr. Thaker relied upon the judgment in the case of
Balraj Taneja & Anr. vs. Sunil Madan & Anr. reported in (1999) 8
SCC 396. He submits that provisions of Order VIII, Rule 10 of the CPC
is discretionary power of the Court. The plaintiff failed to satisfy this
Court as to how the plaintiff has calculated the amount of Rs.
1,07,03,773/-.
15. Mr. Thaker submits that declaration claim under Section 42 of the
Specific Relief Act, 1963, lies entirely judicial discretion of the Court
and is to be exercised with caution according to the exigencies of a
particular case. He submits that a party cannot as of right, claim such
a declaration because such a relief is more in the nature of an equitable
relief than legal remedy. He has relied upon the judgment in the case of
Bhairabendra Narayan Bhup Vs. State of Assam reported in
MANU/GH/0072/1953.
16. Mr. Thaker submits that while exercising its discretionary powers the
Court must keep in mind the well settled principles of justice and fair
play and should exercise the discretion only if the ends of justice
require it, for justice is not an object which can be administered in
vacuum. He relied upon the judgment in the case of Executive
Committee of Vaish Degree College, Shamli and Others vs.
Lakshmi Narain & Ors. reported in (1976) 2 SCC 58.
17. Mr. Thaker submits that the plaintiff in a suit for declaration of title
and possession could succeed only on the strength of its own title and
that could be done only by adducing sufficient evidence to discharge
the onus on it, irrespective of the question whether the defendants have
provided their case or not. In support of his submissions, he has relied
upon the judgment in the case of Union of India and Others vs.
Vasavi Cooperative Housing Society Ltd. & Ors. reported in (2014)
2 SCC 269.
18. Mr. Thaker submits that pleading is not an evidence, far less proof.
Issues are raised on the basis of the pleadings. The suit will fail if both
parties do not adduce any evidence, in view of Section 102 of the
Evidence Act. Ordinarily, the burden of proof would be on the party
who asserts the affirmative of the issue and its rest, after evidence is
gone into, upon the party against whom, at the time the question
arises, judgment would be given, if no further evidence were to be
adduced by either side. He relied upon the judgment in the case of Anil
Rishi vs. Gurbaksh Singh reported in (2006) 5 SCC 558.
19. Mr. Thaker submits that Section 42 of the Specific Relief Act doesn't
contemplate declarations about the pecuniary liability of persons as the
same cannot be considered to be declarations about the legal character
or any right to property. He relied upon the judgment in the case of
Mahabir Jute Mills vs. Firm Kedar Nath Ram Bharose reported in
1959 SCC OnLine All 94.
20. Mr. Thaker submits that the plaintiff cannot be permitted to seek relief
in a suit which would frustrate the defendants from initiating a
prosecution against the plaintiff or seeking any remedy available in law.
In support of his submission, he relied upon the judgments in the case
of Cotton Corporation of India Ltd. Vs. United Industrial Bank
Limited and Others reported in (1983) 4 SCC 625 and Frost
International Ltd. Vs. Milan Developers and Builders Private
Limited and Anr. reported in (2022) 8 SCC 633.
21. Mr. Thaker submits that even if the defendant failed to file written
statement and, in that matter, even if forfeiture of the right to file
written statement has occasioned it would not disentitle the defendant
from participating in the further proceedings, without filing a written
statement and in such circumstances, the defendant would also be
having the right to cross-examine the witnesses, if any, of the plaintiff.
He relied upon the judgment in the case of Kaushik Narsinhbhai
Patel & Ors. Vs. S.J.R. Prime Corporation Private Limited & Ors.
reported in (2024) 9 SCC 462.
22. Mr. Thaker submits that the plaintiff is to prove his pleaded case by
adducing evidence. Order VIII, Rule 10 CPC, in fact, has to be read
together with Order VIII, Rule 5 and the position seems to be clear that
a trial Court, at its discretion, may require any fact, treated as
admitted, to be so proved otherwise than by such admission. He relied
upon the judgment in the case of Asma Lateef and Anr. Vs. Shabbir
Ahmad & Ors. reported in (2024) 4 SCC 696.
23. The issue in the present case is whether a judgment and decree can be
passed under Order VIII, Rule 10 of the Code of Civil Procedure, 1908.
