Mrs. Vibha Mehta vs M/S Hotel Marina & Ors.
2012 Latest Caselaw 6019 Del

        *     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                              Judgment reserved on: 25.09.2012
                                               Judgment pronounced on: 08.10.2012

+       CS(OS) 1703/2005
        MRS. VIBHA MEHTA                                            ..... Plaintiff
                                    Through:     Mr. Piyush Kalra, Adv. with plaintiff
                                                 in person
                           versus

        M/S HOTEL MARINA & ORS.                                    ..... Defendants
                          Through:               Mr. Sandeep Sethi, Sr. Adv. with Mr.
                                                 S.K. Maniktala, Advocates
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN


V.K. JAIN, J.

IA 11371/2012 (under Section 151 for recording the order dated 30.03.2006), 11372/2012 (under Section 5 of Limitation Act)

1. The plaintiff and defendants no.2 to 9 were the partners in defendant no.1, a partnership firm namely M/s Hotel Marina, and the plaintiff had a share of 8% in the profits and losses of the said partnership firm. She filed this suit seeking dissolution of the partnership firm and rendition of accounts. She also sought an injunction restraining the defendants from carrying on business of the partnership firm M/s Hotel Marina and creating any third party interest in the properties of the firm.

2. During pendency of this suit, a joint application, being IA No.6376/2006 was filed by the plaintiff and defendants no.1 & 8 for recording the settlement set out in paragraph (1) of the application and passing a decree in terms thereof. It would be pertinent to note here that the plaintiff is the daughter-in-law of defendant

no.8. The statements of the plaintiff Mrs. Vibha Mehta and defendants no.8 Mr. S.B. Mehta were recorded on 3.3.2006 and the suit was decreed in terms of the said IA No.6376/2006. It was directed by the Court that upon payment of Rs. 2 crores being made by the defendant no.8 to the plaintiff in terms of the settlement, the interim order dated 14.12.2005, whereby the defendants were restrained from creating any third party interest/additions/ modifications in the assets of the partnership business shall stand vacated. The learned counsel for the plaintiff stated before the Court that in view of the settlement, no claim survived against the defendants no.2 to 7.

3. IA No.4079/2006 was then filed by defendant no.8 seeking directions to the plaintiff to execute the documents in accordance with the application. Another application being IA No.5215/2006 was also filed by the defendant no.8 seeking permission of the Court to deposit a draft of Rs.2 crore in the Court or in the alternative to deposit the said amount in the name of Registrar General of this Court.

4. During the course of hearing of IA No.4079/2006 and IA No.5215/2006, the learned counsel for the plaintiff submitted that the compromise between the parties had fallen through and, therefore, could not be enforced. The first contention of the learned counsel for the plaintiff was that the payment of Rs.2 crore had not been made to the plaintiff on or before 30.03.2006. His second contention was that the settlement between the parties was only with regard to the disputes raised in the plaint concerning plaintiff‟s 8% share in the partnership firm. His contention was that there were some other amounts which the plaintiff had given which were either as loan to the firm or were otherwise due to the plaintiff and were not the subject matter of the instant suit and accordingly were also not the subject matter of the settlement inter se parties. This Court vide order dated 02.06.2006, while rejecting

the contention of the plaintiff, held that the intention of the parties was to fully and completely settle all their differences and disputes without leaving anything outstanding and directed that the amount of Rs.2 crore which the defendant no.1 had deposited in the Court could be withdrawn by the plaintiff on execution of the documents, the text of which had been filed with IA No.4079/2006.

5. The order passed by this Court on 2.6.2006 was challenged by the plaintiff by way of FAO(OS) No.492/2006. A Division Bench of this Court, while disposing of the appeal filed by the plaintiff, inter alia, vide order dated 3.1.2012 held as under:

"9. Though the learned counsel for both the parties have made the submissions on the merits of the aforesaid impugned order passed by the learned Single Judge, but we are of the opinion that it is not necessary to go into the respective contentions. From the facts noted above, it becomes clear that joint application was preferred by the parties under Order XXIII Rule 3 of the CPC. On this joint application, statements of the appellant as well as the respondent no.8 were recorded. The prayer made in the application was accepted and the Court directed passing of decree as per the terms agreed to by the parties in the said application. It thus resulted in passing of the decree on the basis of agreed terms. After the decree was passed and the terms whereof also included undertaking of the appellant to sign necessary documents to give effect to the terms of the agreement/decree, in case the appellant was backing out of the said undertaking and was not signing the documents, proper course of action for the respondent no.8 was

to file execution petition seeking execution of the decree which had been passed in the suit. It is only in the said execution that the Court could have gone into the issue as to whether the documents which were sought to be got executed by the respondent no.8 from the appellant were in terms of the decree or not. Instead of filing the execution petition, the respondent no.8 filed the two IAs which were clearly not maintainable.

