Gujarat High Court
Narain Sobhraj Kimatrai Decd ... vs Ramchand Sobhraj Kimatrai on 7 November, 2023
Bench: Ilesh J. Vora
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/APPEAL FROM ORDER NO. 330 of 2003
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ILESH J. VORA Sd/-
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1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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NARAIN SOBHRAJ KIMATRAI DECD THROUGH HEIRS
Versus
RAMCHAND SOBHRAJ KIMATRAI & 19 other(s)
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Appearance:
VIRAL K SHAH(5210) for the Appellant(s) No. 1,1.1,1.2,1.3,1.4
for the Respondent(s) No. 11,16,17,18,19
ARJUN R SHETH(7589) for the Respondent(s) No. 1.1,2,8.1,9
DECEASED LITIGANT for the Respondent(s) No. 1,8
RULE NOT RECD BACK for the Respondent(s) No. 10,4
SERVED BY RPAD (R) for the Respondent(s) No. 13,15,20,5,6,7
UNSERVED EXPIRED (R) for the Respondent(s) No. 12
UNSERVED REFUSED (R) for the Respondent(s) No. 14
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CORAM:HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 07/11/2023
CAV JUDGMENT
1. Challenge in this appeal from order is to the order dated
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27.08.2003, in Civil Suit No.405 of 1997, passed by the Judge,
City Civil Court, Ahmedabad, by which, the application Exh.254
filed by the defendants for return of plaint, under Order 7 Rule
10 of the Civil Procedure Code was allowed and permitted the
plaintiff to present the suit to the proper Court.
2. Briefly stated, the facts of the case are that, the
appellants are the original plaintiffs, whereas, the respondents
are original defendants. The suit was filed by deceased N.S.
Kimatrai, in his individual capacity as well as a Karta and
Manager of H.U.F. and in the capacity as a partner of M/s. J.
Kimatrai & Company, for specific performance of M.O.U. dated
30.04.1995 and 25/30.08.1995. In the said suit, the following
prayers were made:
(i) the defendant nos.1 to 3 and others directed to
transfer their share holding in the defendant no.4
company;
(ii) transmit the tenancy rights of the shops at
Chandani Chowk, Delhi and one godown;
(iii) to pass a decree in terms of money to the tune of
Rs.9,30,000/- to be paid by the defendants who had
received the amount from the joint property;
(iv) pass a decree for dissolution of M/s. J. Kimatrai &
Company, Bombay having branches at Ahmedabad
and Delhi with effect from 30.04.1995;
(v) permanent injunction restraining the defendants
entering into the business premises and do no
disturb the lawful possession of the defendant no.4
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company and shall not transfer or alienate the said
property known as " Shobhraj Bhavan" situated at
Navrangpura, Ahmedabad.
Upon service of summons, the suit was contested
by the defendants and have denied the averments and
allegations made in the plaint. It was averred in the
written statement that, the suit in the present form is not
maintainable as except the defendant nos.1, 2 and 3, the
other defendants who are not party to the M.O.U. and
therefore, it cannot be enforced in the present suit. That,
the necessary and material facts having been suppressed
by the plaintiffs. That, the property namely "Shobhraj
Bhavan" which is the property of the company J.K.P.P.
Limited and dispute in this regard is pending before the
Mediators and so far as partnership firm J. Kimatrai &
Company is concerned, it is having office at Delhi and
Mediators had decided to entrust the properties owned
by the partnership firm to the defendant no.1 as per the
valuation dated 19.08.1995. That, the plaintiff is not the
owner of Shobhraj Bhavan property and it is the
registered office of J.K.P.P. Limited and in that view of the
matter, the suit in the present form is not maintainable.
That, the M.O.U. upon which the suit is filed was drafted,
executed before the Notary at Bombay as the parties
who have executed are residing at Bombay and
therefore, the Civil Court, Ahmedabad having no
territorial jurisdiction to try the suit.
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Based on the pleadings, the Civil Court vide Exh.155
framed the issues.