24. Clause 17 of the Deed dated 27th October, 2014, reads as follows:
"17. The death or retirement of a partner shall
not dissolve the partnership but the partnership
shall be carried on by the surviving partners. The
partnership accounts shall be made up after two
years from the date of death/retirement of a
partner but within three years from the said date.
The share of the deceased or retiring partner in the
outstanding bills upto the date of his
death/retirement which have been realized within
a period of two years from his death/ retirement
less the cost of realization assessed at 30% of the
amount realized on these bills shall be paid to the
retiring partner or the legal representative of the
deceased partner on account of his share of the
profit and goodwill of the firm. The amount payable
for the share of profit and goodwill of the
deceased/ retiring partner to be calculated in the
manner aforesaid shall be determined and paid in
the manner decided by Dinabandhu Mandal in his
absolute discretion and the heirs of the deceased
partner or the retiring partner shall not be entitled
to raise any question or objection thereto."
25. The father of the plaintiff, namely, Dinabandhu Mandal was one of the
partners of the plaintiff firm who died intestate on 30th June, 2020,
leaving behind his wife Kabita Mandal, three sons, namely Shuvabrata
Mandal, Shouryabrata Mandal and Somabrata Mandal, the defendant
no.1 herein. In the meantime, Kabita Mandal also expired on 5th March,
2022. After the death of Dinabandhu Mandal as per Clause-17 of the
Deed of Reconstitution dated 27th October, 2014, the plaintiff firm
offered the defendant no.1 his 1/4th share amounting to Rs.
1,07,03,773/-. The other two brothers of the defendant no.1 have
accepted the said amount. The plaintiff firm also clarified that with
respect to share of the wife of Dinabandhu Mandal, the same would be
made over to the person who succeeds to her estate. The defendant
no.1 refused to accept the amount offered by the plaintiff firm.
26. As the defendant no.1 refused to accept the amount calculated by the
plaintiff firm as per Clause-17 of the Deed, the plaintiff has filed the
present suit praying for the relief stated in paragraph 1 above. In the
suit, the plaintiff has also filed an application being G.A. No. 1 of 2022
praying for the following reliefs:
a) Leave be granted to your petitioner No. 1 to
deposit a sum of Rs.1,07,03,773/- (Rupees One
Crore Seven Lakhs Three Thousand Seven
Hundred and Seventy Three only) with this
Hon'ble Court being the share of the respondent
No. 1 in the amount payable to the erstwhile
senior partner of the petitioner No.1, Late
Dinabandhu Mandal in terms of clause 17 of the
Deed of Reconstitution dated 27th October, 2014
pending disposal of the instant suit;
b) Alternatively, a Special Officer/Receiver be
appointed and the petitioner No. 1 be granted
liberty to deposit the said sum of
Rs.1,07,03,773/- (Rupees One Crore Seven
Lakhs Three Thousand Seven Hundred and
Seventy Three only) being the share of
respondent No. 1 in the amount payable to the
erstwhile senior partner of the petitioner No.1,
Late Dinabandhu Mandal in terms of clause 17
of the Deed of Reconstitution dated 27th October,
2014 with Special Officer/Receiver so appointed
pending disposal of the instant suit;
c) Ad interim orders in terms of prayers above;
d) Such further and/or other order or orders be
passed, direction or directions be given as Your
Lordships may deem fit and proper."
27. In the said application, the defendant no.1 has filed affidavit-in-
opposition. Relevant paragraphs of the said affidavit reads as follows:
"6) b. At all material times my father, namely
Dinabandhu Mondal (since deceased) was a
partner of the plaintiff No. 1 firm. The said plaintiff
No. 1 firm is a registered partnership firm has been
carrying on the business as Solicitor and Advocate
since 1896. During the lifetime of the said
Dinabandhu Mondal, the plaintiff No. 1 firm was
lastly reconstituted on 27th October, 2014 and as
such the rights of the said Dinabandhu Mondal
(since deceased) and legal heirs, in his absence,
will be determined only in terms of the said Deed
on reconstitution deed dated 27th October, 2014.
e. As such, in terms of clause 17 of the Partnership
Deed dated October 27, 2014 the legal heirs of the
said Dinabandhu Mondal are entitled to the
followings:
(i) Money lying in the capital account of
Dinabandhu Mondal (since deceased) as on
June 30, 2020;
(ii) The share of Dinabandhu Mondal in respect of
the outstanding dues upto June 30, 2020 which
has been realized on or before June 30, 2022
less the cost of realization assessed at 30% of
the amount realized;
(iii) Shares in goodwill;
g. I say that the documents annexed to the said
petition would show that I always tried to settle the
accounts relating to the share of my deceased
father who was a partner of the plaintiff firm in
terms of clause 17 of the Deed of Reconstitution.