10. No doubt, the appellant has not taken any steps for setting aside of the decree in question either by filing appeal against the said decree or otherwise. Therefore, whenever such an execution petition is filed it would be for the Court to examine as to whether the documents which the respondent no.8 wants the appellant to execute are in terms of the settlement or not. For this purpose, if the matter requires interpretation of the settlement or leading of evidence thereupon, has to be gone into in those execution proceedings. Therefore, without going into the contention of either parties on the merits of the applications which were filed by the respondent no.8, we are of the opinion that since those applications were not maintainable, the impugned order passed thereupon cannot be sustained. We thus set aside the order dated 2nd June, 2006 passed by the learned Single Judge only on this ground of non-maintainability."

6. CM No. 8161/2012 was then filed by the plaintiff before the Division Bench seeking consideration of the challenge made in the appeal, to the decree

dated 3.3.2006. The plaintiff/appellant invited attention of the Division Bench to the fact that the decree passed on 3.3.2006 had also been challenged by her in the appeal which was disposed of on 3.1.2012. The Division Bench passed the following order on the said application:

"4. The counsels at the time of hearing on 3.01.2012, had addressed on the challenge to the order dated 2.06.2006 only. At that time, no arguments were raised about the challenge to the decree also. It is for this reason that the order dated 3.01.2012 dictated in the Court itself, does not deal with the challenge to the decree and contains observation aforesaid in para 10. We may also record that the appeal is also registered as an FAO(OS) i.e., against the order only and not as an appeal against the decree and which appeal ought to have been filed and registered as an RFA(OS).

5. Be that as it may, the decree dated 3.03.2006 is admittedly a consent decree. As per Section 96(3) of the C.P.C., no appeal is maintainable against the consent decree.

6. The counsel for the appellant has contended that the consent of the appellant to the decree was obtained by fraud. Even if that be so, the appeal is not the remedy and the appellant ought to take appropriate remedy therefor."

7. IA No.11371/2012 was then filed by the plaintiff seeking recall and setting aside of the order dated 3.3.2006 passed by this Court. IA No.11372/2012 has been filed by her under Section 5 and 14 of the Limitation Act for condonation of delay

in seeking recall and setting aside of the order dated 3.3.2006. In IA No.11371/2012 the plaintiff, inter alia, stated as under:

"III. On 3.3.2006, the plaintiff and defendant no.8 entered into a Settlement Agreement drafted by defendant no.8 on his own outside the Court premises, wherein it was agreed by both the parties that the plaintiff will retire from the partnership firm on 1.4.2006 and that the defendants would pay a sum of Rs.2.0 crores to the plaintiff on or before 30.3.2006 and it was understood that the said amount was payable for settlement of 8% share of the plaintiff in the partnership firm only and the same would not include any settlement on the capital accounts. The said settlement was recorded by the learned Single Judge vide order dated 3rd March, 2006 and the same was decreed vide the said order in terms of settlement recorded in joint application preferred by the parties under Order XXIII Rule 3 of the CPC.

V. It is germane to mention herein that on 3.3.2006, the plaintiff was forced to settle the matter for Rs.2 crores on the basis of current accounts and balance sheet dated 31.12.2005. It is pertinent to mention that five days earlier to the settlement i.e. on 27.02.2005 the plaintiff clearly refused to settle the matter for a sum of Rs.2 crore, while the parties were in the Court premises and even submitted before the Hon'ble Court that her share is of much higher value than what was sought to be portrayed.