After settlement of the issues, the respondents
herein submitted an application Exh.254 for framing the
preliminary issue of jurisdiction. The learned trial Court
after hearing the parties, framed the preliminary issues
regarding the jurisdiction of the Court which reads thus:
8(B) Whether this Court has jurisdiction to try the
suit or not?
After hearing the parties, the learned trial Court
decided the preliminary issue of jurisdiction in negative
i.e. it was held that, the Civil Court having no territorial
jurisdiction to try the suit. The Civil Court by invoking
Order 7 Rule 10 of the CPC, returned the plaint to be
presented before the Competent Court.
3. Being aggrieved and dissatisfied with the said order
dated 27.08.2003 passed below Exh.254, the present Appeal
from Order has been preferred under Order 43 Rule 1(a) of the
Civil Procedure Code.
4. This Court has heard learned counsel Mr. Viral K. Shah
appearing for and on behalf of the appellants, Mr. Arjun Sheth
and Mr. J.A. Adeshara, learned counsel for the respondents
herein.
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5. Mr. Viral Shah, learned counsel for the appellants has
submitted that, the Suit No.405 of 1997 was at the stage of
recording the evidence of the plaintiffs and at the midst of the
trial, the application for framing the preliminary issue of
jurisdiction was filed and therefore, at the stage of evidence,
the trial Court fell into error to entertain the application of
framing the preliminary issues. That, the property of the
company known as "Shobhraj Bhavan" is situated at
Ahmedabad and therefore, as per Section 16 of the CPC,
plaintiff has right to file a suit where the subject matter is
situated. That, some of the defendants are resides and carries
on business in the territory of Ahmedabad and therefore, in
view of Section 20 of the CPC, the suit has been rightly
instituted where the defendants reside or cause of action
wholly or in part arises. That, the issue of territorial jurisdiction
is a mixed question of facts and law as the property "Shobhraj
Bhavan" is the subject matter of dispute and considering the
other issues framed by the trial Court at Exh.154, the trial
Court could not have disposed of the suit on a preliminary
issue of jurisdiction. That, the trial Court exceeded its
jurisdiction in considering the defense of the defendants and
overlooked the averments and pleadings of the plaint and
therefore, the order impugned is not tenable in eye of law.
6. In view of aforesaid contentions, learned counsel Mr.
Shah submitted that, the impugned order suffers from
infirmities and having been passed contrary to the statutory
provision of the CPC and is against the settled principles of law
and facts which deserves to be set aside.
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7. The appeal has been strongly opposed by learned
counsel Mr. Arjun Sheth and Mr. J.A. Adeshara for the
respondents. They have submitted that, the learned trial Court
has not committed any error much less an error of law which
can be said to have been committed by the Court. That, the
defendants have challenged the terms and conditions of
M.O.U. by filing the suit before Bombay High Court wherein the
appellants have not raised any objection about the jurisdiction
and therefore, the Civil Court at Ahmedabad having no
territorial jurisdiction, more particularly, no any movable or
immovable properties situated in the territory of Ahmedabad
Court as the property referred are at Delhi and Bombay and
"Shobhraj Bhavan" is not the property of the plaintiff, but it is
owned by the company and therefore, the suit with respect to
"Shobhraj Bhavan" is not maintainable at the instance of
plaintiff herein. That, the plaintiff being a share holder acquires
right to participate in the profits of the company, but he does
not have any right or interest in the assets of the company and
therefore, he does not have any right in the property of the
company so far Shobhraj Bhavan is concerned. (Chiranjit Lal
Chowdhuri vs. The Union of India & Ors.) (1950 SCC 833)
8. That, the learned trial Court has rightly appreciated the
said aspects and has properly exercised its discretion in
framing the issue of jurisdiction. That, the learned trial Court
assigned the cogent and sufficient reasons on the issue of
territorial jurisdiction and instead of rejecting the plaint, the
Court reserving the rights of the parties, returned the plaint.
