Delhi High Court
Jai Rattan Bhalla & Anr. vs Puri Investments & Ors. on 23 December, 2011
Author: Manmohan Singh
.* HIGH COURT OF DELHI : NEW DELHI
+ IA No.16165/2010, IA No.2159/2011, IA No.3346/2011 &
IA No.2824/2011 in CS (OS) No.2424/2010
% Judgment decided on : 23.12.2011
Jai Rattan Bhalla & Anr. ......Plaintiffs
Through: Mr. Abhinav Vasisht, Sr. Adv. with
Mr. Rajat Navet, Adv.
Versus
Puri Investments & Ors. .....Defendants
Through: Mr. P.V. Kapur, Sr. Adv. with
Mr. Jeevesh Nagrath, Ms. Anjali
Verma and Ms. Ikasha Bhalla, Advs.
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. By this order I shall dispose of IA No.16165/2010 (O 39 R
1 & 2 CPC) filed by plaintiffs, IA No.2159/2011 (O 39 R 1 & 2 CPC)
filed by plaintiffs, IA No.3346/2011 (O 12 R 6 CPC) filed by plaintiffs
& IA No.2824/2011 (O 39 R 4 CPC) filed by filed by defendant Nos.1,
2, 5 and 6.
2. The brief factual matrix of the matter is that the plaintiffs
have filed the suit for injunction, rendition of account, partition and
declaration praying for the following reliefs:
(a) Pass a decree of permanent prohibitory injunction in favour of
the plaintiffs and against defendant Nos.2 to 6 restraining
defendant Nos.2 to 6 from selling, transferring, alienating or
creating any third party rights of their share in defendant No.1
and the suit property or parting with the possession of the suit
property or any part thereof, in contravention of Clause 6 and 8
of the MOU dated 5.12.2005;
(b) Pass a decree directing defendant Nos.2 to 6 to render and draw
up accounts of defendant No.1;
(c) Pass a decree directing partition of property bearing No.E/6-7,
Saraswati Bhawan, Connaught Place, New Delhi 1100 01 by
metes and bounds in terms of Memorandum of Understanding
dated 5.12.2005 and to put the plaintiff No.2 (or the plaintiffs, as
the case may be), in exclusive possession of the partitioned and
demarcated share;
(d) Pass a decree of declaration in favour of plaintiff No.2 and
against the defendants that plaintiff No.2 is the sole and
exclusive owner of 13/60 per cent share in defendant No.1.
3. The plaintiff Nos. 1 and 2 claim themselves to be the co-
owners of the property owned by the defendant No. 1 namely Puri
Investments. The said property owned by the defendant No. 1 is
situated at E/6-7, Saraswati Bhawan, Connaught Place, New Delhi -
110001. The plaintiffs state that the suit property which was earlier
owned by partnership is now under the co-ownership (pursuant to the
mutual agreement between the parties to treat the arrangement as co-
ownership) in the name and style of Puri Investment (defendant No.1)
of which the plaintiffs and defendant Nos.2 to 6 are co-owners and the
same was purchased in the year 1968. The details of the co-owners
and their respective shares is already mentioned in the plaint.
4. The plaintiffs then proceed to explain the formation of the
defendant No. 1 and also provide the details of the respective
shareholders in the defendant No. 1. It is stated in para 2 of the plaint
that the Puri Investments/ Defendant No. 1 was formed and constituted
in the nature of partnership vide partnership deed dated 5.3.1958 with
the primary object of making investment in the properties and for
conducting any other general business. It is stated that in the said
partnership deed, the partners were and their respective profit sharing
ratio/ shareholding therein were as under:
S. No. Partners Shares
1. Sh. D.D. Puri 6/30
2. Sh. Ved Prakash Puri 6/30
3. Sh. Sohan Lal Bawa 6/30
4. Sh. Jai Rattan Bhalla (Plaintiff No.1) 5/30
5. Sh. Braham Prakash Puri 4/30
6. Sh. Gian Prakash Puri (Defendant No.3) 3/30
5. It is mentioned in the plaint that subsequent to the setting up
of the partnership firm, the firm acquired the property bearing No. E/6-
7, Connaught Place admeasuring 10844.96 Sq. Ft. or thereabouts under
and by virtue of a perpetual lease dated 1.2.1968 and thereafter
constructed a building thereupon comprising of 3 floors on Inner circle
and 5 floors in the middle circle of the Connaught place admeasuring
approximately 40000 Sq. Ft. of covered area. The said building
complex is named as Saraswati Bhawan.
6. The plaintiffs state that the said partnership firm was
subsequently dissolved and it was mutually agreed between the
partners that the assets of the firm would vest in a co-ownership, with
the partners becoming co-owners to the extent of their respective profit
sharing ratio/ shareholding in the partnership. It is further mentioned in
the plaint that subsequently on account of death of some of the original
co- owners and in view of the fact that some co -owners wanted to
make their legal heirs as joint co- owners, fresh co- ownership
deeds/MOUs were executed from time to time. On 05.06.1989,
20.08.2005, 06.06.2005 and finally on 05.12.2005 by and between the
co -owners and their legal heirs.
7. The plaintiffs mention in the plaint that the co-ownership
deed dated 05.06.1989 was executed between the original co-owners
and the legal heirs of Sh. Sohan Lal Bawa which were Mrs. V.K.S.
Bawa, Mrs. Rashmi Kaura and Ms. Ushmi Sethi. Then, after the death
of Sh. Braham Prakash Puri on 19.02.1993 his share was transferred to
his wife Smt. Raksha Puri and after her death to her legal heirs.
Thereafter, a co-ownership deed dated 28.05.2005 was executed on the
death of Smt. V.K.S. Bawa when her interest was distributed amongst
her legal heirs, Mrs Rashi Kaura and Mrs Ushmi Sethi and these
changes were incorporated in the said deed dated 28.05.2005.
8. Thereafter, an MoU dated 06.06.2005 was entered into
between the parties recording the collective and respective rights of the
co-owners. Thereafter, Mr. Ved prakash Puri made Mrs. Mahima Puri,
joint co-owner of his share and a resolution dated 03.11.2005 was
passed by defendant No.1 accepting Mrs. Mahima Puri, as joint co-
owner of Mr. Ved prakash Puri. Similarly, plaintiff No.1 transferred his
entire shareholding in the said co-ownership in the name of plaintiff
No.2, making him the absolute owner of 13/60 share in defendant No.1
and by his letter dated 08.04.2009, informed the defendant No.1 and
erstwhile Managing co-owner of the same. However, defendant No.1
did not officially incorporate the said transfer in its records.
9. The plaintiffs submit that the changes in the co-ownership
were incorporated in the fresh memorandum of understanding which
was entered into between the co-owners on 05.12.2005. The said
agreement or MOU recorded the profits to be divided as under:
S. No. Partners Shares
1. Sh. Ved Prakash Puri/Ms. Mahima Puri 19/60
(Defendant No.2)
2. Sh. Jai Rattan Bhalla/Sh. Amit Bhalla 13/60
(Plaintiffs)
3. Sh. Gian Prakash Puri (Defendant No.3) 10/60
4. Mrs. Neerja Kolhatkar (Defendant No.4) 6/60
5. Mrs. Rashmi Kaura (Defendant No.5) 6/60
6. Mrs. Ushmi Vasisht (Defendant No.6) 6/60
10. The plaint avers that the only source of income of the
defendant No. 1 has been the rent received by it from letting out
portions of the suit property owned by it. The property has been
converted into the freehold one which is the subject matter of the suit
and also the conveyance deed has been executed in favour of the
defendant No.1.
It is stated that after the demise of Mr. V.P. Puri on
February 2010, who was managing the affairs of the defendant No. 1,
there has been mismanagement in the affairs of the defendant No. 1. It
is also stated that the interests of the existing co-owners are not being
safeguarded properly.
11. It is explained by the plaintiffs that the rear portion of the
said building, Saraswati Bhawan i.e. 25000 sq. ft. is lying vacant since
September, 2006 and no efforts are being made by the erstwhile
Managing Co-owner to let out the premises which could fetch a rent of
approx. Rs.75 lac per month. Similarly since October, 2009 3500 sq.
ft. of the front portion of the said building has also been lying vacant.
It is also stated that the reminders dated 12.11.2008, 6.3.2009,
6.10.2009 and 6.11.2009 were issued to the Managing co-owner to let
out the premises and to that effect meeting was held on 2.1.2008 but
not outcome came out. The plaintiffs themselves had also got offers
from some concerns like ONGC at the rate of Rs. 300 per sq ft but the
managing co-owner did not take any decision to do the needful.
12. It is also averred by the plaintiffs that the managing co-
owner was also in the habit of the withholding the amounts due to the
other co-owners for a considerable period which caused immense
dissatisfaction amongst the co-owners including the plaintiffs.
The similar instances are also mentioned in the plaint about
the non maintenance of proper accounts by the managing co-owner.
13. By relying all these events, it is the case of the plaintiffs that
the co-ownership affairs are brought to a standstill and the same has not
been able to be operated properly by the co-owners. It is also stated
that by not letting out the portion lying vacant, the co-owners are
depriving the other co-owners including the plaintiffs from their
legitimate profits which ought to accrue to them from the said property.
Thus, there shall be no useful purpose to continue to remain in the co-
ownership. Consequently, the plaintiffs intend to safeguard their
interest in the share of the property of the defendant No. 1 by seeking
declaration and partition of the suit premises.