VIII. However, in actual the prayer in Civil Suit bearing CS(OS) No.1703/2005 is restricted to dissolution of a partnership. It is relevant to submit here that in case of dissolution of partnership firm, the cumulative profit is arrived at and the same is treated as personal property of a partner and can in no way be regarded as right, title and share in the partnership firm. Henceforth, it is amply clear that the plaintiff only asked for her 8% share in the firm. It is pertinent to mention herein that in paragraph 10 of the proposed draft Retirement deed proposed to be executed by the defendant with respect to the payment of tax on profits upto 31st March, 2006. The relevant clause is reproduced herein below for ready reference:

"10. The second party hereto shall pay and discharge all tax liabilities including the penalties if any, on the 8% share of First Party in the partnership firm and the profits thereof upto 31st March, 2006 pertaining to partnership firm M/s Hotel Marina only."

XII. ...However, despite sincere efforts and despite being a partner of defendant no.1, the plaintiff was not provided with the accounts of the partnership firm and was bluntly declined. The plaintiff made every effort to procure the capital accounts and balance sheets from Income Tax Department also. Left with no other option, plaintiff filed an application under RTI Act on 16.12.2008 before the Deputy Commissioner of Income Tax (Public Information Officer), Circle 31(1) Income Tax

Department New Delhi requesting for a detailed copy of the Capital Accounts and Current Accounts pertaining to the plaintiff for the period of 1.4.2005 to 31.3.2006 of the partnership firm namely M/s Hotel Marina. The plaintiff received the information as sought and the same was filed before the Division Bench of this Hon'ble Court in FAO(OS) No.492 of 2006 vide CM No.6600/2009.

XIII. ...the plaintiff after perusing the said accounts discovered that the balance amount in her current account as on 31.3.2006 was Rs.1,69,44,438.15 (Rupees One crore sixty nine lakhs forty four thousand four hundred thirty eight and fifteen paise only). At the time of entering into the settlement, the plaintiff was shown some hand written balance sheets and details of current account by defendant no.8 as per which the plaintiff's balance of current account as on 31.12.2005 was recorded as Rs.59,57,744.14 and the said documents were filed even when retirement was agreed upon as 1st April, 2006 before the Hon'ble Court. ...

The plaintiff was never informed, neither was there any indication by defendant no.8 that so much more money was to be credited to the plaintiff's accounts by 31.3.2006 or that the plaintiff's share was much more than what was portrayed at the time of settlement. By suppressing the said fact not only have the defendants defrauded the plaintiff but also this Hon'ble Court and in this manner the whole settlement stands vitiated and cannot be enforced upon and the same is liable to be set

aside for this ground alone. It is respectfully submitted that the deed of settlement between the parties which the plaintiff was coerced to sign was on 3.3.2006 and the date of retirement which both the parties agreed was mentioned as 1.4.2006." XV. Therefore, the defendants had complete knowledge of the fact that they had to close the accounts by 31st March every year and till that time the share of the plaintiff would be substantially higher than Rs.59,57,744.14/- lakhs. It is also submitted the balance sheet of 2005-2006 clearly reflects that the advance tax amounting to Rs.1,87,80,800/- had been paid by defendant no.1, which was never paid in advance for the last 6 financial years. This shows that the defendants were very well aware that how much profit had been earned by the partnership firm and how much more sums would be allocated to each of the partners capital accounts.

XVI. It is submitted that under Section 9 of the Indian Partnership Act, the plaintiff and defendants nos. 2 to 9 were in a fiduciary relationship and this fact was only known to the defendants that the value of the capital account of the plaintiff was much higher. The defendants were under a duty to disclose the said fact to the plaintiff. That the non-disclosure of the said crucial fact clearly amounts to fraud under section 17 of the Contract Act which fraud has been played by defendant no.8 not only upon the plaintiff but also upon this Hon'ble Court and any consensus arrived at perpetuating fraud is liable to be set aside being void.