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9. In view of aforesaid contentions, learned counsel
submitted that, the appeal may be rejected being devoid of
any merits.
10. This Court has heard at length learned counsel for the
respective parties, perused the averments made in the appeal,
contents of impugned order and affidavit in reply.
11. Before adverting to the rival contentions, it is necessary
to refer the observation made in the impugned order by the
trial Court. Para-16 to 27 are relevant to appreciate the
contentions raised by the parties which reads thus:
"16. After considering the rival submissions and on
perusal of documentary evidence, it is clear that the
plaintiff has filed the present suit for the specific
performance of the agreement or MoU between the
plaintiff and defendants 1, 2 and 3. In plaint itself, the
plaintiff has stated that the defendant No.2 and 3
have filed a Civil Suit at Bombay challenging the MoU
and thereby committing breach of the contract
between the parties. Thus, one litigation is pending
before the Bombay High Court wherein the agreement
on which the plaintiff has sought for performance of
the MoU and thus legality of the agreement is
challenged in the said suit. Now the plaintiff has relied
on Secs.16 and 20 of CPC for the purpose of
jurisdiction. But the plaintiff has prayed for
performance of MoU and according to the MoU the
property between the parties is required to be
partitioned and, therefore, the plaintiff's suit falls
under Sec.16 and 17 CPC and Sec.20 pertains to other
suits and it starts with the words "subject to the
limitation aforesaid..... and under the circumstances,
Sec.20 will not be applicable to the present case.
17. So, now the question remains for my consideration
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is whether any immovable property is situated within
the jurisdiction of this court of which the plaintiff has
claimed partition. If question is replied in affirmative,
then this court has jurisdiction.
18. Though the matter was kept for hearing of
preliminary issue, no one has cared to inform this
court that who are partners of the partnership firm
situated at Ahmedabad.
19. It is admitted by both the parties that Sobhraj
Bhavan is owned by J.Kimatrai Printers Ltd. The
perusal of the MoU dt 30-4-95 reveals that four firms
referred to hereinabove are agreed to be dissolved. It
is also revealed from this document that Shri
N.S.Kimatrai and M.V.Kimatrai are to retire from
Krishna Industries and M/s. N.S.Kimatrai (HUF) also
was to retire from J.Kimatrai and Company Bombay
and Delhi and that Delhi property will belong to N.S.K.
Group wholly. It is further agreed in this MoU that
R.S.Kimatrai (HUF) and M.V.Kimatrai will retire from
J.Kimatrai and Co. Delhi. It also transpires from this
document that all the shops at Chandni chowk, the
godown at Kinari Bazar as well as J.Kimatrai Printers
Ltd with Sobhraj Bhavan belong to N.S.K. group. It
further transpires from this document that Mr.Jawahar
Gopwani, Kailash Monga and Kishan Bodhwani are
appointed to work out the exact liabilities and mode of
peaceful separation in the welfare of Kimatrai family. It
also transpires from this document that the parties
have principally agreed to above three groups division
which was at the relevant point of time on
approximate basis so far as the value of the properties
was concerned and that is also agreed that after the
above referred three persons revalue the properties
and given their decisions, the assets and liabilities will
be adjusted amongst the parties. The signataries to
this MoU are of all thae above four groups.
20. The property is not owned by either of the groups
between whom the MoU was executed but it is the
Company property. Moreover, the plaintiff has prayed
that the defendants may be directed to transfer their
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share holdings of the said company in favour of the
plaintiff and, therefore, what the plaintiff prayed in the
suit is transfer of moveable property i.e. their share
holdings of the said company and, therefore Sobhraj
Bhavan is not required to be partitioned, but only
shares are required to be transferred. It cannot be said
that the immoveable property is situated within the
jurisdiction of this court. The defendant No.15 is an
individual and according to plaintiff, he is only a well-
wisher of the plaintiff and the defendants groups and
he was appointed by the plaintiff and the defendants
to partition the property between them and, therefore,
his presence is not necessary to decide the jurisdiction
of this court.