14. The plaintiffs also explained their cause by submitting that it
has come to light that some of the co-owners were trying to sell their
share in defendant No. 1 in violation of clause 6 of MOU dated
5.12.2005. The plaintiff No. 2 then wrote a letter dated 4.4.2009 and
called upon defendant Nos. 2 to 6 and also the erstwhile managing co-
owner, not to take any action in respect of the suit property without the
prior consent of the plaintiff No. 2. Thereafter the letters were
exchanged between the parties wherein several allegations were made
and replied to by the defendants. On 20.10.2009, erstwhile managing
co-owner wrote to the plaintiffs by replying the plaintiffs‟ letter dated
6.10.2009 that no decision had been taken to lease out the suit
property, it was also stated in the said letter that the other co-owners of
defendant No. 1 were desirous of selling the suit property. In the reply
to the said letter dated 20.10.2009, plaintiff No.2 sent a Notice dated
06.11.2009 wherein it was stated that the plaintiff No.2 was not
interested in selling his share in the suit property and instead offered to
buy the entire suit property for Rs.90 crores subject to other terms
being negotiated and mutually agreed upon between the co-owners.
In the meantime, the plaintiffs continued to explain and
convince the defendants and the earlier managing co-owner as to record
the name of the plaintiff No. 2 as a co-owner and also insisted upon the
letting out of the suit premises. Towards this end, the plaintiffs wrote to
the defendants wherein the plaintiffs gave a proposal of the entity
namely United Colors of Benetton wherein the plaintiffs proposed
another tenant namely PUMA AG but as per the plaintiffs no heed was
given by the defendants to the plaintiffs proposals of letting out the said
premises nor the efforts were forthcoming from the defendants side.
15. Thereafter in February 2010, Mr. V.P. Puri passed away
and the plaintiffs wrote a letter on 30.4.2010 to the defendant Nos. 2 to
6 calling upon them to elect new managing co-owner to ensure the
smooth functioning of the defendant No. 1. The plaintiff No. 2 also
reiterated his offer of Rs. 90 crores as a consideration to buy out the
entire suit property and also enclosed the valuation report of ICICI
Homes to this effect. However, the plaintiffs state that no response was
received and also no managing co-owner was appointed.
16. The plaintiffs submit that considering the fact that the
defendants were not responding to their communications last issued in
April 2010 and also that the defendants were not appointing new
managing co-owners, the plaintiffs became apprehensive of the fact that
the defendants were intending to sell their shares in the suit property
without informing them. The plaintiffs therefore carried out a public
notice stating therein that in terms of the MOU, no co-owner was
entitled to sell his/ her share in the suit property without the consent of
all the co-owners and the same would be otherwise illegal.
17. Subsequent thereto, the plaintiffs submit that although the
defendants informed that they were not contemplating to sell the suit
premises but again the plaintiffs have learnt that the defendant No. 2 to
6 are negotiating with some third party for selling their share in the
defendant No. 1 and consequently in the suit property in contravention
and breach of the procedure laid down in the MOU.
18. All this has lead to the plaintiffs filing the suit in November,
2010 and seeking reliefs of injunction and partition and declaration.
The present suit came up for hearing on 01.12.2010 along with IA
No.16165/2010 (U/O 39 R 1 & 2 CPC) wherein the plaintiffs have also
sought an ex-parte ad interim injunction. This court on 01.12.2010
passed the ex-parte ad interim order directing the parties to maintain
status quo with respect to the title and possession of the suit property.
The plaintiffs during the second week of February, 2011 filed another
interim application under Order 39 Rule 1 and 2 CPC being IA
No.2159/2011 seeking orders to restrain the defendants to operate
bank account of defendant No.1 and to maintain status quo with
regard to the affairs of defendant No.1. The said application was
listed before court on 11.2.2011 and an ex-parte order was passed to
the extent that let the defendants clear government dues alone and all
other expenses be not incurred. Upon service, defendant Nos. 2, 5 and
6 issued a letter dated 01.12.2011 about receiving an offer from a
prospective buyer to purchase the suit property together with its
encumbrances and a meeting was convened on 5.2.2011, however,
according to the plaintiffs, the defendant Nos.2, 5 and 6 passed a
purported self-serving resolution that the property being a composite
unit could not be partitioned and the same be sold to the prospective
buyer Metatron Global Fund LLC subject to the approval of the court.
19. Thereafter, on 21.2.2011, the defendant Nos.1, 2, 5 and 6
moved an application under Order 39 R 4 CPC being IA No.2824/2011
and also filed statement and prayed for vacation of ex-parte order dated
01.12.2010.
20. The defendants have raised the following grounds as a
matter of defences and also in support of the application under order 39
rule 4 praying for vacation of the ex-parte order:
a) The defendants submit that the plaintiffs have not presented the
facts before this court correctly while securing the interim order.
It is stated that the plaintiffs are thus guilty of concealment of
material facts from this court.
b) The defendants submit that the plaintiffs are asserting some non
existent right under the agreement and also not performing the
other terms of the agreement. It is submitted that the Clause 18
of the agreement provides for the resolution of the disputes
between the co-owners in relation to the affairs of business as
well as the profits and winding up of business etc which are to be
dealt with as per the resolution mechanism contained in the said
agreement itself wherein the decision of the majority of 2/3rd co-
owners shall prevail. Thus, the plaintiffs cannot rely upon
selected terms of the agreement to their advantage and ignore
rest of them which are specifically agreed between the parties to
resolve the disputes. Accordingly, the interim orders by this
court are not warranted and the plaintiffs be directed to resolve
the disputes in view of the mechanism provided under the
agreement.
c) The defendants although admitted the factual matrix enunciated
by the plaintiffs to the extent of the shares owned by the co-
owners (however later during arguments defendants made the
argument that the co-ownership vests in the firm and parties are
merely association of persons), but varied on the following
aspects in relation to MOU:
It is submitted by the defendants the clauses relied upon
by the plaintiffs are misplaced. It is stated that in order to
avoid third party outsiders from becoming the shareholder
in the profit and losses and the affairs of the business of
the defendant No. 1, it was agreed in the clause 6 of the
MOU that no co-owner shall be able to assign, transfer,
licence, sell, mortgage or otherwise dispose of his/her
share/interest etc. without the prior consent of all the co-
owners. The defendants submitted that the said covenant
was entered into to avoid the third party to become the co-
owner of the property. However, it is submitted that the
said restriction is intended to operate only to the extent of
single co-owner intending to alienate his or her share but
will not preclude the majority co-owners decision to sell
out the property in firm or to wind up the business. The
said condition is stipulated in the separate Clause 6 to
Clause 8 cannot override the other stipulations i.e. Clause
16 and 18. The same are read as under :
"Clause 16
That all matters relating to the Co-ownership, its
conduct and purposes other than those required to
be done with the consent of all Co-owners shall be
decided by a two thirds majority of Co-owners.
Clause 18
That any disputes or differences that may rise
between the Co-owners of their representatives
with regard to business or to the construction,
interpretation and effect of this Memorandum of
Understanding or any part thereof or respecting the
accounts, profits or losses of the business
conducted by the Co-Ownership, or the rights and
liabilities of the Co-Owners under this
Memorandum of Understanding, or the dissolution
and winding up of the business or any other matter
relating to Puri Investments shall be decided upon
by the Co-Owners a two-third majority and such
decisions shall be binding on all Co-Owners."
It is submitted that the defendants that Clause 18 have
been incorporated in the agreement to avoid litigation and
is aimed at resolution of disputed by the agreed
mechanism. The plaintiffs are themselves party to the said
MOU by agreeing to abide by the same. Now, the
plaintiffs by filing the present suit on wrong premises are
rather breaching the terms of the agreement which has
been agreed between the parties. This court should not
allow the same to happen by enforcing the condition or
restriction which in fact does not exist in the agreement.
Therefore, the said agreement should operate and must be
followed in the letter and spirit.
The defendants state that the plaintiffs have their own
motives and dishonest intentions to buy out the said suit
property at the lesser value rather than to go at the fair
value to the outsider. This can be seen from the fact that
the plaintiffs themselves had been negotiating with the
defendants prior to the filing of the suit. Plaintiffs have
also been negotiating with the defendants after filing of the
suit also. It is submitted that the value of the suit property
was almost Rs.150 crores when the plaintiffs offered
merely Rs.90 crores which is almost the half value. Thus,
it is the plaintiffs who intend to gain from the said co-
ownership and deprive the other co-owners from their
profits by selling the property outside when the majority
intends to do the same.
The suit property cannot be partitioned by way of metes
and bounds.
The defendants need money as some of the defendants
namely defendant No. 5 is old and widow and defendant
No. 3 is under financial distress. Thus, the sale to third
party is the mode whereby they can reap maximum profits
as the plaintiffs intend to buy out the property at lesser
value.
The defendant No. 1 is an association of the person
wherein the ownership vests in the composite whole in the
form of firm as against the ownership in the individuals.
d) The defendants submit that the plaintiffs have been approached
even after passing of the ex-parte order, but the plaintiffs have
not attempted to resolve this impasse and rather insisted upon the
creating obstacles in the sale of the property to the third party.
The event post passing of the exparte order shows that even the
plaintiffs are not interested in getting his share of profits in the
form of money but rather have their own motives to get the
property.
e) It is submitted by the defendants that pursuant to the passing of
interim orders by this court, the meeting of co-owners were
called on 05.02.2011 in the presence of notary public and also
two independent persons. The plaintiffs were also called but did
not attend the meeting. It is stated that in the said meeting
unanimous decision was taken and resolved that they would
approach this court for passing of the orders to the effect of the
sale of the suit property as the said property is incapable of being
partitioned being a composite unit by metes and bound. It is also
in the best interest of all the co-owners that the sale is ordered by
the court. The defendants also filed the offer dated 01.02.2011
of Metatron Global Fund LLC who had confirmed its intention
to purchase the suit property for a sale consideration of Rs.155
crores but it should be free from all encumbrances and vacant
possession. In the letter dated 01.02.2011 issued by defendant
Nos.2, 5 and 6 it had also been stated the said buyer was willing
to purchase the suit property alongwith its encumbrances.