XX. ...Further, it is submitted that it was never the intention of the plaintiff to settle the capital accounts. That the plaintiff only wanted to settle the 8% share in the partnership firm. The plaintiff never knew what should be the value of 8% share in the partnership firm.

xxxxx The plaintiff did not understand what should be the meaning of the "Full and Final Settlement" and signed the settlement on 3.3.2006 under the impression that it was a settlement of only her 8% share of partnership firm. It was duty of the defendants to let know the plaintiff what was the value of 8% share in the partnership firm and to inform the plaintiff that more money would be credited to her current account by 31.3.2006. The deed of settlement thus entered into by the parties is not covered under Order 23 Rule 3 which is applicable only to such contracts which are not void and voidable under Indian Contract Act. The present settlement having been entered into on the basis of fraud, is thus beyond the purview of Order 23 Rule 3 and in the facts of the case it is unconscionable. XXI. It is submitted that defendants were under duty to disclose the free and fair details of the accounts and the true value of share in the capital account i.e. 8% of the plaintiff which come to the knowledge of the plaintiff on 19.12.2008. By not disclosing the vital information and by not submitting the true status of accounts to the plaintiff the defendants have

committed fraud thus making the settlement void and unenforceable.

8. In IA No. 11372/2012, the plaintiff has alleged that she was able to get a detailed copy of the capital account and current account statements of the partnership firm for the period ranging from 1.4.2005 to 31.3.2006, which included details of the capital account of the partners only in December, 2008 and the same were filed by her in FAO(OS) No.492/2006 with the permission of the Court vide order dated 13.5.2009. The plaintiff has, therefore, sought condonation of delay of 2279 days in filing the application on the ground that she was bonafidely and diligently pursuing the remedy by way of FAO(OS) No.492/2006, which came to be decided only on 3.1.2012.

9. Both the applications have been opposed by defendant No. 8. It is stated in the reply that the application is nothing, but an afterthought to extract more money and wriggle out of the consent decree passed by this Court on 03.03.2006. It is further stated in the reply that the contention of the plaintiff/applicant that the settlement between the parties did not include her capital account was a matter of interpretation of the terms of the settlement and that could be gone into only by the executing Court. It is further stated in the reply that no plea of fraud was set up by the applicant/plaintiff in her reply to IA No. 4079/2006 or in FAO(OS) 492/2006 filed by her. It is pointed out in the reply that balance sheet for the year 2005-06 was not even in existence when the settlement was arrived at on 03.03.2006 and, therefore, there was no occasion for any misrepresentation by the answering defendant. It is also submitted in the reply that the plaintiff is a qualified person being a commerce graduate and was always guided, advised and represented by a team of competent lawyers, including a senior advocate and all along she had full

access to the accounts of the partnership firm. It is also stated in the reply that the capital account available on page 104 of the application reflects the true and correct position of plaintiff‟s ledger account as on 31.12.2005, even when seen on 03.03.2006.

10. The plaintiff/applicant had sought setting aside the consent decree dated 03.03.2006 primarily on two grounds. The first ground taken by her was that the settlement between the parties did not include her capital account, whereas the second plea taken by her was that defendant No. 8 had played a fraud upon her by not disclosing the profits which were likely to accrue to her by the end of the Financial Year 2005-06. Since the Division Bench vide order dated 03.01.2012, had taken a view that it is only the Executing Court which can go into the issue as to whether the documents which defendant No. 1 sought to be got executed were in terms of the decree or not was a matter which required interpretation of the settlement which could be gone into only in execution proceedings, the plaintiff/applicant was asked on September 19, 2012 as to what were the ground on which she was pressing IA No. 11371/2012. The learned counsel for the plaintiff, on instructions from the plaintiff, who was present on that date, stated that the IA was being pressed only on the ground that the decree had been obtained by playing a fraud on the applicant/plaintiff by not disclosing to her the amount which had accumulated in her capital account in the partnership firm Hotel Marina on the date IA No. 6376/2006 for recording compromise was filed. The learned counsel for the plaintiff, however, did not sign that statement, presumably because the plaintiff wanted to make some changes in the statement. Thereupon, statement of the plaintiff/applicant was recorded in the presence of her counsel on 24.09.2012. In that statement, she stated that she was pressing for setting aside the decree dated 03.03.2006 on the ground that the decree had been obtained by playing a fraud on

her by not disclosing (i) the amount which would have accumulated in her capital account in the partnership firm Hotel Marina, on the date the application being IA No. 6376/2006 for recording of compromise was filed in the Court; (ii) the amount which would have accumulated in her capital account in the aforesaid firm till 31.03.2006.

In view of the statement given by the plaintiff on 24.09.2012, the only question which needs to be examined is as to whether any fraud was played upon the plaintiff by defendant No. 8 and was that fraud which led to her entering into a settlement.

