Mahendra Nath And Anr. vs Shiv Charan And Ors.
1987 Latest Caselaw 273 Del

JUDGMENT

N.N. Goswamy, J.

(1) This second appeal by the plaintiff is directed against the judgment and decree dated July 11, 1985 passed by the learned Add]. District Judge, Delhi where the findings recorded by the learned trial Judge in favor of the plaintiffs and defendants 3 to 5 were set aside but the appeal was dismissed on alleged agreement between the plaintiffs and defendants 1 and 2.

(2) The plaintiffs had instituted a suit for permanent injunction straining defendants I and 2 from interfering with the business of the plaintiffs and from entering premises of their business at 224-A. Najaf Garh New Delhi. The case as set out in the plaint was that a partnership agreement was entered into between the plaintiffs and defendants 3 to 5 in 1973 and as a consequence the business was being carried on in the premises mentioned above. Subsequently another agreement was executed in 1974 which had the effect of bringing in defendants I and 2 as partners. The case of the plaintiffs was that the agreement of 1974 was only a paper transaction and was never given effect to while defendants I and 2 relied on the said agreement and pleaded that they were the partners in the business. The learned trial Judge on the pleadings of the parties framed the following issues: 1. Whether the plaintiff has locus standi to file the present suit ? OPP. 2. Whether there was any dissolution of partnership firm M/s. Allora Electric & Cables Co. If so, to what effect ? 3. Whether defendant Nos. 1,2 and 6 are partners of M/s. Allora Electric & Cable Co., if so to what effect ? OPD. 4. Whether the suit for injunction is not maintainable ? OPD. 5. Whether the plaintiff is entitled to the injunction prayed for ? 6. Relief.

(3) On consideration of the entire evidence on record, the learned trial Judge decided all the issues in favor of the plaintiffs and decreed the suit.

(4) In appeal before the Add!. District Judge, the counsel for the plaintiffs and defendants I and 2 entered into a settlement. The alleged settlement can be understood from paragraph 2 of the impugned judgment passed by the learned Add). District Judge Delhi. The said paragraph is, as follows: "TO-DAY the appellant has made the statement giving solemn undertaking to this Court that he shall not interfere in the premises and the business in question till he gets his rights determined in appropriate proceedings by a competent court and that the findings given by the lower court on the merit of the claim of the parties in the impugned decree and judgment shall not affect the rights of the parties in appropriate proceedings to be decided by the competent court and the injunction granted by the lower court shall remain in force, in above terms and the appeal be disposed of accordingly."

(5) The plaintiffs were not present but their counsel also made a statement that the appeal be decided in these terms. Consequently the appeal was decided in the terms indicated above. However, the learned Additional District Judge also made a passing observation to the effect that in a suit for injunction it was not necessary for the learned trial Judge to record findings to the effect whether respondents I and 2 herein were partners in the business or not.

(6) The contention of Mr. Vohra, the learned counsel, for the plaintiffs-appellants is that the provisions of Order 23 being mandatory, it was not permissible to dispose of the appeal on compromise without there being a written application by the parties. In the present case, admittedly, there was no written application and even the statements of the appellants were not recorded. In view of the provisions of Order 23, the counsel had no implied or express authority to enter into a settlement and have the findings set aside. In any case, there was no appearance for defendants Nos. 3 to 5 and neither there was any statement made by them nor any application bad been filed by them agreeing to have the findings set aside. Obviously the findings recorded by the learned trial Judge were in favor of defendants 3 to 5 and the same could not have been set aside without there being a written application of settlement duly signed by respondents 3 to 5 also.

(7) I also fail to appreciate the observations of the learned Additional District Judge to the effect that it was not necessary to record findings regarding the defendants I and 2 being the partners in the business. The suit was for permanent injunction on the basis that the documents of 1974 were never given effect to and the partners as constituted in 1973 continued to carry on its business. In the circumstances, no injunction could be granted without holding that defendants I and 2 were not the partners and the document executed in 1974 was only a paper transaction.

(8) For the reasons recorded above, the appeal is allowed and the impugned judgment and decree is set aside. The case is sent back to the learned Additional District Judge to decide the same on merits. The parties are directed to appear before the District Judge on 6-7-1987. The learned District Judge will either keep the matter with himself or assign it to the successor court. The records be sent back immediately.