21. Now defendant No.4, 16. 17 and 18 are also
Companies registered under the Companies Act.
While, the defendant No. 18 is a partnership firm. Now
whether a partnership firm's property, can be said to
be an immovable property within the jurisdiction? To
decide that point, I rely on the Judgment in the case of
N.Khadervali Saheb (Dead by LR and anr) VS. N. Gudi
Sabib (Dead) ors. reported in 2003(1) Civil Court Cases
680 (S.C.) wherein it is held that "a partnership firm is
not an independent legal entity, the partners are the
real owners of the assets of the partnership firm.
Actually the firm name is only a compendious name
given to the partnership for sake of convenience. The
assets of the partnership belong to and are owned by
the partners of the firm. So long as partnership
continues each partner is interested in all partnership
firm as each partner is owner of the assets to the
extent of his share in the partnership. On dissolution
of the partnership firm, accounts, are settled amongst
the partners and the assets of the partnership are
distributed amongst the partners as per their
respective shares in the partnership firm. Thus, on
dissolution of a partnership firm, the allotment of
assets to individual partner is not a case of transfer of
any assets of the firm. The assets which herein before
belonged to each partner, will after dissolution of the
firm stand allotted to the partners individually. There
is no transfer or assignment of ownership in any of the
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assets. This is the legal consequences of distribution
of assets on dissolution of partnership firm. The
distribution of assets may be done either by way
arbitration award or by mutual settlement between
the partners themselves. The document which records
the settlement in this case is an award which does not
require registration under Sec. 17 of the Registration
Act since the document does not transfer or assign
interest in any asset. This question stands concluded
by a decision of this Court in S. V. Chandra Pandian
and Others V S.V. Sivalinga Nadar and others, (1993) 1
SCC 589. This was also a case of distribution of assets
of a dissolved firm by way of an award. This Court
noticed that the award read as a whole made it clear
that the arbitrators had confined themselves to the
property belonging to the partnership firm and had
scrupulously avoided other properties. While
distributing the residue assets, the arbitrators
allocated the properties to the partners. Sec. 48 of the
Partnership Act was applied and the properties were
allocated to the partners as per their share on the firm
after settlement of accounts on dissolution. This Court
took the view that the property falling to the share of
the partner on distribution of the residue would
naturally belong to him exclusively "but since the eye
of law it is money and not an Immovable property
there is no question of registration under Section 17 of
the Registration Act". From the above observation, it is
clear that even of the firms are dissolved as as per the
MoU there will be no transfer or assignment of
ownership in any assets, as the dissolution does not
transfer any assets. Under the circumstances, though
there may be property held by the partnership firm,
that is actually not required to be partitioned and,
therefore, it cannot be said that any immovable
property is situated within the jurisdiction of this
Court, and therefore, Sec-18 will not be applicable to
the present case and, therefore, this Court has no
jurisdiction to try this suit.
22. It is also pertinent to note that the plaintiff has
prayed for injunction against the defendants regarding
Sobhraj Bhavan but it is also admitted by the parties
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that the properties belong to the Company and the
plaintiff is not the owner of the suit premises. He can
have control over the suit premises if majority of share
holdings is transferred in its favour. Moreover, the suit
is not filed by the Company Secretary or any
authorized person authorized by the company and
therefore, prayer regarding injunction cannot be
granted by this court. Moreover, it is clear from the
pleadings of the parties that Sobharaj Bhavan is the
registered office of J.Kimatrai Printers and Processors
Pvt. Ltd., and, therefore, the plaintiff cannot be said to
be in exclusive possession of the registered office of
the Company and he cannot seek relief of permanent
injunction restraining any other person from entering
in the premises and if such type of injunction is
granted then the whole business of the company
would be badly affected and it would not be possible
for the company to carry on its day to day
transactions. Under the circumstances, on this count
also, the suit is not maintainable in respect of "Sobhraj
Bhavan".