It is stated that it was also resolved that it is not interest of
the co-owners to lease out the said property as the co-owners
shall suffer losses. It is also resolved that the said property
should not be partitioned and the co-owners shall suffer losses if
the said property is partitioned. It is stated in the written
statement that the said resolution between the defendants have
been accepted by the defendant No. 2 himself and 3 and 4 by
their attorneys.
f) It is submitted that the conduct of the plaintiffs is un-equitable as
the plaintiffs being minority shareholders just want to impose
their say upon the majority by enforcing the terms which never
existed in the agreement. The said act or conduct of the plaintiffs
are un-equitable considering that the defendants are majority
shareholders intend to the deal with the property otherwise by
selling the same to the third party to serve the larger interest of
the other co-owners as against the limited private gains of the
plaintiffs.
g) It is submitted that even under the Partition Act, the court can
direct the sale of the suit property. The plaintiffs do not have
absolute right to partition. This court should invoke clause 18 of
the agreement and direct sale of the party.
21. In nutshell, I.A. No.2824/2011 (O39 R 4 CPC) was filed
for vacation of interim order dated 01.12.2011 and 11.2.2011 on the
following two grounds :
(i) 2/3rd of the co-owners have resolved to sell the suit property
and in terms of Clause 18 of the MOU the decision is binding
on the other co-owners.
(ii) That the suit property cannot be partitioned by metes and
bounds and the value of the partitioned shares would reduce.
22. The defendants have raised the aforementioned grounds in
the application in order to seek vacation of the interim order passed on
01.12.2010 The plaintiffs have filed the replication and rejoinder.
23. The matter came up for hearing when Mr. Abhinav Vasisht,
learned Senior counsel appeared on behalf of the plaintiffs and Mr.
P.V. Kapoor appeared on behalf of the defendants and have made their
submissions at the bar.
24. The submissions advanced Mr. Vasisht, learned Senior
counsel for the plaintiffs can be outlined to the following terms:
a) Firstly, learned Senior counsel submitted that the suit property is
owned by the co-owners having their shares defined in the
memorandum of understanding entered into between the parties
on 5.12.2005. Therefore, the plaintiffs is well within rights to
seek partition under the provisions of the partition Act. This
court should thus follow the process of the partition of the suit
property as envisaged under the partition Act.
b) Secondly learned Senior counsel submitted that there are clear
admissions of the shares made by the defendant in their written
statement. Thus, the shares of the plaintiffs as co-owners have
never been disputed by the defendants. This court should then
proceed to appoint the local commissioner in order to ascertain
the modes of partition as to whether the suit property can be
partitioned by way of metes and bounds.
c) Thirdly, Mr. Vasisht, learned Senior counsel has urged before
the court that the reading of clause 6, 7 , 8, 16 and 18 would
make it clear that there are matters wherein the consent of all the
co-owners are required and there are matters wherein there are 2/3 rd
majority is required. Thus, the alienation to third party requires the
consent of all the co-owners which means that the defendants stand to
the effect that they can sell the property outside being majority
shareholders and therefore seeking vacation of the interim orders is
totally incorrect as it is the matter which requires the consent of all the
co-owners. Clause 6 is reproduced hereinafter:
d) The plaintiffs in their plaint have referred the Clauses 6, 7 and 8 of
MOU dated 5.12.2005 for the purposes of the present case. The same
are reproduced as under :
"Clause 6
That no Co-Owner shall be able to assign, transfer, license, sell
mortgage or otherwise dispose of his/her share/interest in the
asset(s) or profits of the firm, create a lien, charge or any
encumbrance on his/her share/interest in the asset(s) or profit of the
firm without the prior consent of all the other Co-Owners.
Clause 7
That the Co-Owners shall have the right to transfer his/her shares
to his/her legal heirs or successors during the Co-Owners lifetime
without the prior consent of the other Co-Owners.
Clause 8
That notwithstanding clause 6 above, any Co-Owner shall have the
right to transfer his/her interest in Puri Investment on such terms as
he considers fit to the Co-Owner(s) of his/her choice and upon such
Co-Owner(s) expressing their unwillingness in writing to acquiring
the transferring Co-Owners interest, to circulate the same to other
Co-Owners to take over his/her interest in Puri Investment on such
as he/she considers fit."
It is further argued that the mechanism to sell the property
would be that the defendants can offer the same to the plaintiffs or
seek the consent of the plaintiffs. The defendants have not done
either of them. Accordingly, the defendants ground of seeking
modification of vacation of the order passed by this court is
totally in violation of the MOU entered on 5.12.2005 as the said
sale if ever done by the defendants shall be in violation of the
clear terms of the agreement.
Learned Senior counsel for the plaintiffs in order to
support his argument has relied upon the following authorities
laying down the principles relating to interpretation of statutes
and contracts.
1. Gurdevdatta VKSSS Maryadit & Others versus State of
Maharashtra, (2001) 4 SCC 534 wherein apex court
observed as under:
"26. Further we wish to clarify that it is a cardinal
principle of interpretation of statute that the words of a
statute must be understood in their natural, ordinary or
popular sense and construed according to their
grammatical meaning, unless such construction leads to
some absurdity or unless there is something in the context
or in the object of the statute to suggest to the contrary.
The golden rule is that the words of a statute must prima
facie be given their ordinary meaning. It is yet another rule
of construction that when the words of the statute are
clear, plain and unambiguous, then the Courts are bound
to give effect to that meaning, irrespective of the
consequences. It is said that the words themselves best
declare the intention of the law giver. The Courts have
adhered to the principle that efforts should be made to
give meaning to each and every word used by the
legislature and it is not a sound principle of construction to
brush aside words in a statute as being inapposite
surpluses, if they can have a proper application in
circumstances conceivable within the contemplation of the
statute. Bearing in mind, the aforesaid principle of
construction, if the expression "any new member society"
occurring in the proviso to sub-section (3) of Section 27 is
construed, it conveys the only meaning that it refers to the
societies to be formed hereafter and not of those societies
which have already become member societies of the
federal society. Therefore, the requirement of the
completion of the period of three years from the date of its
investing any part of its fund in the shares of such federal
society would apply only to those societies which became
member society of the federal society after 23.8.2000. In
this view of the matter, the impugned judgment of the
High Court does not suffer from any infirmity. Even if
there remained any doubt in the matter of interpreting the
proviso, the Ordinance that has been promulgated on
27.02.2001, called the Maharashtra Ordinance 10 of 2001,
after the first proviso to sub-section (3), a second proviso
had been inserted, which has removed any doubt or
controversy inasmuch as it has been indicated therein that
the first proviso will not apply to the member society
which has invested any part of its fund in the share of the
federal society before the commencement of the
Maharashtra Cooperative Societies (Amendment) Act,
2000 dated 23.08.2000. The aforesaid Ordinance also has
been given a retrospective effect, to be effective from
23.08.2000. The Ordinance having been held to be valid
by us as stated above, the so-called prohibition contained
in the first proviso to sub-section (3) of Section 27 will not
apply to all those societies which have already become
members of the federal society prior to 23.08.2000."
2. Bay Berry Apartments (P) Ltd & Anr. Vs Shobha, (2006)
13 SCC 737 wherein apex court observed as under:
"34. When a document is not uncertain or does not
contain an ambiguous expression it should be given its
literal meaning. Only when the contents are not clear the
question of taking recourse to the application of
principles of construction of a document may have to be
applied. It is also not a case where there exists any
inconsistency between an earlier and later part of the
document. What is necessary for a true, proper and
effective construction of the will in question is to give
effect to the intention of the propounder of the will. It
will bear repetition to state that an embargo was put on
his sons inheriting the property in absolute terms. Their
title was to be limited. They could enjoy the property
only during lifetime."
3. Kali Ram versus Ram Rattan, 1977 (13) DLT 250 wherein
this court observed as under:
"7. The courts below have referred to Section 7 of
the Act which gives a definition of what is a partnership at
will. It states :-
"Where no provision is made by contract between
the partners for the duration of their partners, or for
the determination of their partnership, the
partnership is "partnership at will"."
This Section shows that a partnership at will is a form of
partnership in which the parties do not fix a duration of the
partnership and do not make any provision as to how the
partnership is to be dissolved. Therefore, if the partners do
not make an arrangement as to how the partnership is to
be dissolved the partnership ipso facto ceases to be a
partnership at will. This is the argument that has impressed
both courts below. They have looked at the terms of
section 7, they have looked at the partnership deed and
stated that as the parties have agreed as to how the firm
should be dissolved, the partnership cannot be at will
inspire of the statement to that effect contained in the
partnership document. The question to be determined is
whether this is correct. And secondly, even if this was so,
whether the partnership was dissolved by the notice
actually given in this case."
e) Learned senior counsel further argued that the plea of the
defendants that clause 18 would be applicable as the co-owners
have agreed to dissolve/liquidate the co-ownership is factually
incorrect as the same is not coming out of the resolution dated
5.2.2011. There is no document on record to show that the
defendants have ever decided to wind up or dissolve the said co-
ownership. Therefore, it can be assumed that the defendants are
actually intending to dissolve the co-ownership.