11. A perusal of the order dated 02.06.2006 passed by this Court in IA No. 1097 and 1215/2006 would show that no plea of a fraud having been played upon the plaintiff/applicant was taken in her reply to IA No. 4079 and 5215/2006. As noted earlier, the submissions made by the learned counsel for the plaintiff at that time were that the compromise cannot be enforced since payment of Rs 2 crore had not been made on or before 30.03.2006 and the settlement between the parties was only with regard to her 8% share in the firm and did not cover the amounts which the plaintiff had given as loan or were otherwise due to her. This was not the contention before this Court that a fraud was played upon the plaintiff by not disclosing to her the amount which had accrued to her capital account as on 03.03.2006 or would have accrued to the said account on 31.03.2006.

12. A perusal of the orders passed by the Division Bench in FAO(OS) 492/2006 shows that no plea of fraud was set up by the plaintiff before the Division Bench. This was not her contention before the Division Bench that defendant No. 1 had played a fraud upon her by not disclosing to her the amount which had accrued in her capital account on 03.03.2006 or would have accrued on 31.03.2006. Again, there is no explanation from the plaintiff/applicant as to why such a plea was not

taken before the Division Bench. This becomes important considering the fact that not only the order dated 02.06.2006, but also the order dated 03.03.2006 had been challenged by her in the appeal and the appeal was heard years after December, 2008, when the plaintiff claims to have received copies of accounts of the firm under RTI Act. It would, therefore, only be appropriate to conclude, in such circumstances that the plea of fraud/misrepresentation is nothing, but an afterthought with a view to wriggle out of the consent decree passed by this Court on 03.03.2006.

13. Coming to the merit of the plea of fraud/misrepresentation, I find from a perusal of the record that the plaintiff was present in the Court on 03.03.2006 and she admitted that application for recording settlement was signed by her and was accompanied by her affidavit. There is no indication in IA No. 6376/2006 that the plaintiff had agreed to accept Rs 2 crore from defendant No. 8 on the basis of accounts of the firm as on 03.03.2006. The application does not indicate that defendant No. 8 had agreed to pay profits which had accrued to the share of the plaintiff in the firm as on 03.03.2006, to her and the amount of Rs 2 crore was being accepted by the plaintiff as her profit in the firm up to 03.03.2006. The compromise application, inter alia, reads as under:-

"The parties have amicably, by their free will and consent compromised the present suit on the following terms:

(i) The defendant No. 8 shall pay to the plaintiff a sum of Rs 2,00,00,000/- (Rupees Two Crores only) on or before 30th March, 2006

(ii) The said payment shall be in full and final settlement and adjustment of any and all rights, title or interest of the plaintiff in the defendant No. 1 Firm and the assets, properties, belongings, tenancy and business and affairs of the said firm, including plaintiff‟s 8% share in the said firm.

(iii) Upon the said payment,

(a) The plaintiff shall cease to have any share in the defendant no.1 Firm and shall also have no claim or demand upon the said firm.

(b) The plaintiff shall have retired from the defendant no.1 firm with effect from 1st April, 2006 or earlier when payment is made.

(c) The plaintiff shall have no subsisting dispute or difference with any of the defendants firms and all its partners all disputes and differences same shall be deemed to be fully and finally, unconditionally and absolutely satisfied.

              (d)     The share of the plaintiff shall stand transferred to
              the     defendant    no.8   automatically     and    without
              requirement of doing of any act of omission or

commission on the part of any of the parties hereto. The defendant no.8 shall be the sole and absolute owner of

the 8% share held by the plaintiff in the defendant no.1 firm until now.

(e) The rights of the plaintiff in tenancy of the defendant no.1 firm in respect of Hotel Marina at premises No.G-9, Connaught Place, New Delhi shall stand surrendered to the surviving partners of the defendant no.1 firm and the plaintiff shall have no subsisting right or interest in the tenancy. It shall be open for the surviving partners of the defendant no.1 firm to apply to the landlord for deletion of the plaintiff as a co- tenant in respect of the said premises.

(f) In the event, the landlord for the said premises does not consent to the said deletion, the plaintiff shall authorize and keep authorized defendant no.8 or his nominee to act for the plaintiff, in her name and on her behalf on all matters concerning the said tenancy. The said authorization shall be irrevocable and shall be and shall be executed as per the draft enclosed herewith and marked as Annexure-1. The plaintiff undertakes not to revoke the said authorization at any time and for any reason.

