Delhi High Court
Rajenderpal Singh Bhatia vs Joginder Singh on 23 November, 2012
Author: V. K. Jain
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 09.11.2012
Judgment pronounced on: 23.11.2012
+ CS(OS) 1441/1990 & IAs 9560/2005, 15149/2008, 14120/2009, 7428/2010,
8847/2011, 19250/2011 & 19255/2011
RAJENDERPAL SINGH BHATIA ..... Plaintiff
Through: Mr. Rajat Aneja with Mr. S. Seth
Mahendran, Advocates
versus
JOGINDER SINGH ..... Defendant
Through: Mr. Sandeep Aggarwal with Mr. K.A. Singh,
Advocates
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN
V.K. JAIN, J.
1. This is a suit for dissolution of the partnership firm Royal Safe Company,
rendition of accounts and partition of the immovable properties of the firm. The
plaintiff is the son of late defendant No. 1 Joginder Singh, who died during
pendency of the suit, and the brother of defendants 2 to 5. The plaintiff had 20%
share, whereas defendants 1 to 5 had 15%, 20%, 20%, 15% and 10% share
respectively in the said partnership firm. The partnership firm owned Property No.
C-114, Naraina Phase-I, New Delhi and also held tenancy rights in respect of
Properties No. 13/39, Western Eastern Area, Arya Samaj Road, Karol Bagh, New
Delhi and G-26, NDSE, Part-I, New Delhi. It is an admitted fact that the
partnership firm discontinued its business in September, 1979. The case of the
plaintiff is that neither the firm has been dissolved nor have its above-referred
immovable properties been partitioned. Some portions of property No. C-114,
Naraina Phase-I and a portion of Property No. 13/39, Western Eastern Area, Arya
Samaj Road, Karol Bagh, New Delhi are stated to have been let out. The case of
the plaintiff is that despite his repeatedly asking the defendants to dissolve the firm
and render accounts of the rent received by them, they have failed to do so. The
plaintiff has accordingly sought dissolution of the partnership firm, rendition of
accounts in respect of the rent realized from letting out the properties of the firm, as
well as 1/5th share in the immovable properties of the firm. He has also sought
appointment of a Local Commissioner to effect the partition of the immovable
properties by metes and bounds, besides seeking declaration that he is the owner of
1/5th share in those properties.
2. Defendants 1, 2 and 5, namely, Joginder Singh, and his sons Shri Gurbachan
Singh and Jitender Singh filed a joint written statement, contesting the suit.
Separate written statements, contesting the suit, were filed by defendants 3 and 4,
namely, Shri Surinder Singh and Shri Satvinder Singh respectively. Defendants
no.1,2 and 5 took a preliminary objection that the suit, as framed, is not
maintainable since the plaintiff was simultaneously seeking dissolution of firm as
well as partition and is also barred by limitation. They also took a preliminary
objection that since the plaintiff sought dissolution of the partnership firm vide his
letter dated 15.07.1979, which was followed by a regular Dissolution Deed dated
22.09.1979, and the parties had acted upon the same ever since then, the plaintiff
abandoned all his alleged rights to claim dissolution/partition and is now estopped
from claiming the same. It is also alleged in the written statement of defendants 1,
2 and 5 that the plaintiff had omitted two properties which had fallen to his share
and those were N-29, Gali No. 4, Anand Parbat Industrial Area and 53, M.M.
Road. The case set up by them in this regard is that a part of Property No. N-29,
Anand Parbat Industrial Area which belonged to defendants 1 and 2 was being used
by defendant No. 1 for carrying business in partnership with defendant No. 5, but,
on dissolution of the firm Royal Safe Company, he and defendant No. 5 shifted
their business to C-114, Naraina Industrial Area, Phase-I, whereas the plaintiff and
defendant No. 3 Surinder Singh were allowed/leased out the whole of the said
premises. It is also alleged that on dissolution of the firm on 22.09.1979, property
No. C-114, Naraina Industrial Area, fell to the share of defendants 1, 2 and 5.