Further, it is argued by Mr. Vasisht, learned Senior
counsel that even the defendants resolution do not actually
constitute 2/3rd Majority as the defendant No. 2 is not the sole
owner of 19/60 share as is being contended by her and
defendants share if added together do not constitute 2/3rd
majority.
f) Learned Senior counsel for the plaintiffs submitted that the
submission of the defendants that the suit property is not
partitionable is totally untenable or ill-conceived in as much as
the suit property being more than 40000 sq ft built up area on a
freehold plot can be easily be partitioned by metes and bounds.
Even otherwise, without adopting the measures prescribed under
law by way of appointment of local commissioner and clear
ascertainment thereto, it cannot be said that the suit property
cannot be partitioned.
Mr. Vasisht further submitted that the defendants plea that
the smaller shares in fraction will diminish the valuation is also a
matter of ascertainment and it can be said to be on mere saying
of the defendants unless there is a proper ascertainment by the
court through the legal channels.
g) Mr. Vasisht, learned senior counsel also disputes the aspect of
the offer of some Metatron Global Fund LLC, there is no legal
and valid offer for purchase of the suit property as the offer
provides the vacant peaceful possession whereas admittedly,
there are sitting tenants occupying 7500 sq ft of the suit property.
Thus, in no probability the offer made by the Metatron Global
Fund LLC can culminate into the sale of the suit property.
By making the above submissions, Mr. Vasisht concluded
that in the present case, the court may conveniently order of
preliminary decree of partition after ascertaining the possibility of the
partitioning the same by adopting the mechanism prescribed under the
law.
25. Per contra, Mr. P.V. Kapur, learned Senior counsel,
appearing on behalf of the defendants has made his submissions which
can be crystallized in the following manner:
a) Mr. Kapur, learned Senior counsel firstly submitted that the
plaintiffs in the present suit is seeking the partition of the share in
the property which is governed by Memorandum of
Understanding and thus the plaintiffs are clearly flouting the
terms of the memorandum of undertaking by resorting the
partition under the Partition Act.
This has been explained by Mr. Kapoor on reading the
terms of the agreement clause 6, 8 and 18 wherein it has been
explained by Mr. Kapoor that the clause 6 relates to the embargo
wherein one co-owner cannot transfer the rights to third party
without the consent of all the co-owners. Unlike clause 6, clause
8 provides that the co-owner can transfer his or her share to the
other respective co-owner. Clause 18 however is departure from
these clauses which does not relates to rights of the single co-
owner and it gives the majority of 2/3rd co-owners a right to
decide over the rights and liabilities of the co-owners and also
any dispute relating to profit or loss or relating to dissolution or
winding of the business.
In the present case, the rest of the co-owners except the
plaintiffs intend to wind up their business by selling the suit
property as they are under financial distress and also no useful
purpose shall be served by running the said co-ownership.
Accordingly, as per Mr. Kapur, the said power of winding up of
the business and selling the property flows from clause 18 of the
agreement which has been entered between the parties including
the plaintiffs.
Now, once the defendants which are majority co-owners
are attempting to find a profitable buyer in exercise of their
powers, the plaintiffs could not have any objection. The plaintiffs
by resorting to the mode of partition is rather breaching the clear
terms of clause 18 and thus guilty of violation of the terms of the
agreement.
In order to support his contention, Mr. Kapoor also relies
upon some letters which have exchanged between co-owners and
also the resolution dated 5.2.2011 to the effect of the decisions
of the defendants to sell out the suit property.
In view of the same, as per Mr. Kapur, the present suit is
not maintainable in view of the MOU and its terms and condition
and the defendants acts cannot be faulted with.
b) Secondly Mr. Kapoor, learned senior counsel submitted that
by entering into MOU, the plaintiffs have waived its right to seek
partition by entering into such agreement with open eyes.
In order to support his contention, Mr. Kapoor relies upon
the judgment passed in Lachoo Mal vs. Radhey Shyam, (1971)
1 SCC 619 wherein the court said that the statutory rights can be
waived by contracting otherwise if the same are not against
public policy. It is submitted that the agreements which are
contracted to limit the benefit which ought to have accrued to the
party may not be said to be against the public policy and only
those contracts which are aimed at achieving unlawful object by
seeking to agree to do something which is prohibited can be said
to be ones against the public policy.
c) Thirdly, Mr. Kapur, learned senior counsel argued that the
plaintiffs have their own oblique motives to buy out the suit
property at the lesser value rather than to benefit the other co-
owners by selling the said property outside. The plaintiffs in this
way are seeking to invoke the right which never exists in MOU
and therefore the suit property cannot be partitioned.
d) Fourthly, Mr. Kapur submitted that the said suit property
being a composite unit and the co-owners are large in number,
the same cannot be partitioned by the method of the metes and
bounds. It is also argued that the suit property if sold as a one
unit shall fetch much higher value than the one which sold in
fractions and ultimately that will be a loss proposition for all the
co-owners. It is submitted by Mr. Kapur that even otherwise, the
court can order direct sale in the partition suit if it is realized that
the partitioning by metes and bounds shall not be beneficial for
the co-owners. Accordingly, this court should order the sale of
the property instead than exercising the option of partitioning
through metes and bounds.
Mr. Kapur relied upon the following authorities proposition
wise:
a) R. Ramamurthy Iyer vs. Raja v. Rajeshwara Rao, 1972
(2) SCC 721 to rely upon the proposition that the partition
is not absolute conclusive right. The court can refuse
partition if it appears inconvenient or unreasonable having
regard to inter alia number of shareholders.
b) Ashanullah versus Kali Kinkur Kur, (ILR 10 Cal 674),
to support the proposition that the court can refuse to grant
partition where partition would lead to reduction in the
intrinsic value of the property.
c) Abdullah Haji versus Kunhamina, AIR 1961 Kerala
674 to say that if the property cannot be partitioned to give
every co-owner a share, partition ought not to be granted
and sale should be resorted to.
e) Fifthly, Mr. Kapur submitted that the memorandum of
understanding entered into the parties will operate as the family
settlement whereby the parties by way of an agreement have
settled their rights and agreed to amongst themselves to be
governed by the rights flowing from the agreements. Thus, the
agreed mechanism for resolution of dispute would be the one
provided by the MOU and the plaintiffs cannot therefore seek
partition of the suit property by breaching the said agreed dispute
resolution mechanism wherein the majority decision would be
binding upon the minority co-owners.
f) Sixthly, Mr. Kapur submitted that even if the said
submissions are not found to be meritorious, still the co-
ownership vests in Defendant No. 1 and not in the individual
persons and the parties to the suit are merely association of the
persons. The consequence of this would be that the individual
persons/ parties to the suit cannot claim themselves to be the
owner and it is only the defendant No. 1 wherein the ownership
vests and thus cannot seek partition.
26. In order to support his argument on the association of
persons, Mr. Kapur relied upon the judgment passed by the apex court
in Ramanlal Bhailal Patel vs. State of Gujarat, AIR 2008 SC 1246
wherein the apex court observed as under:
"14. The extent of land that could be held by the
appellants depends upon the interpretation of the word
„person‟ in section 6(1) of the Ceiling Act which provides
that "no person shall be entitled to hold land in excess of
the ceiling area". If the ten co-owners are considered as
an „association of persons‟ or „body of individuals‟ and
consequently as a „person‟, then the ten co-owners
together as a person, will be entitled to only one unit of
land which is the ceiling area per person. But if
„association of persons‟ or body of individuals is not a
„person‟, or if a co-ownership is not an association of
person/body of individuals, then each co-owners or the
family of each co-owner, as the case may be will be a
separate „person‟ having regard to the definition of person
in section 2(21) of Ceiling Act, in which event, each
family will be entitled to hold one unit of land."
27. Mr. Kapur drawing the aid from the aforementioned
observations of the Supreme Court has argued that the present case
also relates to the similar situation wherein the parties are merely
association of persons and the ownership actually vests in the firm.
This has been further sought to be strengthened by Mr. Kapur on facts
by placing reliance upon the following facts:
a) The conveyance deed of the property is in the name of "Puri
Investments".
b) The conveyance deed is not signed by all the co-owners in the
name of either of them but is in the name of Puri Investments.
c) None of the co-owners can sign any individual document
transferring any right in the property.
d) Property tax is paid by Puri Investments
e) Rent was received in the name of Puri Investments.
f) TDS was issued in the name of Defendant No. 1 by using Pan of
V.P. Puri
h) In co-ownership there is no concept of liquidation and winding
up
i) Plaintiff himself in the memo of parties refers to the co-
ownership or association of persons and use the term
interchangeably.
28. All the aforementioned facts also find mention in the list of
reliance and written synopsis handed over by the defendants at the later
date. Mr. Kapur thus argued that from the above narrated facts, it is
clear that the ownership actually vests in the defendant No.1 and not in
the individuals and the parties are merely association of the persons and
cannot claim to be owners in their own right and consequently cannot
claim the partition of the suit premises.
29. By making aforementioned submissions, Mr. Kapur
submitted that the interim order passed on 1.12.2010 must be vacated
by the court as the suit property in view of his submissions cannot be
partitioned. The defendants may be allowed to sell the property to the
third party so that it can fetch a better price than what has been offered
by the plaintiffs to serve their own interest.
30. In rejoinder, Mr. Vasisht learned Senior counsel strongly
refuted the contentions of the defendants on the aspect of association of
person. It is argued that the defendants are completely wrong
contending that no ownership vests in the parties. This has been
explained by relying upon the following factual situation:
a) The issue regarding TDS certificates as already raised by the
plaintiffs in their letter to defendants that the rent should be
received directly by the co-owners and TDS should be paid by
them. The said issue has been addressed in the plaintiffs‟ letter
dated 25.8.2009 and notice dated 6.10.2009 to the defendants.
b) The reading of MOU itself makes it clear that the intention of the
parties to act as co-owners and not as Association of Persons.