(g) The plaintiff undertakes to this Hon‟ble Court that from time to time she shall at the request of defendant no.8 sign and execute any and all documents, papers and

deeds required to give effect to the terms of his Agreement including the Dissolution Deed.

(h) That the other defendants other than defendant no.8 are having no objection to the purchase of defendant no.8 above purchasing the share of plaintiff.

2. The parties stated the Agreement arrived at between them, as aforesaid, is lawful and fully and finally settles the subject matter of the present suit and in any manner relating to the defendant no.1 firm. With the abovesaid settlement, nothing with respect to the defendant no.1 firm remains to be adjudicated."

In fact, the basis of settlement appears to be the accounts of the firm as on 31.12.2005, since admittedly those were the accounts made available to the plaintiff at the time of settlement.

14. In terms of the settlement between the parties, the plaintiff was to retire from the firm with effect from 01.04.2006 or earlier when payment was made. Therefore, it cannot be said that defendant No. 8 had agreed to pay to the plaintiff her share in the profits till 31.03.2006. In the event of payment of Rs 2 crore being made to the plaintiff at any time prior to 30.03.2006, she would have retired from the firm from that very date and there would be no question of paying to her any share in the profits which the firm earned after that payment. It is true that ordinarily a partner would get his/her share in the profits of the firm till the date he/she actually retires from the firm. But, nothing prevents him/her from accepting a flat amount instead of insisting upon settling of the accounts till the date of her

retirement. Even if the plaintiff was to retire from the firm only with effect from 01.04.2006, nothing prevented her from agreeing to accept a flat sum instead of insisting upon payments of profits which accrued to her share till the date of her retirement.

15. Since there was no linkage between the amount of Rs 2 crore which defendant No. 8 agreed to pay to the plaintiff and the share of the plaintiff in the profits of the partnership firm as on 3.3.2006 or 31.3.2006, no obligation was cast on defendant No. 8 to disclose to the plaintiff the profits which the partnership firm had earned till 03.03.2006.

16. The compromise application was signed by the plaintiff and her statement was recorded in the Court on 03.03.2006. Nothing prevented the plaintiff from insisting upon rendition of accounts till 03.03.2006, before she entering into a binding settlement with defendant No. 8. If the understanding of the plaintiff was that she was to get her profits earned by the firm till 03.03.2006, nothing prevented her from insisting upon such profit being worked out before her entering into a settlement with defendant No. 8. This is not the case of the plaintiff that she had asked defendant No. 8 to render Profit & Loss account of the partnership firm as on 03.03.2006 and he had given false accounts to her. Her case is that defendant No. 8 was under an obligation to disclose the profit which had accrued to her share till 03.03.2006. It is true that under Section 9 of Indian Partnership Act, the partners are bound to be just and faithful to each other, and to render true accounts and full information of all things affecting the firm to any partner or his legal representative but, the question before the Court is whether any such fraud was played upon the plaintiff, which would render the settlement voidable or not. Section 17 of Contract Act defines "fraud" as under:-

"„Fraud‟ means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:-

(1) the suggestion as a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent."

The explanation to Section 19 of Contract act provides that a fraud which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.

Since there was no linkage between the profit which had accrued to the partnership firm till 03.03.2006 and the amount which the plaintiff agreed to accept from defendant No. 8, the contract between the parties would not be voidable, even

if it is assumed that defendant No. 8 was under obligation to disclose the profits of the partnership firm till 03.03.2006 to the plaintiff.

The Exception to Section 19 of the Contract Act provides that if the consent of an agreement was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. In the case before me, the plaintiff was certainly in a position to insist that the profits earned by the firm till 03.03.2006 be disclosed to her before she entered into settlement with defendant No. 8. If the plaintiff, despite having the means to ascertain the profits of the firm till 03.03.2006, chose not to insist on the requisite information and agreed to accept a lump sum amount from defendant No. 8, the settlement between her and defendant No. 8 would not be voidable at her instance.