According to these defendants, on dissolution of the firm, the properties of the firm
were divided into six portions on the lines, suggest by the plaintiff. The first set
comprising the entire rented accommodation at G-26, NDSE Part-I and a portion of
property No.C-114, Naraina Industrial Area, Phase-I, came to the share of
defendant No.1, who was also given the firm Royal Safe Company (South), the
second set consisting of a part of property No. 13/39, Western Extension Area,
Arya Samaj Road, Karol Bagh and part of property No. C-114, Naraina Industrial
Area, came to the share of defendant No. 2, Gurbachan Singh, who was authorized
to use the name Royal Safe Company (Karol Bagh). The third set comprising a
part of the ground floor of property No. 53, M.M. Road and half of the factory land
at Gali No. 4, Anand Parbat Industrial Area came to the share of the plaintiff and it
was further agreed that the accommodation at 53 M.M. Road, New Delhi had been
given to the plaintiff on rent by defendant No. 1. Similarly, in respect of that part
of property at Anand Parbat Industrial Area, which had gone to the share of the
plaintiff, he was to pay rent to defendant No. 1. The plaintiff was not given any
right to use the name of the firm Royal Safe Company and was to form a new firm
of his choice. The fourth set comprising part of Property No. 53 M.M. Road was
given to defendant No. 3, who was to be the tenant of defendant No. 1. He was also
allotted a hall in the property in Gali No. 4, Anand Parbat. He also was not given
any right to use the name of the firm Royal Safe Company. The fifth set
comprising part of the ground floor of property No. 53 M.M. Road was given to
defendant No. 4 Shri Satvinder Singh, who also was to be a tenant of defendant No.
1 in respect of the said premises and was allowed to use the name Royal Safe
Company (M.M. Road). The sixth set comprising part of property No.13/39,
WEA, Arya Samaj Road and part of property No. C-114 Naraina Industrial Area,
came to the share of defendant No. 5. It is also alleged that the plaintiff of his own,
had exchanged his initially allotted properties with defendant No. 5 and it was in
the exchange that he got middle portion of property No. 53, M.M. Road and half of
the factory plot at N-29 Anand Parbat Industrial Area, whereas defendant No.5 got
bigger portion at 13/39, WEA, Arya Samaj Road, Karol Bagh and built up half
portion at C-114 Naraina Industrial Area, Phase-I.
3. In his written statement, defendant No. 3 Surinder Singh took a preliminary
objection that the plaintiff was seeking dissolution of a firm which had been
dissolved vide Dissolution Deed dated 22.09.1979 and, therefore, the suit is not
maintainable. He also stated that since the business premises owned or taken on
rent by the firm had been distributed/allotted to the partners of the dissolved firm,
the suit was not maintainable. He further alleged that Dissolution Deed dated
22.09.1979 had already been acted upon by the plaintiff. He further stated that at
the time of dissolution, 53, M.M. Road and half factory at N-29, Rohtak Road, had
fallen to his share, whereas the property at Naraina had come to the share of
defendants No. 1, 2 and 5. He further alleged that tenancy rights of WEA property
had fallen to the share of defendants 2 and 5, whereas the tenancy rights of G-26,
NDSE, Part-I, had fallen to the share of defendant No. 1 Joginder Singh. He also
alleged that premises No. 53-B, M.M. Road and half of the factory at Anand Parbat
had fallen to the share of the plaintiff who has been enjoying the same. He also
alleged that the property at M.M.Road and Anand Parbat stood in the individual
name of defendant - Joginder Singh who was charging rent from him in respect of
53B, M.M.Road, New Delhi and half of property No. N-29, Anand Parbat, Delhi.
4. Defendant No. 4 also took a preliminary objection that since the plaintiff
himself sought dissolution of the firm vide letter dated 15.07.1979, which was
followed by a regular Dissolution Deed dated 22.09.1979, and the parties had acted
upon the same, the suit was not maintainable. It was further stated that on
dissolution of the partnership firm, property No. 13/39, WEA, Arya Samaj Road
was divided into two parts, one going to the share of defendant No. 2 and the other
going to the share of plaintiff, who later exchanged the same with defendant No. 5.
It is further stated that defendant No. 5, out of love and affection, gave his share of
Shop No. 13/39, WEA, Arya Samaj Road, to defendant No. 4 and, thereafter, a
fresh tenancy in his favour was created after surrendering the old tenancy. Taking
a plea identical to that of defendants 1, 2 and 5, it is alleged that on dissolution of
the firm, defendants 1 and 5 shifted the business which they were carrying under
the name of Jayess Corporation in property No. N-29, Anand Parvat Industrial
Area to C-114, Naraina Industrial Area, Phase-I and the plaintiff and defendant No.