The following correspondences were exchanged
between the parties:
(i) Letter dated November 11, 2020 by me to the
partners of the plaintiff No.1;
(ii) Letter dated March 21, 2022 addressed by my
advocate to the partners of the plaintiff No.1;
(iii) Letter dated April 16, 2022 exchanged
between the Plaintiff No.1 and SRA Law
chambers being my advocate;
(iv) Letter dated May 14, 2022 between my
advocate of the petitioner and the plaintiff
No.1;
(v) Letter dated May 23, 2022 exchanged
and my advocate;
h. It would appear from a bare reading of the
aforesaid communications that the partners of the
plaintiff firm did not adhere to such request made
by me.
9. With reference to paragraphs 20 and 21 of the
said petition save what have been stated herein,
save what are matter of records and save what
may be substantiated therefrom, all allegations
contrary thereto and/or inconsistent therewith are
denied and/or disputed. I repeat that subject to the
share receivable by my mother in the estate of
Dinabandhu Mandal, I am entitled to 25% of share
of the said estate. Although the plaintiffs have
correctly admitted such however they are
categorically refuting to make payment of the share
of goodwill receivable by my deceased father and
eventually I am deprived of the same to the extent
of 25% thereof. Further, the plaintiff firm and its
partners have not yet disclosed the accounts of the
Firm for the financial years 2019-20, 2020-21 and
2021-22. I hereby call the plaintiffs upon to
disclose the accounts of the Firm for the financial
years 2019-20, 2020-21 and 2021-22 and reserve
my rights to make further submissions and claims
after perusal thereof. It would appear from the
contents of the plaint and the said petition that the
plaintiffs have admitted their liability to me at least
to the extent of Rs. 1,07,03,773/-. I say that the
alleged statement of calculation is a document
(being annexure R to the said petition) purportedly
prepared by the plaintiff firm and/or its partners
unilaterally and the basis thereof has never been
disclosed to me; I do not admit or accept the
existence of the said documents and/or the
contents thereof.
10. With reference to paragraphs 22, 23, 24, 25,
26, 27, 28, 29, 30 and 31 of the said petition it is
denied and/or disputed that I am only entitled to
Rs. 89,89,272/- or Rs. 17,14,501/- as it has been
untruly alleged or at all. It is incorrect to allege that
I am invading and/or threatening to invade the
rights of the plaintiffs. It is incorrect to allege that
by issuing any communication to the plaintiff or its
partners (and not to any third party) I could invade
and/or threaten to invade the rights of the
plaintiffs. It is absolutely false that I ever made any
claim, receivable by me from the estate of my
deceased father, beyond the scope of clause 17 of
the said Partnership Deed; on the contrary I have
been seeking to get the same absolutely in terms of
clause 17 of the said Deed. It is denied and/or
disputed that any decree of perpetual injunction
needs to be passed. It is utterly misconceived
assertion that I had interfered with the business of
the plaintiff firm by issuing any communication. In
view of the aforesaid the subject suit is liable to be
dismissed."
28. The plaintiff has disclosed the statement of calculation in the plaint as
well as in the application being G.A. No. 1 of 2022, which reads as
follows:
"Fees realised on bills raised prior to 01.07.2020
during the period 01.07.2020 to 30.06.2022
Month Fox & Mandal
Jul-20 55,40,677
Aug-20 67,07,203
Sep-20 51,10,757
Oct-20 27,49,887
Nov-20 19,14,082
Dec-20 32,59,809
Jan-21 13,30,208
Feb-21 23,08,061
Mar-21 37,28,503
Apr-21 2,23,784
May-21 94,116
Jun-21 3,03,600
Jul-21 4,26,101
Aug-21 7,07,593
Sep-21 4,81,999
Oct-21 2,86,337
Nov-21 45,048
Dec-21 5,51,400
Jan-22 16,04,363
Feb-22 1,32,350
Mar-22 1,45,636
Apr-22 9,34,381
May-22 20,700
Jun-22 5,82,003
Total (X) 3,91,88,599
Agreed cost of realization as per clause 17
1,17,56,580
Y = (30% of X)
Balance : Z = X - Y 2,74,32,019
Payable to Estate of Late Dinabandhu
68,58,005
Mandal (A)
Note:
1. A = 25% of Z (17.50% of X)
2. The share of the deceased partner in the profits
of the Firm was lastly 25%."