This has been supported by the fact that if, Puri Investment
would have been association of persons, then it would have been
taxed separately.
c) The Balance sheet of the defendant No. 1 records a note wherein
it is mentioned that Puri Investment is a group of co-owners
having definite and ascertained share in the property known as
Saraswati Bhavan. The said note in the balance sheet further
makes it clear that the intention of the parties was to treat
themselves as co-owners and not as of Association of persons.
d) It is also mentioned that in MOU that since no business was
carried out by the said firm, it was mutually agreed by the parties
that the assets of the said firm shall vest amongst the parties as
co-owners which again makes it clear that the parties have
themselves agreed to act as co-owners and not as the firm.
e) Clause 1 of the MOU records and clarifies that the parties to the
above memorandum of the understanding hereby become and
treated as co-owners.
31. It is thus argued by Mr. Vasisht that the aforementioned
factual situation speaks for itself that the co-ownership vests in the
individuals and not in the firm. Therefore, every co-owner is an
individual right holder having ownership on every part of the property
till the time it is partitioned and thereby entitling him for the right to
seek partition.
The defendants in order controvert the submissions of the
plaintiffs have further filed rebuttal submissions disputing all the points
above.
32. I have gone through the plaint, written statement, replication
and documents filed by the parties. I have also given careful
consideration to the oral submissions advanced at the bar and written
submissions given by the parties and shall now deal with them in
seriatim.
33. The parties have made number of submissions as indicated
above. However, the first point in my view which falls for
consideration is what is the status of the parties in the suit and what is
the status of the defendant No. 1 in the suit. Whether the defendant No.
1 is a partnership or association of persons or co-ownership or whether
the parties other than defendant no. 1 can be said to be co-owners. The
answer to this question will enable this court to proceed further in the
matter depending upon the status of the parties by adopting the right
recourse permissible under the law. This will also enable the court to
understand whether the suit property can be partitioned or not.
34. Before initiating the discussion on the aspect of the status of
the parties in the suit, it is worth noting few facts in the case as a matter
of backdrop to this discussion.
a) It is averred in the plaint and also in the written statement that
the defendant No. 1 originally started as a partnership firm and
no dispute to the said averment has been made.
b) It is also stated that the said firm was dissolved subsequently and
it was mutually agreed amongst the partners to hold the suit
property as co-owners.
35. The parties nowhere place on record as to when the said
firm was dissolved. The parties also do not file the documents and nor
place any such deed of dissolution on record to show as to when such
dissolution had occurred and when such arrangement was agreed by the
parties to be carried on as that of the co-owners and whether the parties
at the time of dissolution were transferred such shares in the properties
by entering into such transfer deeds so as to become co-owners in their
own right. This is due to the reason that during the subsistence of the
partnership, the said partners in the defendant No. 1 were only share
holders in the profits and losses of firm and the property actually
belonged to the firm. All these unanswered questions necessitated this
discussion.
36. Firstly, it becomes necessary to discuss in law as to what is
nature of the partnership property and what happens when the firm is
dissolved.
The Indian Partnership Act, 1932 provides for a mechanism for
dealing in property which has been the subject matter of partnership
firm upon dissolution of the firm. In this context, the relevant section
of the Partnership Act relating to the same is reproduced herein after:-
"Section 46 :
46. Right of partners to have business wound up after
dissolution. On the dissolution of a firm every partner or his
representative is entitled, as against all the other partners or their
representatives, to have the property of the firm applied in
payment of the debts and liabilities of the firm, and to have the
surplus distributed among the partners or their representatives
according to their rights."
37. From the bare reading of the above section 46, it becomes
clear that the assets /properties belonging to the partnership vests in the
firm as the section uses the expression "property of the firm" and not in
the individuals and upon dissolution after settling the debts of the firm,
the sum realized out of the assets of the firm is divided amongst the
partners to the extent of their profit sharing ratio as a surplus. This also
shows that the partner‟s interest in the estate or property of the firm is
confined to the realization of the sum arising of the sale of the property
and not to treat himself as co-owner.
38. In this context, the observations of Supreme Court in the
case of Commissioner of Income Tax, Madhya Pradesh Vs. Dewas
Cine Corporation; AIR 1968 SC 676 are worth noting wherein the
court observed thus:
"Under the Partnership Act, 1932, property which is brought into
the partnership by the partners when it is formed or which may
be acquired in the course of the business becomes the property
of the partnership and a partner is, subject to any special
agreement between the partners, entitled upon dissolution to a
share in the money representing the value of the property. When
the two partners brought in the theatres of their respective
ownership into the partnership, the theatres must be deemed
to have become the property of the partnership. Under s. 46
of the Partnership Act, 1932, on the dissolution of-the firm
every partner or his representative is entitled, as against all
the other partners or their representatives, to have the
property of the firm applied in payment of the debts and
liabilities of the firm, and to have the surplus distributed
among the partners or their representatives according to
their rights. Section 48 of the Partnership Act provides for the
mode of settlement of accounts between the partners. It
prescribes the sequence in which the various outgoing are to be
applied and. the residue remaining is to be divided between the
partners. The distribution of surplus is for the purpose of
adjustment of the rights of the partners in the assets of the
partnership; it does not amount to transfer of assets.
On dissolution of the partnership, each theatre must be
deemed to be returned to the original owner, in satisfaction
partially or wholly of his claim to a share in the residue of
the assets after discharging the debts and other obligations.
But thereby the theaters were not in law sold by the
partnership to the individual partners in consideration of
their respective share in the residue."(Emphasis Supplied)
39. Few things immediately become clear from the reading of
aforesaid observation of the apex court which are:
a) That once the property being in ownership of the partners is
brought into the partnership, it becomes the property of the firm.
b) Every partner‟s interest in the partnership firm upon dissolution
is confined to the sharing the money representing the value of the
property in the profit sharing ratio. This is subject to special
agreement wherein the partners may agree that instead of the
money, some asset shall be allotted as a matter of adjustment or
any other agreement.
c) Upon dissolution, the said property is returned to the owner as a
matter of adjustment of his claim either in the form of money or
property. But the said property cannot be said to be sold in law
to the partner in consideration of his share.
40. In Dewas (supra), it was also argued before the Supreme
Court that the partners can agree anything by way of special agreement
as the mode prescribed in the dissolution is subject to special
agreement and thus the property allocated to the partner can be subject
to the arrangement between the partners wherein they can agree that
the said allocation can be deemed to be in law the sale. This contention
was raised by the revenue department which has been negated by the
court in the following manner:
"The Solicitor-General appearing for the Revenue submitted that
each partner is entitled to have the assets of the partnership sold
for discharging the debts and obligations of the partnership, and
for the. purpose of dividing the residue among the partners if
property is allotted to the partners in satisfaction of their claims,
the transaction must be deemed in law to take the form of a
notional sale of the property to the partner in consideration of the
money value of his share. Counsel relied upon the statement of
the law in Lindley on Partnership, 12th Edn., at p. 568:
"........in the absence of a special agreement to the contrary, the
right of each partner on a dissolution is to have the partnership
property converted into money by a sale, even although a sale
may not be necessary for the payment of debts.",
and also upon the decision of this Court in Addanki Narayanappa
and another v. Bhaskara Krishnappa and others (1).
"A partner may, it is true, in an action for dissolution insist
that the assets of the partnership be realised by sale of its
assets, but where in satisfaction of the claim of the partner to
his share in the value of the residue determined on the
footing of an actual or notional sale property is allotted, the
property so allotted to him cannot be deemed in law to be
sold to him."
41. Thus, the Supreme court has answered the said question as
well that even if the partners agree otherwise to take the property
instead of the monetary value of sale of the property in adjustment of
the share of the partner, the said transaction shall not be deemed in law
to be sale.
42. The same view has been affirmed by the Supreme Court in
C.I.T., U.P Vs. Bankey Lal Vaidya (Dead) By L.R.S; 1971 AIR
2270, wherein Supreme Court observed as under:
"In the case in hand there is no sale and payment of price, but
payment of the value of share under an arrangement for
dissolution of the partnership and distribution the assets. The
rights of the parties were adjusted by handing over to one of
the partners the entire assets and to the other partner the
money value of his share. Such a transaction is not in our
judgment a sale, exchange or transfer of assets of the firm. In
Commissioner of Income-tax, Madhya Pradesh, Nagpur &
Bhandara v. Dewas Cine Corporation in dealing with the
meaning of the expressions "Sale" and "sold" as used in s. (10)
(2) (vii) of the Income-tax Act, 1922, this Court observed that
the expression "sale" in its ordinary meaning is a transfer of
property for a price, and adjustment of the rights of the partners
in a dissolved firm by allotment of its assets is not a transfer for a
price. In that case the assets were distributed among the partners
and it was contended that the assets must in law be deemed to be
sold by the partners to the individual partners in consideration of their
respective shares, and the difference between the written-down value and the
price realised should be included in the total income of the partnership under
the second proviso to s. 10(2) (vii). This Court observed that a partner may, it
is true, in an action for dissolution insist that the assets of the partnership be
realised by sale of its assets, but property allotted to a family in satisfaction of
his claim to his share, cannot be deemed in law to be sold to him."
(Emphasis Supplied)
43. The proposition of law which emerges from the above
discussion that the property allotted to a partner upon dissolution of firm
cannot be deemed under the law a transfer or a sale of the same merely upon
dissolution unless there is a specific instrument which can be shown to effect
the said transfer has been done besides the dissolution deed.