17. The learned counsel for the plaintiff referred to Section 88 of Indian Trust Act, 1882 which, to the extent it is relevant, provides that where a partner gains for himself any pecuniary advantage, he must hold the same for the benefit of firm. This is made abundantly clear by illustration (d) wherein it is stated that if a partner buys land belonging to the partnership firm, he/she holds such land for the benefit of the partnership. This finds further elaboration from illustration (e) and (f). There is no dispute with the proposition of law laid down in Section 88 of Indian Trust Act, but the case before this Court is not covered by the aforesaid provision. This is not a case of an individual partner obtaining some pecuniary advantage from the funds of the firm or entering into a transaction on behalf of the firm. Here, the only allegation against defendant No. 8 is that he did not disclose the profits earned by the firm till 03.03.2006 to the plaintiff. Since the plaintiff, with exercise of due diligence, could easily have obtained this information before she entered into a

settlement with defendant No. 8 and in any case there was no apparent linkage between the profits earned by the firm till 03.03.2006 and the lump sum amount agreed to be paid by defendant No. 8 to the plaintiff, no element of fraud or gaining a pecuniary advantage by a partner of the firm is involved in this case.

18. The plaintiff herself has placed on record details of the amount payment to her as on 31.12.2005. This, according to her, was the statement shown to her at the time she entered into settlement with defendant No. 8. This is not the case of the plaintiff that the partnership firm earned any substantial profit between 31.12.2005 and 03.03.2006. The case of defendant No. 8 in his reply is that there was no transaction by the firm between 31.12.2005 to 03.03.2006. If no profits were earned by the firm between 31.12.2005 to 03.03.2006, non-disclosure of the accounts as on 03.03.2005 becomes absolutely immaterial and it cannot be said that had those accounts been disclosed to the plaintiff, she would not have agreed to accept Rs 2 crore from defendant No. 8.

19. As regards profits earned between 03.03.2006 to 31.03.2006, as noted earlier, there was no agreement between the parties that the plaintiff was entitled to a share in the profits that were to be earned by the partnership firm till 31.03.2006 or till the date she retired from the firm. As noted earlier, the plaintiff would have retired from the firm at any time on or after 03.03.2006 in case the agreed amount of Rs 2 crore was paid to her. The accounts till 31.03.2006 could have been prepared only after the close of the financial year. Therefore, there was no question of the profits of the firm for the whole of the Financial Year 2005-06 being disclosed to the plaintiff on or before 03.03.2006. Even if it is presumed that defendant No. 8 had, in his contemplation, the profit which the firm could be earning between 03.03.2006 to 31.03.2006, that would make no difference to the merits of the case since there was no agreement between the parties that the

plaintiff was necessarily entitled to a share in the profits earned by firm during the whole of the Financial Year 2005-06. Defendant No. 8 had agreed to pay a lump sum amount of Rs 2 crore to the plaintiff. Had there been losses in the firm between 03.03.2006 to 31.03.2006, he would still be liable to pay that much amount to the plaintiff for the simple reason that the amount which he had agreed to pay to the plaintiff was not made dependent upon the profits to be earned by the firm during the Financial Year 2005-06. If the losses of the firm could not have been effected the amount payable to the plaintiff in her settlement with defendant No. 4, it can hardly be accepted that profits earned by the firm between 03.03.2006 to 31.03.2006 would affect the amount payable to her under the settlement. Once, the plaintiff had agreed to accept a lump sum amount of Rs 2 crore from defendant No. 8, the profits or losses of the firm became insignificant and she was entitled to nothing more or less than that particular amount, irrespective of the profits earned by the firm and her share in the profits of the firm.

20. The learned counsel for the plaintiff has referred to the decision of this Court in Union of India v. Ministry of Personnel, PG & Pension 165(2009) DLT 559, where the Court interpreted the expression "fiduciary" in the context of Right to Information Act. This judgment has absolutely no application to the issue involved in the case before this Court and, therefore, the reliance upon this judgment is wholly misplaced. The leaned counsel has next referred to the decision of Supreme Court in Deputy Collector, Northern Sub-Division, Panaji v. Comunidade of Bambolim AIR 1996 SC1 48. The reliance upon this judgment has been placed in support of IA No.11472/2012 for condonation of delay in filing IA No.11471/2012. In that case, it was found that counsel for the State was pursuing a remedy wrongly under the Portuguese Code, as a result of which the appeal of the State came to be filed beyond limitation. It was held that remedy under Portuguese Code was being

pursued bona fidely and consequently the appellant was entitled to benefit of Section 14 of Limitation Act. Since I am of the view that IA No. 11071/2012 is devoid of any merit, I need not take any view on the issue of limitation and, therefore, need not consider this judgment.