The defendant no.1 has not filed written statement in the suit but
has filed affidavit-in-opposition in G.A. No.1 of 2022. The defendant has
dealt with the said document in para 9 of the affidavit-in-opposition
which is quoted at paragraph 27 above. The defendant no.1 has only
stated that statement is prepared by the plaintiff unilaterally and the
basis thereof were not disclosed to him. The defendant no.1 has not
disclosed his calculation and what is the quantum of amount the
defendant no.1 is liable to get other than the amount calculated by the
plaintiff.
29. Mr. Thaker relied upon the case of Balraj Taneja (supra) wherein the
Hon'ble Supreme Court held that:
"29. As pointed out earlier, the court has not
to act blindly upon the admission of a fact made by
the defendant in his written statement nor should
the court proceed to pass judgment blindly merely
because a written statement has not been filed by
the defendant traversing the facts set out by the
plaintiff in the plaint filed in the court. In a case,
specially where a written statement has not been
filed by the defendant, the court should be a little
cautious in proceeding under Order 8 Rule 10 CPC.
Before passing the judgment against the defendant
it must see to it that even if the facts set out in the
plaint are treated to have been admitted, a
judgment could possibly be passed in favour of the
plaintiff without requiring him to prove any fact
mentioned in the plaint. It is a matter of the court's
satisfaction and, therefore, only on being satisfied
that there is no fact which need be proved on
account of deemed admission, the court can
conveniently pass a judgment against the
defendant who has not filed the written statement.
But if the plaint itself indicates that there are
disputed questions of fact involved in the case
regarding which two different versions are set out
in the plaint itself, it would not be safe for the court
to pass a judgment without requiring the plaintiff to
prove the facts so as to settle the factual
controversy, Such a case would be covered by the
expression "the court may, in its discretion, require
any such fact to be proved" used in sub-rule (2) of
Rule 5 of Order 8, or the expression "may make
such order in relation to the suit as it thinks fit"
used in Rule 10 of Order 8."
In the present case, the defendant has not filed written statement.
The suit filed by the plaintiff is a commercial suit. Order VIII, Rules 1,
3, 5 and 10 are amended under the Commercial Courts Act, 2015
which reads as follows:
"(i) In Rule 1, for the proviso, the following
proviso shall be substituted, namely:-
"Provided that where the defendant fails to file
the written statement within the said period of
thirty days, he shall be allowed to file the written
statement on such other day, as may be specified
by the Court, for reasons to be recorded in writing
and on payment of such costs as the Court deems
fit, but which shall not be later than one hundred
twenty days from the date of service of summons
and on expiry of one hundred twenty days from the
date of service of summons, the defendant shall
forfeit the right to file the written statement and the
Court shall not allow the written statement to be
taken on record.";
(ii) After Rule 3, the following Rule shall be
inserted, namely:-
"3A. Denial by the defendant in suits before the
Commercial Division of the High Court or the
Commercial Court.-
(1) Denial shall be in the manner provided in sub-
rules (2), (3), (4) and (5) of this Rule.
(2) The defendant in his written statement shall
state which of the allegations in the particulars
of plaint he denies, which allegations he is
unable to admit or deny, but which he requires
the plaintiff to prove, and which allegations he
admits.
(3) Where the defendant denies an allegation of
fact in a plaint, he must state his reasons for
doing so and if he intends to put forward a
different version of events from that given by
the plaintiff, he must state his own version.
(4) If the defendant disputes the jurisdiction of the
Court he must state the reasons for doing so,
and if he is able, give his own statement as to
which Court ought to have jurisdiction.