44. Now, the question which arises for consideration is as to
whether the partners of the firm upon dissolution can claim themselves to be
the co-owners of a property of the partnership firm or Is interest of partners in
the firm is co-extensive with that of the co-owner and whether the partner can
regard themselves as co-owners merely upon dissolution either by way of
agreeing to divide the said property or agree to claim themselves as co-
owners.
45. The question whether the interest of the partner can be equated
with that of the co-owner stands answered by the Full Bench Of the Gujarat
High Court in the case of Vrajlal Makandas Valiya vs L.D. Joshi, Collector,
(1971) 12 GLR 586 wherein Hon‟ble P.N. Bhagwati CJ (as his lordship then
was) speaking for the full bench departing from the view of the Mysore High
Court observed thus:
"It is true that the Mysore High Court has taken a different
view in Venkatachalapathi v. State (supra) but with the greatest respect
to the learned Judges who decided that case, we find ourselves unable
to accept that view. It appears from the judgment in that case that
no argument was advanced before the learned Judges based on the
distinctive character of the interest of a partner in a partnership.
The interest of a partner in the partnership assets was treated as if
it were an interest of a co-owner in property. The learned Judges
held that if the result intended to be achieved by the execution of the
instrument in question was extinguishment of the rights and interest of
the first party in certain special parties of the dissolved firm and
corresponding augmentation of the rights and interest of the second
party, in consideration a certain sum of money paid to the first party
there was no reason why the transaction should not be regarded as a
sale of the undivided interest of the first party to the second party. This
reasoning with the greatest respect overlooks the true nature of the
interest of a partner in a partnership and fails to take into account
what really happens when a partner retires from a partnership
and takes away either in cash or in property his share in the
partnership. We cannot accept this decision as laying down the
correct law and in any event in view of the decision of the Supreme
Court in the case of Commissioner of Income-tax v. Dewas Cine
Corporation (supra), it must be regarded as devoid of authority."
(emphasis Supplied)
46. From the bare reading of the aforesaid observation, it
becomes further clear that treating the dissolution document as a
conveyance deed or a document of transfer means treating the interest
of the partners and co-owners co-extensive which actually is not and
would also be going against the dictum of Dewas(Supra). Thus, the
proposition discussed above that the merely upon dissolution, the
property allotted to the partner cannot be treated as transfer further gets
extended which is that until the document effecting such transfer is
executed, the said dissolution cannot be regarded as deed of transfer.
Therefore, the partners cannot become co-owner upon allotment of the
property in the event of dissolution of the firm.
47. The residual part of the proposition framed above still
remains to be considered which is that what is the consequence of the
partners agreeing upon dissolution to divide the said partnership
property amongst themselves and whether the said agreement would
confer the right in the partners as co-owners. This question is again
answered by the another Full Bench decision of the Gujarat High Court
in the case of The Chief Controlling Revenue Authority Vs.
Chaturbhuj And Anr, AIR 1977 GJ 1 wherein the Full Bench of the
court after analyzing the dictum of Dewas (Supra) and analyzing the
differences between the co-ownership and partnership and also above
quoted dictum of its own full bench in Vello Industries(Supra) observed
as under:
"In our opinion, what the legal position which ultimately
emerges from Naravanappa v. Bhaskara Krishnappa (supra),
Dewas Cine Corporation (supra). Commissioner of Income-tax
v. Bankey Lal Vaidya, (AIR 1971 SC 2270) (supra) and Velo
Industries (supra) is that whatever a partner gets either in the
shape of money or in the shape of an immovable property which
prior to the dissolution was a property of the partnership firm, is
his share in the surplus of the assets of the firm which remained
after the liabilities and other outgoings of the firm are provided
for. There is no concept of co-ownership amongst partners
during the subsistence of the partnership. The partnership
properties are not held by the partners as co-owners. The
property belongs to the firm and it merely vests in all the
partners because the firm has no legal entity. But such
vesting does not mean that all the partners are the co-owners
of the Property. The distinction between co-ownership and
partnership pointed out by the Supreme Court in Champaram
Cane Concern v. State of Bihar, (AIR 1963 SC 1737) (supra)
must be borne in mind in this connection. Moreover, what
happens at the time of dissolution is merely handing over to each
partner his share in the surplus of the partnership assets after all
the liabilities and outgoings are provided for and if any particular
property which prior to the dissolution was part of the
partnership is allotted to the partner it is merely by way of
adjustment of his share in the assets of the partnership.
As the Supreme Court pointed out in Dewas Cine Corporation's
case (supra) the distribution of surplus is for the purpose of
adjustment of the shares of the partners in the assets and it is in
the course of such adjustment that one or other property - may be
moveable, may be immovable - comes in the allotment to a
particular partner. The concept of partition or the concept of
co-owners of the property dividing or agreeing to divide such
property in severalty can never apply to what happens when
a firm is dissolved and one property or another is allotted to
a partner." (Emphasis Supplied)
48. From the reading of the aforesaid observation, it becomes
abundantly clear that upon dissolution of the partnership, the mutual
agreement between the partners to treat themselves as a co-owners is
inconsequential in law in as much as the same may not confer any title
in the said immovable property which otherwise does not exist in the
law. Therefore, the agreement to divide such property in severalty and
treatment of the partners amongst themselves as co-owners without
respective conveyance deeds in favour of the partners does not confer
them the titles as co-owners.
49. Even if one sees the situation as it was existing uptil case of
Dewas (Supra) and apply the principles set out therein which are that
upon dissolution, the allotment of the property to the partner cannot be
regarded as sale or transfer. Then, afortiori, it follows the conveyance
deed is essential in addition to dissolution and act of dissolution cannot
coincide with the conveyance which is the dictum of Vraj(supra).
Lastly, once it is realized that the conveyance deed is separately
required in order to confer such title upon the partner or person, Then,
any covenant entered between the erstwhile partners to treat themselves
as co-owners without the actual conveyance deeds is inconsequential in
law as no right of that nature exists under the law as agreed by the
parties which has been the exposition of the law in Chaturbhuj(Supra).
50. Applying the said principles of law to the present case in
hand, if one sees the status of the defendant No. 1 firm as it existed
earlier when it started was of partnership firm, it is stated by the parties
that the said firm was dissolved. Firstly, it is not informed by placing
the documents on record as to when such firm was dissolved. Even
assuming if the said fact would have been informed by placing deed of
the dissolution on record, still the said factum of dissolution will not
make the partners as co-owners of the properties on their ipse dixit or
as per their own agreement unless the mechanism discussed above
follows which provides of deed of transfer or transfer document in
favour of each of the parties or persons which will vest the said rights
in individuals and not in firm.
51. But in fact, neither the dissolution deed is placed on record
nor the conveyance deed has been placed on record to show the perfect
title of the parties as co-owners and the parties are just silent about the
factum of dissolution except to the extent of saying that the said firm
was in fact dissolved and it was agreed between them that they will
treat themselves as co-owners and proceed to run the same firm again.
Going by the word of the parties, if the status of the parties as co-
owners is attained on the basis of their mutual agreement in the form of
MOU consequent upon dissolution of the partnership, then for the
purposes of the prima facie view to be taken in order to decide
injunction application, it seems extremely doubtful as to how the
partners in the defendant No. 1 firm attain the status of the co-owners
by agreeing to divide the said shares in the absence of the conveyance
or transfer deeds vesting such rights in view of the exposition of law
laid down in Dewas (supra), Vraj(supra) and Chatturbhuj(supra).
52. Accordingly, it can also be safely said for the prima facie
purposes that the defendant No. 1 firm which initially started its genesis
as a partnership firm, the partners therein cannot agree to regard
themselves as co-owners and cannot agree to divide the said property
in severalty with each other. Their status uptil the date of MOUs is no
different from that of the partners only as there is no vesting of rights in
the co-owners.
53. Now the status of the parties can be looked at from another
perspective too which is that the status can be seen from the events
which has happened after the dissolution of the said partnership. If the
memorandum of understandings as agreed by the parties are looked
into, the presumption still goes in favour of the partnership besides the
fact the parties could not have acquired the titles as co-owners without
entering into the conveyance deeds.
54. This can be seen again by realizing the difference between
the partnership and co-ownership. The reference is invited to often
quoted excerpt from Lindley on Partnership ((Twelfth Edition Mae 57)
who analyzes the said difference very minutely. The Learned Author
observes as under:-
"main differences between co-ownership and co-partnership
have been compared. One of the principal differences is that co-
ownership is not necessarily the result of agreement, whereas
partnership is ... ... ... ... ... The second difference is that co-
ownership does not necessarily involve community of profit or of
loss, but partnership does ... ... ... ... ... The third difference is
that one co-owner can without the consent of the other, transfer
his interest etc. to a stranger, A Partner cannot do this ... ... ... ...
... In a partnership each partner acts for all. In a co-ownership
one co-owner is not as such the agent, real or implied, of the
other."
55. The said excerpt has been approved by the Supreme Court
in the case of Champaran Cane Concern vs. State Of Bihar And Anr.
1963 AIR 1737 followed by several courts from time to time.
56. If the aforesaid differences between the partnership and co-
ownership as elucidated above and applied by Supreme Court in
Champaran (supra) as a matter of tests for determining the status of the
entities are applied to the present case, the conclusion is inescapable
which is that the parties till date as per the current arrangement are
operating as a partnership. This can be seen by looking the MOU and
its clauses as under:
i) Clause 7 of Memorandum of understanding contains the
clause that one co-owner can transfer the share to another
co-owner without the consent of any co-owners but cannot
transfer the same to the third party without the consent of
all the other co-owners. This can happen even in
partnership where one partner can transfer his or her
share/ profit sharing ratio by retiring himself from the
partnership to another partner or inter se, but cannot
transfer his share to the third party without the consent of
other partners and the same can be a ground for
dissolution also.