3 Surinder Singh were allowed/leased out the whole of the premises at Anand
Parbat. He has endorsed the plea of defendants No. 1, 2 and 5 that in order to
obtain exemption under Urban Land (Ceiling and Regulation) Act, 1976, property
No. C-114, Naraina Industrial Area was shown as owned by all the partners
though, in fact, it had fallen to the share of defendants 1, 2 and 5, in the dissolution
of the firm. Defendant No. 4 has also supported the case set out by defendants 1,2
and 5 as regards six sets of properties on dissolution of the firm with effect from
22.09.1979 and has alleged that the plaintiff, in exchange with defendant No. 5, got
middle portion of property No. 53, M.M. Road and half of the factory plot at N-29,
Anand Parbat Industrial Area, whereas defendant No. 5 got bigger portion at 13/39,
WEA, Arya Samaj Road and built up half portion of C-114, Naraina Industrial
Area, Phase-I.
5. The following issues were framed on the pleadings of the parties:-
(i) Whether the suit is within limitation? OPP
(ii) Whether the suit as framed by the plaintiff is not maintainable in view
of the allegation that the firm had already been dissolved w.e.f.
22.09.79, as alleged by the defendants? OPD
(iii) If the answer to Issue No. 2 is in favour of dissolution, whether such
dissolution has already been acted upon and given effect to by the
parties? OPD
(iv) Whether the plaintiff is estopped from filing the present suit in view of
the pleas relating to dissolution and such dissolution having been
acted upon taken by the defendants? OPD
(v) Whether the properties C-114 Naraina Industrial Area and 53 M.M.
Road, Pahar Ganj were acquired with the funds of partnership? If so,
to what effect? OPP
(vi) Whether the plaintiff is entitled to claim any rent subsequent to the
date of the alleged dissolution? OPP
(vii) Whether the plaintiff is entitled to rendition of accounts? OPP
(viii) Relief.
6. Issue No.5: It is an admitted position that the property bearing number 114,
Naraina Phase-I, New Delhi was acquired by the partnership firm at the time when
all the parties to the suit were its partners and the Lease Deed was executed in the
name of the said partnership firm. The Lease Deed Ex.P1 purports to have been
signed by Shri Joginder Singh for himself as well as an attorney of other partners
namely Shri Gurbachan Singh, Shri Surender Singh, Shri Satbinder Singh. Shri
Jatinder Singh and Shri Rajinder Pal Singh. During the course of arguments, it was
not disputed that the above referred property belonged to the said partnership firm.
I, therefore, have no hesitation in holding that the above referred property was
owned by the partnership firm M/s Royal Safe Company.
As regards the property bearing number 53, M.M. Road, it is not in dispute
that the aforesaid property was owned by the defendant no.1 Shri Joginder Singh.
This is not the case of any of the parties that the property bearing number 53, M.M.
Road was owned by the partnership firm or by any person other than defendant
no.1 Shri Joginder Singh. This issue is decided accordingly.
7. Issues No.1 to 4: The only reliefs sought by the plaintiff are (i) dissolution
of the partnership firm Royal Safe Company; (ii) distribution of the immovable
assets of the firm and (iii) rendition of accounts in respect of the rent realized from
the immovable properties of the firm. No division of movable assets of the firm
such as stock in trade, machinery, raw material, cash, bank balance investments etc.