(5) If the defendant disputes the plaintiffs
valuation of the suit, he must state his reasons
for doing so, and if he is able, give his own
statement of the value of the suit.";
(iii) In Rule 5, in sub-rule (1), after the first
proviso, the following proviso shall be inserted,
namely:-
"Provided further that every allegation of fact in
the plaint, if not denied in the manner provided
under Rule 3-A of this Order, shall be taken to be
admitted except as against a person under
disability.";
(iv) In Rule 10, [***] the following proviso shall be
inserted, namely:-
"[Provided that] no Court shall make an order to
extend the time provided under Rule 1 of this Order
for filing of the written statement.";"
The defendant has not filed written statement even within the
outer period of 120 days as prescribed under Order VIII, Rule 1 of the
CPC as amended under the Commercial Courts Act, 2015 and the
application filed by the defendant no.1 was dismissed by this Court by
an order dated 14th June, 2024 in G.A. No. 4 of 2023. The defendant
no. 1 has not filed written statement, thus there is no denial. The
defendant no.1 has filed affidavit-in-opposition in G.A. No.1 of 2022. In
the said affidavit also, the defendant no.1 has not come forward with
different version of events from that given by the plaintiff. The
defendant no.1 has not stated which calculation is wrong and what is
the further amount the defendant no.1 is entitled. Simply the defendant
no.1 has stated that it was prepared unilaterally and the defendant
no.1 does not accept the said calculation.
30. Mr. Thaker has further relied upon the judgment in the case of Anil
Rishi (supra) wherein the Hon'ble Supreme Court held that:
"10. Pleading is not evidence, far less proof.
Issues are raised on the basis of the pleadings. The
defendant-appellant having not admitted or
acknowledged the fiduciary relationship between
the parties, indisputably, the relationship between
the parties itself would be an issue. The suit will
fail if both the parties do not adduce any evidence,
in view of Section 102 of the Evidence Act. Thus,
ordinarily, the burden of proof would be on the
party who asserts the affirmative of the issue and
it rests, after evidence is gone into, upon the party
against whom, at the time the question arises,
judgment would be given, if no further evidence
were to be adduced by either side."
In the said case issues are raised on the basis of pleadings, which
reveal that the defendant filed written statement and not admitted the
fiduciary relationship between the parties and the relationship between
the parties was an issue. In the present case no written statement is
filed. The defendant no.1 has not raised any issue by denying the
averments made in the plaint as per Rule 3A of the Code of Civil
Procedure, 1908 as amended under the Commercial Courts Act, 2015.
In the affidavit-in-opposition also the defendant no.1 has not come up
with specific claim.
31. Mr. Thaker relied upon the case of Sudir Engineering Company Vs.
Nitco Roadways Ltd. Reported in 1995 (34) DRJ, wherein the Delhi
High Court held that:
"6. Any document filed by either party passes
through three stages before it is held proved or
disproved. These are:
First stage; when the documents are filed by
either party in the Court; these documents
though on file, do not become part of the judicial
record;
Second stage: when the documents are
tendered or produced in evidence by a party
and the Court admits the documents in
evidence. A document admitted in evidence
becomes a part of the judicial record of the case
and constitutes evidence;
Third stage: the documents which are held
'proved, not proved or disproved when the
Court is called upon to apply its judicial mind
by reference to Section 3 of the Evidence Act.
Usually this stage arrives at the final hearing of
the suit or proceeding."
In the said case, the Delhi High Court has explained about
admission of document in evidence, and how it is to be proved and
disproved. In the present case the plaintiff is not relying upon the
document for judgment under Order VIII, Rule 10 of the CPC. The
plaintiff in paragraphs 21 and 22 of the plaint has described how the
defendant no.1 is entitled to get an amount of Rs. 1,07,03,773/-. The
defendant has not denied with regard to the said amount. The claim of
the defendant that the defendant is entitled to further amount than the
amount calculated by the plaintiff. The defendant has not disclosed any
calculation by which the defendant no.1 is entitled to get further
amount. The only claim of the defendant no.1 is that no amount of
goodwill has been offered to him and other legal heirs but the defendant
no.1 has not made any calculation as to what would be the amount of
goodwill. On the other hand, the other two brothers of the defendant
no.1 have accepted the amount calculated by the plaintiff.
32. The contention of the defendant no.1 that the plaintiff has relied upon
the Deed dated 27th October, 2014 and the calculation being Annexure
- "R" of the plaint but the said documents are not the evidence. As
regard to the Deed, the defendant is also relying upon and admitted
Clause 17 of the Deed. It is the specific case of the defendant no.1 that
the manner in which the accounts of a deceased partner is to be
settled, is governed by Clause 17 of the Deed dated 27th October, 2014.