23. It is also clear from the view of the Hon'ble
Supreme Court that the property falling to the share of
the partner on distribution of the residue would
naturally belong to him exclusively but in the eye of
law it is money and not an immovable property.
(M.Khadervali case) (supra).
24. I do not find any substance in the submission of
the l.a. for the defendant Mr.D.R.Shah that this issue
cannot be tried at this stage, as it is held by the
Hon'ble Supreme Court in the case of Saleem Bhai v.
State of Maharashtra & Ors: 2003(1) Civil Court Cases
569 (S.C.) that "a perusal of order VII Rule 11 CPC
makes it clear that the relevant facts which need to be
looked into for deciding an application thereunder are
the averments in the plaint. The trial count can
exercise the power under Order VII Rule 11 CPC at any
stage of the suit before registering the plaint or after
issuing summons to the defendant at any time before
the conclusion of the trial".
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Order VII Rule 11 CPC reads as under:
"11. Rejection of plaint: The plaint shall be rejected in
the following cases:-
(a) ....
(b) ....
(c) ....
(d) where the suit appears from the statement in the
plaint to be barred by and law;
(e)....(f)..."
So, if the suit is not filed within the territorial
jurisdiction of the court, the same principle and
analogy will apply to the present case also and I,
therefore, do not find any substance in the submission
of Mr. D.R.Shah.
25. Moreover, the plaintiff himself has stated in the
plaint that the defendant has also filed a suit before
the Bombay High Court and it has challenged the
legality of the MoU. The plaintiff has also stated in
para 20, page No.76 that the defendant No.2 and 3
have filed a Civil Suit in the High Court at Bombay
challenging the MOU and thereafter the plaintiff has
filed this suit In this Court. The plaintiff has also shown
his Bombay address in the plaint and it appears that
he is residing at Bombay. The MoU is also executed at
Bombay. The defendants No.1, 2 and 3 who have
singed the MoU are also residing at Bombay and,
therefore, it can be said that the plaintiff has filed this
suit in order to harass the defendants which clearly
abuse of process of law. It is needles to say that two
proceedings should not be parallely proceeded in
different courts and it would certainly adversely affect
the uniformity of the decisions of the courts. Moreover,
justice is not only to be done but seen to be done. If
two different courts give conflicting views then it
would shake the confidence and faith of the people in
the judiciary and under the circumstances, it is more
desirable that the suit filed by the defendants
challenging the MoU prior to filing of this suit, shall be
tried first and I do not think any difficulty for the
plaintiffs to take all these contentions before the Court
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at Bombay where the MoU is challenged. I find much
substance in the arguments of the defendants.
26. Moreover Order VII Rule 10 says that -
"10. Return of plaint Subject to the provisions of Rule
10A, the plaint shall at any stage of the suit be
returned to be presented to the Court in which the suit
should have been instituted" and wherein also, the
words are used "at any stage of the suit be returned"
and that means, there is a clear cut intention of the
Legislature that if the Court finds it has no jurisdiction
then, the suit must be returned and the court shall not
proceed with the suit.
27. case It is also held by the Kerala High Court in the
case M/s.Femina Handloom of India, Cananore v. M/s.
M.R. Verma & Sons: AIR 1993 Kerala 210, that "where
the defendant alleged that the court has no
jurisdiction to try the case and an issue is framed
regarding jurisdiction for the convenience of the
parties same should have been tried as preliminary
issue and if the court finds that it has no jurisdiction
the plaintiff can very well proceed the litigation in the
proper court. The finding regarding jurisdiction at the
final stage would only cause undue hardship to
parties."
12. Having heard the learned counsel for the respective parties, the
issue falls for my consideration is to whether the impugned order
returning the plaint under Order 7 Rule 10 suffers from any error of law
and calls for interference in the exercise of appellate jurisdiction?