has been claimed by the plaintiff. The only questions which arise for adjudication
in this case are as to whether there has been dissolution of partnership and
distribution of its immovable properties or not. The parties to the suit are members
of the same family, the plaintiff and defendants No.2 to 5 being the sons of
defendant No.1- late Shri Joginder Singh. All the defendants, in their written
statement, took a categorical stand that the firm was dissolved and its properties
were distributed amongst the partners and the said dissolution and distribution of
assets was also acted upon by them. During trial, defendant No.3 - Surinder Singh
and defendant No.4 - Satbinder Singh took a stand contrary to their pleading by
stating that there was no final distribution of the immovable properties amongst the
partners. Defendant No.3 - Shri Surinder Singh stated that though the firm was
dissolved by distributing machinery and stock etc. separately to every partner, the
properties of the firm were not distributed and no agreement regarding distribution
of the properties amongst the partners was ever executed. He admitted that he was
given a part of 53, Rani Jhansi Road on the ground floor and un-built area on the
first floor for running his business and was in its exclusive possession, whereas the
middle portion of 53, Rani Jhansi Road, measuring 16X 100 ft. and half of the first
floor measuring 25 ft. X 100 ft. was given to the plaintiff at the rent of Rs.950/- per
month, in the distribution of properties which took place at the time of dissolution,
for independent working of the partners. He also admitted that he was carrying
business under the name of National Steel Works. Thus, this defendant, while in
the witness box, sought to take a stand somewhat contrary to his pleading by saying
that the distribution at the time of the dissolution of the firm was only a working
arrangement, mutually agreed by the partners of the firm. According to him, he
was paying Rs.650/- per month to defendant No.1 as rent for an area measuring 16
X 100 ft. on the ground floor and 25 X 100 ft. on the first floor of property No.53,
Rani Jhansi Road, which was given to him on dissolution of the firm. Defendant
No.4 - Satwinder Singh also took a somewhat similar stand in his affidavit by way
of evidence and stated that in the distribution at the time of dissolution of the firm;
the plaintiff was given middle portion of 53, Rani Jhansi Road measuring 16 X 100
ft. and half of the entire first floor measuring 25 X 100 ft. at the rent of Rs.950/-
per month. As regards shop No.13/39, Arya Samaj Road, Karol Bagh, he stated
that it was in his personal tenancy vide agreement exhibited DW-3/11/D and
neither Royal Safe Company nor its partners had any right on it. The deposition of
defendant No.3 and defendant No.4 to the extent they have disputed the
distribution of immovable properties, being contrary to their pleadings, cannot be
taken into consideration and is liable to be excluded from consideration. Having
admitted not only dissolution of the firm but also distribution of its immovable
properties in the manner stated in their respective written statements, defendants
No.3 & 4 could not have, during trial, taken a stand contrary to their pleadings. In
this regard, the learned counsel for defendants No.1, 2 & 5 has rightly placed
reliance upon the decision of Supreme Court in Sangramsinh P. Gaekwad And
Others vs. Shantadevi P. Gaekwad(Dead) through LRs And Ors., (2005) 11 SCC
314, where the Apex Court took the view that the parties are bound in their
pleadings and cannot be permitted to get rid of the admission made by them in their
pleadings. The Court in this regard referred to Section 58 of the Evidence Act
which provides that no fact needs to be proved in any proceeding which the parties
thereto or their agents agree to admit by any writing under their hand or which by
any rule or pleading, they are deemed to have admitted by their pleadings. The
Court categorically held that the Company which was petitioner before it could not
be permitted to take a stand which was contrary or inconsistent with its original
proceedings nor it could be permitted to resile for the admissions contained therein.
The Apex Court in this regard also referred to its earlier decisions in Nagindas
Ramdas vs. Dalpatram Ichharam, (1974) 1 SCC 242 and Viswalakshmi
Sasidharan vs. Branch Manager, Syndicate Bank, (1974) 1 SCC 78.
8. It is an admitted position that the partnership firm namely M/s Royal Safe
Company did not carry any business after September, 1979. It is also not in dispute
that post-September, 1979, the plaintiff started doing business under the name and
style of a new firm namely M/s. King Furnishing and Safe Company (South),
defendant no.1 started doing business under the name and style of M/s Royal Safe
Company(South), defendant no.2 Shri Gurbachan Sigh started doing the business
under the name of M/s Royal Safe Company (Karol Bagh) and defendant no.4 Shri
Satvinder Singh started doing the business under the name of M/s Royal Safe
Company (M.M. Road). It is also not in dispute that a specific portion of the
property bearing number N-29, Gali No. 4, Anand Parbat Industrial Area is in
exclusive possession of the plaintiff. It is also not in dispute that the property
bearing number 53, M.M. Road was physically partitioned post-September, 1979
and its middle portion is in exclusive possession of the plaintiff. It is also not in
dispute that post September 1979, the entire rented accommodation in property
bearing number G-26, NDSE, Part-I, New Delhi came to be occupied by defendant
no.1 Shri Joginder Singh who has since surrendered it possession to the landlord of
the said property. It is also not in dispute that defendant no.3 Shri Surinder Singh is
in possession of the remaining portion of the property bearing number N-29, Gali
No. 4, Anand Parbat Industrial Area. This is also an admitted position that the
mezzanine and basement floor of the property bearing number 53, M.M. Road is
solely in occupation of defendant no.4 Shri Satvinder Singh. This is also not in
dispute that a specific portion of the property bearing number 13/39, Western
Eastern Area, Arya Samaj Road, Karol Bagh, New Delhi and a portion of the
property bearing number C-114, Naraina Industrial Area, Phase-I had come in
exclusive possession of defendant no.5 Shri Jitender Singh.