Once the defendant has admitted the Deed of Reconstitution, the
plaintiff is not required to prove the said document further. As regard
to the calculation sheet is concerned, the defendant no.1 is not denying
with the amount of Rs. 1,07,03,773/- which the plaintiff is ready to pay
to the defendant no.1. The defendant no.1 is not accepting the said
amount only with the reason that the break up does not provide for any
valuation for goodwill. The main issue raised by the defendant no.1
with regard to the valuation of goodwill but the defendant no.1 has not
stated anywhere that as per his calculation what would be the
valuation of the goodwill.
33. The first part of Clause 17 is that the death or retirement of partner
shall not dissolve the partnership but the partnership shall be carried
on by the surviving partners. The defendant has not raised any dispute
to the same. The second part is that the partnership accounts shall be
made up after two years from the date of death/ retirement of a partner
but within three years from the said date. The said part is also not in
dispute as the plaintiff has initiated process for disbursement of shares
of Dinabandhu Mandal but the defendant no.1 has started sending
notices and e-mails requesting not to distribute the assets of
Dinabandhu Mandal and in the meantime the wife of Dinabandhu
Mandal expired and thereafter the other two brothers have received the
amount.
The third part is that the share of the deceased or retiring partner
in the outstanding bills upto the date of his death /retirement which
have been realized within a period of two years from his death/
retirement less the cost of realization assessed at 30% of the amount
realized on these bills shall be paid to the retiring partner or the legal
representative of the deceased partner on account of his share of the
profit and goodwill of the firm.
34. "Goodwill", as Lord MacNaghten described is "a thing very easy to
describe, very difficult to define", in IRC v. Muller & Co. (All ER p.
416 G).
35. The term "goodwill" signifies the value of the business in the hands of a
successor, so far as increased by the continuity of the undertaking
being preserved in the shape of the right to use the old name and
otherwise. It is something more than a mere chance or probability of
old customers maintaining their connection, though this is a material
part of the practical fruits. "Goodwill" may be the whole advantage
belonging to the firm, its reputation as also connection thereof. It, thus,
means that every affirmative advantage as contrasted with negative
advantage that has been acquired in carrying on the business whether
connected with the premises of business or its name or style,
everything connected with or carrying the benefit of the business.
36. In Halsbury's Laws of England, 4th Edn., Vol. 35, at pp. 114-15,
the law is stated in the following terms:
"201. Goodwill generally; right to use name;
sale to a partner.--The goodwill of the business
carried on by a partnership forms part of the assets
to be realised on distribution. If the goodwill is not
sold, each partner may use the name of the firm, if
by doing so he does not hold out the other partners
as still being partners with him. If a partner agrees
to retire and his partners buy his share but do not
take any express assignment of the goodwill, they
are not entitled to continue the use of his name as
part of the firm name; and where a business is
carried on under the name, solely or with any
addition, of an outgoing partner who is still living
and not bankrupt, a purchaser of the business
including the goodwill is not entitled to use the
name of the outgoing partner in such a way as to
suggest that he is still connected with the business,
unless the right to use the firm name is expressly
assigned. On dissolution, a partner may advertise
that he is no longer connected with a periodical
that the firm publishes.
Where the goodwill becomes on dissolution the
property of one of the partners (either by purchase
in the ordinary way or pursuant to a provision in
the articles), the outgoing partner or partners may
not carry on a similar business in the name of the
old firm, and may not solicit old customers."
37. The goodwill is generally considered to be an asset of the partnership.
In the aforementioned volume of Halsbury's Laws of England, at p.
116, it is further stated:
"204. When goodwill is to be treated as an
asset.--Although, generally, the goodwill should be
included where, under the partnership articles, a
general account and valuation is to be taken on the
death of a partner, the value of the goodwill should
not, in the absence of contrary agreement, be
included in the firm's periodical balance sheets;
and, therefore, where the value of the share of a
deceased partner is, by agreement, governed by
the balance sheet, his estate is not entitled to treat
the goodwill as an asset.
Where a surviving partner sells the
partnership business, the estate of his deceased
partner is entitled to a share of the purchase
money representing the value, if any, of the
goodwill; but, having regard to the rights of the
surviving partners to carry on a similar business,
this value may be infinitesimal.
38. The plaintiff has calculated the entitlement of the shares of the legal
heirs of Dinabandhu Mandal as per the balance sheet as Rs.
3,59,57,086/- and all the said total amount is divided in four equal
shares which come to Rs. 89,89,272/-. The plaintiff has taken the
calculated of total fees realized in terms of Clause 17 of the Deed is Rs.