13. By following reasons, my answer is in negative:
(i) It is not in dispute that, the original plaintiff Naren
Shobhraj was resident of Bombay and the partnership
firm M/s. Kimatrai & Company doing its business at
Bombay. The defendants no. 1, 2 and 3 are also
residing at Bombay. The defendant no. 4 -
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J.Kimatrai Printers and Processors Pvt. Ltd. is a
company. The other defendants namely defendant
nos.5 to 18 have been joined either in person or as
a company registered under The Companies Act.
The M.O.U dated 30.04.1995, and 25/30.08.1995
which is subject matter of the suit, was executed,
signed and notarized at Bombay. The suit
challenging the validity of the MOUs filed by the
defendant nos.1 to 3 is pending at Bombay High
Court. The present suit is for specific performance
of the MOUs and for issuance of necessary
directions to transmit the tenancy rights of the
rented shops situated at Delhi and decree is sought
for dissolution of the partnership firm M/s. J.
Kimatrai & Company and restrain the defendants in
transferring or alienating the property Shobhraj
Bhavan situated at Ahmedabad. The Shobhraj
Bhavan is owned by J. Kimatrai Printers and
Processors Pvt. Ltd. The plaintiff as well as
defendants are share holders of the said company.
(ii) In the aforesaid background facts, if we read the
plaint as a whole, the learned Court below rightly
held that, the suit related to the property as well as
the MOU which had been executed at Bombay,
situated outside the jurisdiction of the trial Court
and Section 20 of the CPC is not attracted. The
property referred in the plaint is the property of the
company. The principal relief sought is to transfer
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the share holding of the company and in that view
of the matter, merely a property of the company
situated at Ahmedabad, it would not give any cause
to file a suit at Ahmedabad for transferring the
share holdings. Learned trial Court on the issue of
transfer or assignment of assets on dissolution of
the partnership firm, has rightly come to conclusion
that, in case of dissolution of the firms, as per the
MOUs, there will be no transfer or assignment of the
ownership, as the dissolution does not transfer any
assets. This Court is also after analysis of the
record, come to conclusion that, the suit related to
the property situated outside the jurisdiction of the
trial Court. It needs to be noted that, the Shobhraj
Bhavan which is owned by the company and
considering the holding of the plaintiff, he cannot
claim any partition or interest in the assets of the
company and on this issue, the Apex Court in case
of Chiranjit Lal (supra), in equivocal terms held that,
a share holder has got no interest in the property of
the company though he has undoubtedly a right to
participate in the profit. The learned trial Court
after referring the statutory provisions of Order 7
Rule 10 of the CPC, held that, at any stage if the
Court formed an opinion that, there is no territorial
jurisdiction to entertain the plaint, then, the proper
course is to return the plaint for presentation to the
proper forum. Thus, the objectives of Order 7 Rule
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10 are clear and specific and at any stage, after
having found that, there is lack of territorial
jurisdiction to entertain the plaint, the Court, has no
alternative but to return it for presentation to the
proper forum. In the facts of present case, both the
MOUs were signed and executed at Bombay. The
properties referred are situated outside the
jurisdiction of the trial Court. The plaintiff being a
share holder of the company cannot claim any right
or interest in the assets of the company. In such
circumstances, reading the plaint as a whole, no
immovable property situated within the territorial
jurisdiction of the Ahmedabad City Court and the
conclusion arrived at by the trial Court to return the
plaint cannot be said to be perverse or dehors to
the statutory provisions. It is settled legal position
that, at the stage of consideration of return of
plaint, the Court has to read the plaint in a
meaningful manner to find out the real intention
behind the suit. In the facts of the present case, the
MOUs have been challenged by the defendants by
filing the civil suit at Bombay High Court. The
parties are permanent residents of Bombay. In such
circumstances, the intention to file the present suit
at Ahmedabad speaks voluminous and no further
reasons on this issue are require to be assigned.
14. For the reasons aforestated, this Court does not find any
perversity in the order impugned and no grounds are made out
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warranting interference by this Court and thus, the present
Appeal from Order is devoid of any merits and is hereby
dismissed. No order as to costs.
Sd/-
(ILESH J. VORA,J)
TAUSIF SAIYED