9. Admittedly, the property bearing number 53, M.M. Road was owned solely
by defendant no.1 Joginder Singh and no other partner of the firm had any right,
title or interest in it. The plaintiff, therefore, was not entitled to any share in the
said property. As noted earlier, the ground floor of this property was physically
divided into three portions and the middle portion is in the exclusive possession of
the plaintiff who has been carrying business there under the name and style of M/s.
King Furnishing and Safe Company. The physical partition of the aforesaid
property, coupled with exclusive possession of a specific portion thereof by the
plaintiff post-September, 1979 is a strong circumstance supporting the case of the
defendants with respect to the division of all the assets including the immovable
properties of the firm after it stopped business since September, 1979. Though the
plaintiff has been paying some rent for the occupation of the aforesaid property,
that, to my mind, would not be material considering the extent of the
accommodation provided to him in the aforesaid property. The plaintiff was given
exclusive possession of the area measuring 1600 sq. ft on the ground floor and
2500 sq ft on the first floor of this property for a rent of Rs.950/- per month. Even
in the year 1979, the market rent of such a huge area in a commercial locality as
such M.M. Road, where the partnership firm Royal Safe Company had been
carrying business and which therefore was likely to attract the customer of the
erstwhile partnership firm, could not have been Rs.950/- per month. I find no merit
in the contention that the premises at M.M. Road, New Delhi was given to the
plaintiff on rent so that defendant no.1 could have steady income by way of rent.
Had that been the case, defendant no.1 would have let out the property at the
prevalent market rent or would have simply sold it instead of charging more or less
a token rent from the plaintiff. Moreover, defendant no.3 and defendant no.4 also
got one portion each of the property at M.M. Road and agreed to pay rent to
defendant no.1 for use of the portions occupied by them and both of them admitted
in their written statement that these portions were given to them in distribution of
the assets of the firm on its dissolution. Neither defendant No. 3 who had 20%
share in the firm nor defendant No. 4 got any share in property No. C-114, Naraina
Industrial Area, Phase-I, New Delhi, G-26, NDSE, Part-I, New Delhi or 13/39,
Western Eastern Area, Arya Samaj Road, Karol Bagh, New Delhi, which were
owned/taken on rent by the firm. Despite that both of them have in their
respective written statement, admitted the division of immovable properties in the
manner pleaded by defendants 1, 2 and 5. In fact, defendant No. 3, whose share in
the firm was equal to that of the plaintiff, got the same treatment which was given
to the plaintiff, as both of them got part of 53, M.M. Road and N-29, Gali No. 4,
Anand Parbat Industrial Area.
Admittedly, neither the partnership firm nor the plaintiff had any right, title
or interest in the property bearing number N-29, Gali No. 4, Anand Parbat
Industrial Area. Admittedly, one portion of this property is in sole possession of the
plaintiff whereas the other portion is in sole possession of defendant no.3. Had
there been no distribution of immovable properties of the firm, there would have
been no reason for the defendants no.1 and 2 to shift their business from there and
handover this prime property to the plaintiff and defendant no.3 by dividing into
two equal parts. It was contended by the learned counsel for the plaintiff that this
property has been acquired by the Government and, therefore, defendants no.1 and
2 had no right, title or interest left in the said property. I, however, find no merits in
the contention. There is no evidence of this property having been acquired by the
Government. It has come in evidence that this property was notified under Section
4 of the Land Acquisition Act and the property bearing number C-114, Naraina
Industrial Area, Phase-I, New Delhi was allotted by DDA in lieu of this property.
But, mere notification under Section 4 of the Land Acquisition Act did not have the
effect of vesting the aforesaid property in the Government. It is only after the
Award being passed and possession being taken that the property comes to vests in
the Government. Admittedly, possession of this property had not been taken by the
Government at any point of time and Section 16 of Land Acquisition Act provides
for vesting of the acquired land in the Government only after Award is made under
Section 11 followed by taking possession of the acquired land by the Collector.