The next judgment relied upon by the learned counsel for the plaintiff is the decision of this Court on Jagat Singh and Anr. V. Hoshiari Devi 157 (2009) DLT

90. This judgment also deals with the issue of limitation and considering the view taken by me on the merits of the application, need not be analyzed.

The learned counsel for the plaintiff has relied upon the decision of this Court in Roshan Lal Arora v. State 2007 (4) JCC 2883, where this Court observed that every partner of a firm has a fiduciary obligation to render true and faithful accounts of the other partners. There is no quarrel with the proposition of law enunciated in this case. But, in the case before this Court, there was no linkage between the accounts of the firm and the account which the plaintiff agreed to accept from defendant No. 8 and in any case, nothing prevented defendant No. 8 from insisting upon the accounts of the firm till 03.03.2006 being disclosed to her before she entered into a settlement with defendant No. 8. The last judgment relied upon by the learned counsel for the plaintiff is the decision of Allahabad High Court in Mathura Datt Bhatt v. Prem Ballabh Khulba, AIR 1961 Allahabad 19 (V 48 C 3), where the High Court rejected the contention that there was fiduciary relationship between the partners and held that whether a partner acts in a fiduciary capacity or not would depend upon the facts of the case. The High Court held that though merely being accounting party would not straightway establish a fiduciary relationship between one partner or other partners in regard to every transaction, the accounting partner receives the money not only on his behalf but on behalf of all partners. It was further observed that if a partner is made Managing partner

because of some special trust which is reposed in him by the other partners, then he may come to hold a post of fiduciary relationship. The learned counsel for the defendant No. 8, on the other hand, has relied upon the decision of Supreme Court in Prem Ballabh Khulbe v. Mathura Datt Bhatt AIR 1967, Supreme Court 1342 (V 54 C 280), where the Court approved the statement of law stated in Halsbury's Laws of England 3rd Edition, Vol. 38, art. 1363, p. 820 to the effect that partnership itself does not create a fiduciary relation between the partners or make one of them a trustee for the other or for his representatives though such relations may arise on the death of one of them or be created by other special circumstances. The decision relied upon by the learned counsel for the plaintiff does not help the plaintiff for the simple reason that this is not the case of the plaintiff that defendant No. 8 had refused to disclose the accounts of the firm to her or had rendered false accounts and in any case, there was no relationship between the profits earned by the firm and the account which the plaintiff agreed to accept from defendant No. 8.

21. It has been vaguely alleged in the application that the plaintiff was pressurized to sign the compromise application, though no arguments on this plea were advanced. Coercion is defined in Section 15 of the Indian Contract Act as committing or threatening to commit any act forbidden by the Indian Penal Code, or the unlawful detaining or threatening to detain any property to the prejudice to any person whatever, with the intention of causing any person to enter into an agreement. When coercion is alleged, the allegation like fraud or misrepresentation must be supported by particulars. It is only after complete particulars of the alleged coercion are given that the Court can inquire into it and decide whether it stands proved or not.

In the case before this Court, there are no such allegations as would constitute within the meaning of Section 15 of Contract Act. This is not the case of

the plaintiff that defendant No. 8 had committed any offence against her or had threatened to commit any unlawful act qua her. This is also not her case that either she or any of her properties was detained with the intention of causing her to enter into a settlement with defendant No. 8. The application does not disclose as to what was the mode of pressurizing the plaintiff, what exactly was the pressure applied on her and where and when was it done. As noted earlier, the plaintiff is an educated lady and was present in the Court on the day compromise decree was passed. She admitted that the application for recording compromise was supported by her affidavit. She was acting on legal advice, when application for recording compromise was considered by the Court. Therefore, no case of coercion or pressurizing the plaintiff is made out.

22. For the reasons stated hereinabove, I find no merit in IA No. 11371/2012 and the same is hereby dismissed. No order needs to be passed in IA No. 11372/2012 since no merit has been found in IA No. 11371/2012. Both the IAs stand disposed of.

V.K.JAIN, J

OCTOBER 08 , 2012/rd/BG