3,91,88,599/-. As per Clause 17, agreed cost of realisation @ 30% has
been taken into consideration which comes to Rs. 1,17,56,580/- and
accordingly, the total balance would come to Rs.2,74,32,019/-. 25% of
share of Dinabandhu Mandal is come to Rs. 68,58,005/-, accordingly,
the 1/4th share of the defendant no. 1 would come to Rs. 17,14,501/-,
thus the total share of the defendant no. 1 in the estate of the
Dinabandhu Mandal comes to Rs. 1,07,03,773/-.
This Court finds that the plaintiff has considered the share of
Dinabandhu Mandal including profits of the plaintiff firm, goodwill and
benefits of the other assets and properties and books of account and
papers thereof. The defendant no. 1 has not raised any specific claim
with regard to the goodwill.
39. The 4th part of Clause 17 of the Deed of Partnership provides that the
amount payable for the share of the profit and goodwill of the
deceased/ retiring partner to be calculated in the manner aforesaid
shall be determined and paid in the manner decided by Dinabandhu
Mandal in his absolute discretion and the heirs of the deceased partner
or the retiring partner shall not be entitled to raise any question or
objection thereto. In this regard, this Court finds that after the death of
Dinabandhu Mandal, the plaintiff firm has considered the share of the
Dinabandhu Mandal and divided into four shares including the wife of
Dinabandhu Mandal but after the death of the wife, the plaintiff firm
has duly informed the legal heirs that the share of the wife of
Dinabandhu Mandal shall be released/paid on production of
Succession Certificate or Letters of Administration or probate or equally
to all the legal heirs. Two of the sons of Dinabandhu Mandal have
already accepted their shares as calculated by the plaintiff but only the
defendant no. 1, one or the other reasons has not accepted the shares
calculated by the plaintiff firm even the defendant no. 1 has not raised
any specific claim before the plaintiff or in the present suit.
40. Considering the above, this Court finds that the plaintiff firm has
calculated the shares of the deceased Dinabandhu Mandal in
accordance with the Clause 17 of the Deed of Reconstitution and the
defendant no. 1 has not come with any further calculation to disbelieve
the calculation made by the plaintiff.
41. As regard to the issue raised by the defendant that the suit filed by the
plaintiff is barred by Section 41(b) of the Specific Relief Act, 1963, this
Court finds that the plaintiff has prayed for perpetual injunction
against the defendant no. 1 at prayers (c), (d), & (e) of the plaint.
42. In the case of Cotton Corporation of India Limited vs. United
Industrial Bank Limited & Ors. reported in (1983) 4 SCC 625, the
Hon'ble Supreme Court held that the bank seeks to restrain the
corporation by an injunction of the Court from instituting a proceeding
for winding up of the bank. There is a clear bar in Section 41(b) against
granting these reliefs. The Hon'ble Supreme Court further held that the
Court has no jurisdiction to grant a perpetual injunction restraining a
person from instituting a proceeding in a court not subordinate to it, as
a relief, temporarily relief cannot be granted in the same terms.
43. In the present case, the plaintiff has prayed for decree for perpetual
injunction restraining the defendant no. 1 from claiming any amount of
money against the shares of Dinabandhu Mandal other than Rs.
1,07,03,773/- in terms of Clause 17 of the Deed of Reconstitution and
restraining the defendant no. 1 from issuing any email or notices or
communication against the plaintiff. The prayers (c), (d) and (e) of the
plaint are barred under Section 41(b) of the Specific Relief Act, 1963
and thus the plaintiff is not entitled to get any relief in terms of the
prayers (c), (d) and (e) of the plaint.
44. Considering the above, the defendant no. 1 is directed to receive the
amount of Rs. 1,07,03,773/- being his 1/4th share from the plaintiff
within a period of 30 days from the date of this judgment failing which
the plaintiff is directed to deposit the said amount with the Registrar,
Original Side of this Court within two weeks thereafter. If the plaintiff
deposits the said amount with the Registrar, the Registrar shall invest
the said amount in the interest bearing fixed deposit receipt with any of
the Nationalized bank and to keep the same in safe custody till the
defendant no. 1 receive the said amount.
45. C.S. (Com) No. 408 of 2024 (Old No. CS 178 of 2022) is disposed of.
Decree be drawn accordingly. In view of the above, GA No. 1 of 2022 is
also disposed of.
(Krishna Rao, J.)