Nothing prevented defendants no.1 and 2 from putting the aforesaid property to a
commercial use or letting out the same at market rent instead of giving it to the
plaintiff and defendant no.3 by portioning it into two equal parts. Admittedly, the
plaintiff has been issued license by Factory Licensing Department of MCD under
Section 416/417 of DMC Act permitting him to carry business of manufacturing
steel furniture in this property and even otherwise it is not in dispute that the
plaintiff has been carrying on business in this property. It would, therefore, be
difficult to dispute that the aforesaid property is a prime commercial property
which its owners could have put to an appropriate use and thereby earn substantial
income by carrying on business there. Therefore, transfer of possession of one part
of this property to the plaintiff and the other portion to defendant no.3 is another
circumstance which proves distribution of the assets including the immovable
properties of the firm.
10. Neither defendant no.3 nor the defendant no.4 got any share in the properties
bearing number C-114, Naraina Industrial Area, Phase-I, 13/39, Western Eastern
Area, Arya Samaj Road, Karol Bagh, New Delhi and G-26, NDSE, Part-I, New
Delhi. If the properties bearing number C-114, Naraina Industrial Area, Phase-I,
13/39, Western Eastern Area, Arya Samaj Road, Karol Bagh, New Delhi and G-26,
NDSE, Part-I, New Delhi were to be partitioned, defendants no.3 and 4 would have
got 1/5th share each in these properties. Despite that, both of them expressly
admitted in their respective written statement that in the distribution of the assets of
the firm on its dissolution in September, 1979, the property bearing number C-114,
Naraina Industrial Area, Phase-I had gone to the share of the defendants no.1, 2 and
5; the property bearing number 13/39, Western Eastern Area, Arya Samaj Road,
Karol Bagh, New Delhi had gone to defendants no.2 and 5 and the property bearing
number G-26, NDSE, Part-I, New Delhi had gone to defendant no.1. Since no one,
in the ordinary course of human conduct is likely to act against his own interest,
neither defendant no.3 nor defendant no.4 would have joined hands with
defendants no.1, 2 and 5 in contesting the case of the plaintiff had there been no
distribution of the immovable properties of the firm in the dissolution of the firm in
September, 1979.
11. It is an admitted position that the partnership firm M/s Royal Safe Company
did not carry any business after September, 1979. This suit seeking dissolution of
the firm, distribution of its immovable properties and rendition of account has been
filed in the year 1990. There is no convincing explanation from the plaintiff as to
why he kept silent for 11 years and did not seek dissolution of the firm and
distribution of its immovable properties. Had there been no distribution of the
immovable assets of the firm, the plaintiff would not have kept silent and allowed
other partners of the firm to exclude him from the use and enjoyment of these
valuable properties of the firm for as many as 11 years. It is also an admitted
position that post 1979, the plaintiff did not use the goodwill and name of the firm
M/s Royal Safe Company whereas some of the defendants were taking at least
limited advantage of the said name by using the trade name M/s Royal Safe
Company (South), Royal Safe Company ( M.M. Road) and Royal Safe Company
(Karol Bagh). There is no explanation from the plaintiff as to why he took no
action to prevent the use of the name Royal Safe Company (South), Royal Safe
Company (M.M. Road) and Royal Safe Company (Karol Bagh) and thereby
allowed other partners of the firm to take advantage of the reputation which the
firm enjoyed in the market. This is yet another indicator that there was dissolution
of the firm followed by distribution of all its assets including its goodwill and that
is why the plaintiff did not object to use of these names by his father/brothers.