This shows again the color of partnership rather
than co-ownership. Reliance is again placed upon the
excerpt of Lindley which states that the co-owner is a
person who can transfer the share absolutely to the third
party, however, the partner cannot, is one of the
fundamental differences between the partners and co-
owners, which differentiate a partner from that of co-
owner. This is due to the reason that the co-owner is the
owner of the property in his own right and can at his will
transfer or alienate his share to stranger unlike partner
who is not the owner in his own right. Therefore, even if
the parties to the MOU call themselves to be the co-
owners but by virtue of their covenant/ understanding have
imposed fetters upon themselves on the basis of
restrictions on the transfer of their shares to the strangers
which again take the parties back to the nature of
partnership as against the ascertained rights of the co-
owners. Thus, it cannot be said that they are perfectly
operating themselves as co-owners rather they are still
operating as that of partnership under the guise of co-
owners. It is only the nomenclature which the parties have
adopted as co-owners and actually they are the partners
wherein the rights to transfer the properties are fettered
covenant requiring the consent of all other co-owners.
ii) Similarly, the basic difference between partnership and co-
ownership as elucidated by Lindley is that partnership is
necessarily contractual but co-owner is not. Here again,
there is complete departure by the parties wherein the
parties have entered into the MOU calling themselves as
co-owners but imposing the fetters like partnership in the
said covenant, making the arrangement purely contractual
in nature. Therefore, again the said so-called co-owners
shall be subject to the arrangements between them in the
MOU will not act as independent co-owners entitling them
to seek partition amongst themselves.
57. Moreover, the contents of MOU provides for the profit
sharing ratio or proportion in clause 4, capital of the co-owners in
clause 5, continuation of co-ownership even in the event of death of
any of the co-owners in clause 9, appointment of the managing,
maintenance of the accounts by the co-ownership, acquisition of the
property by the co-ownership in its own name, dissolving and winding
up of the firm. All these ingredients in the agreement shows that the
intention of the parties was to run or continue the partnership or the
entity Puri Investment as a partnership.
58. The incidents like capital and or profit sharing ratio
normally are present is partnership, continuation of the firm even in the
case of the death of the partner is one of the covenant which the
partners usually enter in order to continue the partnership and avoid
dissolution in the event of the death of the partner. The dissolution or
the winding occurs of a partnership firm and not of the co-ownership.
Similarly, it is the partnership which can acquire the property and not
the co-ownership.
59. Even if one replaces the word partnership instead of co-
ownership in MOU attempts to read the same in that manner, it can be
seen that all the covenants entered into by the co-owners become the
ones of partnership. But this cannot happen as there is difference
between co-ownership and partnership.
60. The above discussion makes it clear that the parties has and
had the intention of running Puri Investment like a partnership concern
and not to act as the independent co-owners by entering into such
covenants. This is in addition to the factor that the parties including the
plaintiffs and defendants could not have acquired such rights at the first
place as co-owners in law upon dissolution of the partnership.
61. It is trite law that the intention of the parties are to be seen
by reading the whole instrument in its entirety and the title of the
instrument or the nomenclature or terms adopted in the instruments do
not necessarily define the relationship or are decisive of the nature of
the relationship between the parties. The parties may enter into the
lease agreement calling themselves as licencees. Similarly, the parties
may call themselves as co-owner while they are actually operating as a
partners. ( Kindly see judgment passed in Mrs. M. N. Clubwala &
Anr. Vs Fida Hussain Saheb, 1964 SCR (6) 642 wherein the apex
court observed that Whether an agreement creates between the parties
the relationship of landlord and tenant or merely that of licensor and
licensee the decisive consideration is the intention of the parties, which
has to be ascertained on a consideration of all the relevant provisions in
the agreement. In the absence, however, of a formal document the
intention of the parties must be inferred from the circumstances and
conduct of the parties.).
62. It is well settled that the party cannot be allowed to take the
advantage of the part of the agreement or covenant therein and avoid
the rest of the same which is operating to its detriment.(kindly see the
judgment of Supreme Court in relation to election C. Beepathumma &
Ors. Vs. V.S. Kadambolithaya & Ors., 1964 (5) SCR 836, wherein the
apex Court relied on Maitland as saying: "That he who accepts a
benefit under a deed or will or other instrument must adopt the whole
contents of that instrument, must conform to all its provisions and
renounce all rights that are inconsistent with it."; (Maitlands Lectures
on Equity, Lecture 18). The apex Court also took note of the principle
stated in White Tudor's Leading Case in Equity volume 18th edition at
p.444 - wherein it is stated, Election is the obligation imposed upon a
party by Courts of equity to choose between two inconsistent or
alternative rights or claims in cases where there is clear intention of the
person from whom he derives one that he should not enjoy both... That
he who accepts a benefit under a deed or will must adopt the whole
contents of the instrument."
63. In the case of New Bihar Biri Leaves Co. And Others v.
State Of Bihar And Others Nathalal Doshi And Others Vs. State
Of Bihar And Others, (1981) 1 SCC 537, the apex Court observed
that it is a fundamental principle of general application that if a person
of his own accord, accepts a contract on certain terms and works out
the contract, he cannot be allowed to adhere to and abide by some of
the terms of the contract which proved advantageous to him and
repudiate the other terms of the same contract which might be
disadvantageous to him. The maxim, qui approbat non reprobat (one
who approbates cannot reprobate), applies in our laws too.)
64. From the above, it is clear that even if the situation as it
exists today from the clauses of MOU if analyzed on the principles
differentiate partnership from that of co-ownership which has been
approved by the Courts from time to time. It is clear that the clauses
which have been agreed by the parties calling themselves as co-owners
are in the nature of partnership/ quasi-partnership and it cannot be said
that the parties are perfectly operating themselves as co-owners or co-
shareholders as their rights to consider the property or to enjoy the
property are fettered by the covenant in the form of MOU and it is
purely contractual affair.
The above stated conclusion as to the status of the
defendant No. 1 is in the nature of partnership also finds support from
the submissions advanced by the parties on facts. This can be explained
as under:
a) The Parties are attempting to dispute between themselves as
to whether co-ownership vests in individual or in the firm.
Immense labour has been done by both the parties to
differentiate them by explaining to the Court the concept of
association of persons with that of co-ownership and there is
dispute between the parties as to whether the co-ownership
vests in the firm or in individual partners. This has happened
due to the peculiar nature of arrangement or MOU which has
been entered into by the parties giving legal shape wherein it
started as a matter of partnership but thereafter the parties
have mutually agreed to call themselves as co-owners and
thereafter mutually agreed to impose fetters upon their rights
and that led to the question as to whether the property rights
vest in the firm or in the respective individuals. Further,
when the parties themselves are disputing as to where the co-
ownership vests, either in the individuals or in the firm in
order to protect their rights, it shows that they are unclear
about their rights and further it also shows that they are not
operating themselves perfectly as co-owners as co-ownership
vests in individuals and not in the firm and once this argument
is taken that the co-ownership vests in the firm axiomatically
the presumption tilts towards partnership.
b) It is very easy to understand if one looks at the same from the
standpoint where the partnership ended as discussed above in
Dewas (supra) that the partnership property vests in the firm
and upon dissolution it cannot be said that the partner who
has been allocated the property is a co-owners. Therefore, it
cannot vest in the individual and the attempts made by the
parties to distinguish the concept of co-ownership in the
individuals and co-ownership in the firm is due to the reason
that parties are themselves not clear about their rights and
unsure which of the of the stand would be correct.
c) The plaintiffs in their letter admittedly referred Mr. V.P. Puri
as Managing Partner to which the defendants responded that
it is co-ownership and called upon the plaintiffs‟ counsel to
correct its record. Thereafter, the plaintiffs filed a suit
wherein the defendant No. 1 is arrayed as Co-ownership and
or unregistered association of persons. When the defendants
sought to explain during the course of argument about the
distinction between the association of person and co-
ownership and sought to urge before the court that the co-
ownership vests in the firm and not in individual, the same
very plaintiffs have taken aback whereby the plaintiffs filed
additional submissions contending that the mere fact it is
arrayed in array of parties as unregistered association of
person does not make it association of person when more
than several places, it is shown as co-ownership.
d) Likewise, the defendants although initially not argued the
issue relating to the association of person but virtually
realizing that the said concept of co-ownership may invite
partition argued about on the aspect of the association of
persons but are unable to justify the stands in the covenants
wherein they have referred themselves as co-owners of
ascertained rights. Further even if defendants take the stand
that the co-ownership vests in the firm and actually the parties
are merely association of persons, then again implicitly the
defendants are conceding the partnership as association of
persons shall be confined to the profit sharing ratio and the
property right shall vest in the firm and again the said
argument brings back the defendant No.1 within the realm of
partnership. Therefore, the argument of the defendants that
the co-ownership vests with the firm and the counter-
argument that it vests in individuals itself makes it evident
that the parties are unclear about their rights and the party
which is stating that it vests in the firm actually leading to the
inference that there is a kind of partnership between the
parties. This dispute on facts by the parties further amplifies
the conclusions set out above that the firm is in the nature of
partnership wherein the property prima facie vests in the firm
and this is more clear when the property is actually registered
in the name of firm on records and not in the name of
individual persons.
e) Secondly, both the parties have although stated that the firm
was dissolved and it was mutually agreed that the parties will
act as co-owners. However, the parties have not shown any
instrument of transfer by which the said co-ownership is
transferred and shall vest in the individuals as indicated above
that upon dissolution of partnership, it cannot be said to be
ipse dixit of partners themselves that there shall be the co-
ownership. There has to be some instrument of transfer
whereby the said persons can be said to be vested with the
shares and can be categorized as co-owners. There is no
instrument upon dissolution of firm which has been shown or
placed on record to claim such co-ownership and rather the
MOUs which have been entered into at the later date are
clear departure from the said concept of co-ownership and tilt
the arrangement towards partnership. In the absence of such
document/ instrument of transfer, again the conclusion qua
partnership finds support in the facts and circumstances
65. The above contradictions and anomalies done by the parties
are pointed out in order to show and highlight the change in the stand
taken by the parties during the course of the time in order ascertain the
true status of the defendant No. 1 and the parties. It is inconceivable
that an entity started as a partnership during course of the time have
become co-ownership and ultimately sought to be declared as
association of persons by the parties to the proceedings. This also
shows that there is a serious dispute as to the status of the defendant
No. 1 and the parties, which puts the title of the parties under cloud.