12. It was contended by the learned counsel for the plaintiff that no intimation of
the dissolution of the firm was given either to the Income Tax Department or to
Sale Tax Department which is indicative of the fact that the firm had not been
dissolved at all. I however find no merits in the contention. A perusal of the
assessment order of the plaintiff would show that while assessing him for the
assessment year 1980-81, the Assessing Officer noted that the plaintiff had filed a
letter stating therein that the firm Royal Safe Company had been dissolved and all
the partners had started their own business. The statement made by the plaintiff
before his Assessing Officer clearly is an admission of the fact that the partnership
firm Royal Safe Company was actually dissolved in the accounting year 1979-80
and that is why the plaintiff stated so before his Assessing Officer. The learned
counsel for the plaintiff pointed out that in the letter written by him, the plaintiff
had stated that the firm Royal Safe Company was "under dissolution" and the
Assessing Officer did not interpret that letter correctly. I, however, find no merits
in the contention. The case of the plaintiff, as set out in the plaint, is that the firm
Royal Safe Company was never dissolved. This is not the case of the plaintiff in
the plaint that the dissolution of the firm was initiated, but not completed. Even
defendants 3 and 4, who during evidence sought to deny distribution of immovable
properties of the firm, admitted dissolution of the firm. Moreover, there is no
evidence of the plaintiff having sought any correction in the assessment order on
the ground that the Assessing Officer had wrongly interpreted the letter written to
him by the plaintiff and in fact the firm Royal Safe Company had not been
dissolved. In any case, there is no legal requirement of informing the Income Tax
Department with respect to dissolution of a partnership firm.
As far as informing the Sales Tax Department is concerned, the affidavit
filed by defendant no.4 Shri Satbinder Singh on 12.01.1988 clearly shows that the
original registration certificate issued to the firm Royal Safe Company by the Sales
Tax Department had been misplaced and the closure of the business was also
intimated to the Department. The only requirement, on closure of the business of
the firm, was to surrender Sales Tax Registration and the certificate issued by the
Department having been misplaced, it was not possible to surrender the same to the
Department which in any case had been intimated about closure of the business of
the firm.
13. This is plaintiff's own case that the movable assets of the firm such as
machinery, stock and trade, etc. was distributed when the firm stopped business in
September, 1979. In the facts and circumstances of the case, it would be difficult
for me to accept that on closing the business of the firm, the partners distributed
only its movable assets, without any settlement with respect to its immovable
assets. In the ordinary course of events, on dissolution of a firm, the distribution of
all the assets of the erstwhile firm takes place simultaneously since the partners
would normally carry out a valuation of all the movable and immovable properties
as well as the goodwill of the firm after deduction of its liabilities and then
distribute the net surplus, whether in the form of immovable properties or in the
form of movable properties, such as machinery, stock and trade, raw material, cash,
savings, investments, etc.
14. It was contended by the learned counsel for the plaintiff that though the
plaintiff had 20% share in the firm, he got no share in any of the immovable
properties of the firm, i.e., C-114, Naraina Industrial Area, Phase-I, 13/39,
Western Eastern Area, Arya Samaj Road, Karol Bagh, New Delhi and G-26,
NDSE, Part-I, New Delhi. As noted earlier, the plaintiff was given half of property
No. N-29, Gali No. 4, Anand Parbat Industrial Area and the middle portion of
property No. 53, M.M. Road, both of which were prime commercial/industrial
properties. It would be immaterial that he was to pay a nominal rent to his father.
In fact, property No. 13/39, Western Eastern Area, Arya Samaj Road, Karol Bagh,
New Delhi and G-26, NDSE, Part-I were also rented properties and were owned by
the firm. Despite that, these properties had immense market value and this is
plaintiff's own case that defendant No. 1 received a huge amount by surrendering
possession of property No. G-26, NDSE, Part-I. Since the partners of the firm,
who were family members being father and sons, agreed to a particular settlement
of the properties of the firm, it is not open to the Court to go into the question as to
what was the value of individual properties allocated to them in the division.
Nothing prevents a partner from accepting, in division, less than his legal
entitlement. This is more so when the partners are family members. In fact, in
family settlements, there is always some give and take and no mathematical
division of the net assets of the family is usually carried out. Even defendant No.4,
who held 15% share in the partnership firm, got only a share in property No. 53
M.M. Road, as compared to the plaintiff who got not only a part of 53 M.M. Road,
but also half of N-29, Gali No. 4, Anand Parbat Industrial Area, though his share in
the firm was only marginally higher at 20%. Despite that, defendant No. 4
expressly admitted distribution of immovable properties of the firm in the written
statement filed by him.