Accordingly, it is to be discovered in trial when the parties are able to
show with the cogent proof of documents what exactly is the true status
of the defendant No.1 and whether it can be partition or not. However,
in view of the conclusions arrived above, the defendant No. 1 prima
facie appears to be operating as a partnership firm and accordingly the
inference qua co-ownership is difficult to draw. Resultantly, the suit
property prima facie belongs to the partnership or the firm which is
defendant No. 1 and cannot be partitioned at the preliminary stage due
to the serious nature of dispute as title as to whether the parties are co-
owners or partners to be tried between the parties.
It can be argued that the parties have not disputed the co-
ownership but only disputed the nature of vesting. The said submission
is totally without merit as the parties by contending and differentiating
the vesting of co-ownership in the individual with that of the firm are
disputing the status of the defendant No. 1 directly. It is to discern the
true nature of the status of the parties, the discussion became relevant
in the present case.
66. Further, the prima facie view of mine that the defendant No.
1 operates as partnership also takes away the suit property within the
concept of partition as the remedy of the unsatisfied partners lie not in
partition but in dissolution which shall be subject to the covenants
entered into between the parties in the MOU.
Interpretation of Clause 6 of MOU
The plaintiffs‟ case from the beginning has been that the
defendants are attempting to sell the property in violation of the clause
6 of the terms of the MOU. Firstly, the clause 6 talks about the right of
single co-owner and seeks to impose the fetters upon the said right to
transfer his or her share outside in the asset or profits of the firm. The
reading of the clause makes it clear that it is the share of the co-owner
in the assets or profit of the firm and not his share in the property.
Further, the said right of a co-owner is restricted qua transfer by way of
selling etc without the consent of all the co-owners.
However, the said restricted right of co-owner cannot be
said to restrict the unfettered right of the majority of 2/3rd in relation to
deciding about the rights and liabilities of the co-owners or the
dissolution and winding up of the business as per clause 18. The
defendants have shown some communication between defendants
between July, 2008 to November, 2010 wherein they decided to wind
up the business by selling the property. The said restricted right of a co-
owner cannot operate as an embargo to that of the right of the majority
under clause 18 of the MOU. The defendants in the written statement
have stated that they are looking for the buyer of the property wherein
one entity namely Metatron Global Fund LLC is intending to buy the
property at the rate of Rs. 155 crores. The defendants have also stated
that they are in need of money and are agreeable to the give plaintiffs
their share in the profits. All this reveals that the defendants are
intending to sell the business of defendant No.1 which is right vests in
the majority and the same cannot be fettered by operation of clause 6 of
the agreement.
67. It is further noteworthy that the plaintiffs on the one hand
contend that the said attempt by the defendants to sell the property is
violative of clause 6 of the agreement. However, the plaintiffs
themselves do not abide by the agreed mechanism under clause 18
wherein any decision relating to rights or liabilities of the co-owner as
well as the winding up or dissolution of the firm vest in the majority.
Thus, the plaintiffs cannot accuse the defendants when they are
intending to wind up the business by selling the property in view of
majority decision as violating memorandum of understanding by filing
the suit for partition. The plaintiffs stand of seeking partition under the
partition Act itself is coming out the agreement wherein the dissolution
rights vest in the majority decision.
68. It is well settled that a party cannot be allowed to take the
advantage of the part of the agreement or covenant therein and avoid
the rest of the same which is operating to its detriment.(kindly see
judgment)
Applying the said principle to the fact of the case, it cannot
be said by the plaintiffs for the purposes of seeking partition that the
defendants are violating the terms of MOU in clause 6 and the court
should adopt the modes of partition. If the reliance is placed by the
plaintiffs on MOU of clause 6, then the court should adopt the
mechanism as agreed between the parties in MOU which means that
the right to dissolve the firm vests in the majority as per clause 18 of
the agreement and will rather not insist upon the partition in the case
like the present wherein the rights of the parties flow from contractual
arrangement which is agrees to the contrary. This is another factor
which enables this court to believe that the suit property cannot be
partitioned at the preliminary stage as the rights are governed by
contract in the nature of MOU wherein dissolution of firm is possible
by majority decision.
Further in view of my finding that the status of the
defendant No. 1 is prima facie is in the nature of the partnership and the
same is governed by the covenant, it is also not proper to treat the
partition suit as that of the dissolution and proceed to decide the rights
of the parties. The MOU is interpreted to extent necessary as the
submissions are advanced by the parties by placing reliance of the
same. Once, it is found out that MOU itself leads to the inference of
partnership, the discussion on the embargo of the rights of the partners
under MOU in the partition suit is otherwise irrelevant.
69. Let me now deal with the submission of the rival parties
made at the bar :
a) Firstly, it is the contention of the plaintiffs that the shares of the
plaintiffs and the defendants are allocated in the agreement and
there is no dispute as to the shares of the co-owners and
therefore, partition is warranted. The said submission of the
plaintiff‟s senior counsel Mr. Vasisht is rejected in as much as
the defendants dispute the said share by contending the co-
ownership vest in the firm and the parties are association of the
persons. Although my findings are the firm prima facie appears
to be of character of partnership. All this reveals that the shares
of the co-owners are not ascertained or defined and rather there
is dispute qua the status of the parties as co-owners. Thus, the
said submission of the plaintiffs is devoid of any merit.
b) Secondly, as regards the interpretation of clause 6 and others, I
have already indicated that the operation of clause 6 imposes of
the rights of the co-owner and of co-owners and even if the plain
rule as discussed by Mr. Vasisht applied, the said reading makes
it plain that the right to transfer is fettered when it comes to a co-
owner but the right to dissolution of majority is unfettered under
clause 18. Further, the part reliance upon the MOU cannot be
allowed. If the MOU is accepted, then property all the more
becomes not partitionable
c) As regards the submissions on partitions made by the plaintiffs,
the same do not warrant discussion in view of my prima facie
findings that the suit property is the one belonging to partnership
and thus the recourse to partition is not proper.
d) The submissions about the buyer being not proper or incapability
of delivering the possession by the defendants also do not aid the
case of the plaintiffs as the same will not change my findings qua
the status of the suit property and the defendant No. 1 as
partnership.
e) Further discussion qua the co-ownership and association of
person also becomes unnecessary as I have in depth analyzed the
issue above and have come to the prima facie finding the
incidents of co-ownership in the parties are missing and the
argument of association of persons adopted by the defendants
wherein it is sought to be contended that the ownership or co-
ownership vests in the firm rather brings back the defendant No.
1 closer towards partnership and supports the conclusions qua
partnership.
No further submission remains unanswered.
70. It is now for me to discuss the principles governing the grant
of interim injunction which have succinctly put forward in the case of
Dalpat kumar Vs. Prahlad Singh, (1992) 1 SCC 719 which are :
a) Prima facie case
b) Irreparable loss
c) Balance of convenience
71. The plaintiffs have failed to make out a prima facie case for
the grant of injunction or partition as in the partition suit, it is found that
the prima facie nature and status of the property is that the same is a
partnership property vest in the firm and not in the individuals and the
rights of the parties flow from contract which is MOU. Thus, there is
no prima facie case made out by the plaintiffs for continuation of the
said interim order passed on 01.12.2010 in case wherein the plaintiffs
seeks partition when prima facie the property is in capable of being
partitioned being partnership asset or firm‟s asset. The balance of
convenience is in favour of the defendants as the plaintiffs would be
less inconvenienced if the interim order passed on is vacated in as
much as the plaintiffs would in any way get their share in the profits of
the firm consequent upon the dissolution or winding up by the
defendants selling the said property at the higher rates and the
defendants are already ready and willing to give said share of profit as
per the agreement to the plaintiffs. It is however plaintiffs who is
insistent for the partition when the co-ownership rights are prima facie
not been established. The irreparable loss will ensue to the defendants
if the order dated 01.12.2010 is continued as the defendants will not
unnecessarily be restricted to sell out the property when MOU provides
for the winding or dissolution of the business by the majority decision
and more so when the property is not partitionable in view of it being a
partnership asset.
72. Accordingly I.A. No.2824/2011 (O 39 R 4 CPC) is allowed
and interim order granted on 01.12.2010 and 11.2.2011 are
consequently vacated. I.A. No.3346/2011 (O 12 Rule 6 CPC) is also
dismissed as there no admissions in view of my findings and there are
rather dispute on the title and nature of ownership by the parties.
Consequently both the applications being I.A. No.16165/2010 (O 39 R
1 & 2 CPC) and IA No.2159/2011 (O 39 R 1 & 2 CPC) are dismissed.
73. No costs.
MANMOHAN SINGH, J.
DECEMBER 23, 2011