15. During the course of arguments, the learned counsel for the plaintiff laid
great emphasis on the fact that though Dissolution Deed, cited by the parties, refers
to a Schedule of Properties, no such schedule was actually drawn. His contention
was that had there been division of immovable properties, as is claimed by the
defendants, a schedule of such properties in terms of the Dissolution Deed would
certainly have been drawn up. The contention of defendants in this regard was that
the schedule was drawn and was attached only to that copy of the Dissolution Deed
which was retained by the plaintiff and has been filed by him the Court. The
alternative submission of the defendants was that since the division of the
immovable properties was noted by the plaintiff himself in the letter dated
15.7.1979 written by him, there was no need to draw up a separate schedule of the
immovable properties of the firm. This was countered by the learned counsel for
the plaintiff, who submitted that the above-referred letter was not written by the
plaintiff and does not bear his signature. I, however, need not go into the question
as to whether the letter dated 15.7.1979 was written by the plaintiff or not, since the
evidence led during trial clearly shows that the parties had mutually distributed the
immovable properties of the firm in the manner stated in the written statements and
the said distribution of immovable properties was also actually acted upon by them
and that is why the plaintiff did not object to use of properties No. C-114, Naraina
Industrial Area, Phase-I, 13/39, Western Eastern Area, Arya Samaj Road, Karol
Bagh, New Delhi and G-26, NDSE, Part-I, New Delhi by other partners of the firm
for as many as 11 years. Failure to draw up a schedule in terms of the Dissolution
Deed, therefore, becomes immaterial. Having accepted distribution of the
immovable properties and acted upon the same, the plaintiff is now estopped from
disputing the said distribution.
16. Another circumstance which indicates that a distribution of the immovable
properties of the firm had actually taken place is that neither defendant No. 3 nor
defendant No. 4 sought distribution of the immovable properties of the firm,
despite the fact that neither of them got any share either in C-114, Naraina
Industrial Area, Phase-I which was owned by the firm or in 13/39, Western Eastern
Area, Arya Samaj Road, Karol Bagh, New Delhi and G-26, NDSE, Part-I, New
Delhi, which the firm had taken on rent. Had there been no mutual distribution of
the immovable properties of the firm, they were not likely to sit silently when the
properties were being used by other erstwhile partners, to their complete exclusion.
17. It was pointed out by the learned counsel for the plaintiff that all the parties
had stated before the Competent Authority under Urban Land (Ceiling &
Regulation) Act, 1976 that the property bearing number C-114, Naraina Phase-I,
New Delhi was the property of the firm Royal Safe Company and was jointly
owned by them. Vide this order dated 22.3.1983, the share of each partner in the
excess vacant land was also calculated by the Competent Authority and this,
accordingly to the learned counsel for the plaintiff, is an admission of the fact that
there was no division of the immovable properties of the firm in September, 1979.
The case of the defendants in this regard is that there was an understanding
amongst the partners to represent to the Competent Authority that the aforesaid
property was jointly owned by them because had the Competent Authority been
intimated that this property had come solely to the share of defendants no.1, 2 and
5, the excess land would have been acquired by the Government under the
provisions of the Urban Land (Ceiling & Regulation) Act, 1976. Considering the
fact that the relations between the parties were quite cordial at the time the firm
stopped the business in September, 1979, as would be evident from the fact that no
partner sought dissolution of the firm or division of its immovable properties at any
time prior to filing of this suit in the year 1990, the case set up by the defendants in
this regard appears to be plausible and logical. The plaintiff and defendants no.3
and 4 would not have gained anything by disclosing to the Competent Authority,
that the aforesaid property had fallen solely to defendants no.1, 2 and 5, though it
would certainly have caused loss to defendants no.1, 2 and 5 since the excess land
would have been acquired by the Government. Therefore, in the facts and
circumstances of the case, the misrepresentation made by the parties before the
Competent Authority cannot be said to be an admission of the right of the plaintiff
and defendants no.3 and 4 in the aforesaid property.
Since on merits I find that the firm stood dissolved and its properties stood
duly divided amongst its partners, I need not examine the issue of limitation raised
by the defendants in their written statement. The Issues are decided against the
plaintiff and in favour of the defendants.
18. Issues No.6 to 8: In view of my findings on Issues No.2 to 4, the plaintiff is
not entitled to any rent realized by the defendants, rendition of accounts or any
other relief.
19. In view of my findings on the Issues, the suit is hereby dismissed. However,
in the facts and circumstances of the case, there shall be no orders as to costs.
Decree Sheet be drawn accordingly. All pending applications being IAs
No.9560/2005, 15149/2008, 14120/2009, 7428/2010, 8847/2011, 19250/2011 and
19255/2011 also stand disposed of.
V.K.JAIN, J
NOVEMBER 23, 2012
Bg/rd/sn
