Karnataka High Court
Sri vs Balasubramanayam V/S L K Trust on 7 March, 2024
-1-
NC: 2024:KHC:12527
RFA No. 1495 of 2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF MARCH, 2024
BEFORE
THE HON'BLE MR JUSTICE C M JOSHI
REGULAR FIRST APPEAL NO.1495 OF 2012
(DEC/INJ)
BETWEEN:
1. SRI V.S BALASUBRAMANAYAM,
S/O. LATE V.S SHESHA IYER,
AGED ABOUT 77 YEARS.
2. SMT. KALAVATHI,
W/O V.S. BALASUBRAMANAYAM,
AGED ABOUT 56 YEARS.
BOTH ARE R/AT NO.7/3,
BULL TEMPLE ROAD,
SHANKARAPURAM,
BANGALORE-560 004.
...APPELLANTS
Digitally signed
by NANDINI R (BY SRI S SHAKER SHETTY &
Location: High SRI A ANIL KUMAR SHETTY, ADVOCATES [V/C])
Court of
Karnataka AND:
1. L.K. TRUST,
NO.9, SHESHADRI ROAD,
BANGALORE-560 009.
REP. BY ITS TRUSTEE-
K L SWAMY.
2. M/S. HIGHLAND ENTERPRISES,
REGISTERED PARTNERSHIP FIRM,
NO.101, INFANTRY ROAD,
-2-
NC: 2024:KHC:12527
RFA No. 1495 of 2012
BANGALORE-560 001.
REP. BY ITS PARTNER-
K L SWAMY.
3. M/S. PRESTIGE ESTATE PROJECTS PVT. LTD.,
'THE FALCON HOUSE',
NO.1, MAIN GUARD CROSS ROAD,
BANGALORE-560 001.
BY ITS DIRECTOR
MR. IRFAN RAZAK.
...RESPONDENTS
(BY SRI ABHINAV R. & SRI M. GURUMURHTY, ADVOCATES
FOR R1 & R2;
SRI GANAPATHI HEGDE, SENIOR COUNSEL FOR M/S DUA
ASSOCIATES, FOR R3)
THIS RFA IS FILED UNDER SEC.96 OF CPC., PRAYING TO
CALL FOR THE RECORDS AND SET ASIDE THE JUDGMENT AND
DECREE PASSED BY THE I ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE, BANGALORE IN O.S.NO.4030 OF 2009,
PASSED ON 30.7.2012 AND ALLOW THE APPEAL, WITH COST
THROUGHOUT.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
30.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed by the plaintiffs in
O.S.No.4030/2009 being aggrieved by the judgment of
dismissal of the suit by the I Additional City Civil and
Sessions Judge, Bangalore, dated 30.07.2012.
NC: 2024:KHC:12527
2. The parties would be referred to as per their
ranks before the Trial Court for the sake of convenience.
3. The plaintiffs - appellants filed the suit for
declaration that they are not bound by any arrangements
made or the documents entered into between the
defendants pertaining to the suit schedule properties and
for the mandatory injunction directing the defendants to
demolish the construction put up on the suit schedule
properties and also for the permanent injunction to
restrain the defendants from interfering with the plaintiffs'
possession over the suit schedule properties. The claim of
the plaintiffs is based upon the contention that the
plaintiffs are the absolute owners of the suit schedule
properties. They contend that defendant No.1 is a
registered Trust and defendant No.2 is a registered
Partnership Firm, wherein defendant No.1 is also a
partner. Defendant No.3 is a Company incorporated under
the Companies Act. The plaintiffs contended that plaintiff
No.2 is full owner of the land bearing Sy.No.43 measuring
NC: 2024:KHC:12527
05 acres 09 guntas situated at Ittumedagu village which
was acquired under a registered sale deed dated
20.06.1980. Plaintiff No.1 is the full and absolute owner of
the land bearing Sy.No.125 measuring 04 acres 20 guntas
situated at Hoskerehalli village. Both the lands are situated
at Uttarhalli, Bengaluru South Taluk and the properties are
in legal physical possession of the plaintiffs.
It is the case of the plaintiffs that, the Bangalore
Development Authority (BDA), proposed to acquire the
said lands and at that time, the two brothers of plaintiff
No.2 i.e., V. S. Nataraj and V.S. Gopalswamiy at the
instigation of the Trustees of defendant No.1- Trust
persuaded the plaintiffs to enter into a nominal agreement
to sell the property to V. S. Nataraj contending that if a
representation is made to the Government saying that a
Super Specialty Hospital for the benefit of the poor is
proposed to be constructed, the land may be exempted
from the acquisition proceedings. The plaintiffs believed
the same and entered into a nominal agreement and got
NC: 2024:KHC:12527
the exemption. They have also got the permission of the
competent authority under the Urban Land (Ceiling and
Regulation) Act, (ULC Act for short), to alienate the same
in favour of the said V.S.Nataraj. However, the said
agreement was a nominal agreement and it was neither
for any construction nor for acting upon. It was only for
the purpose of saving the land from acquisition. It is
contended that thereafter, the said V. S. Nataraj
persuaded the plaintiffs to enter into a nominal Partnership
Deed with the defendant No.1 - Trust, stating that the
Trustee is very influential in the Government and will
work for not to include the said lands in the notification for
acquisition. The plaintiffs did not agree for the same,
however, on an assurance that the Partnership Deed
would be drawn in such a fashion that the document itself
becomes invalid. Therefore, Nominal Agreement of sale in
favour of the said Nataraj was cancelled and the
Partnership Deed was entered into for which the said V.S.
Nataraj also attested as a consenting party.
NC: 2024:KHC:12527
4. It is contended that the both the suit schedule
properties were given to the Firm as a capital contribution,
but defendant No.1 - Trust had not contributed anything
to the Partnership. The plaintiffs contended that the said
partnership with defendant No.1 is non-est on several
grounds as below:
A. The first ground is that defendant No.1 did not
contribute anything to the partnership and there is
no recital how much should be the contribution of
defendant No.1.
B. Secondly, without indicating the amount to be
contributed by him and without valuing the property
contributed by the plaintiffs, the ratio of profit and
loss was stated to be 3% for the plaintiffs and 97%
for defendant No.1 - Trust. Therefore, it was a clear
indication that it was only nominal deed of
partnership firm.
NC: 2024:KHC:12527
C. Thirdly, it is contended that the suit schedule
properties are the agricultural lands and the
Partnership Firm could not have acquired any
agricultural lands, since there is a prohibition under
Section 79B of the Karnataka Land Reforms Act.
Either defendant No.1-Trust or defendant No.2-
Partnership Firm could not have possessed any
agricultural lands.
D. Fourthly, under Section 48 of the Trust Act, all the
Trustees of defendant No.1- Trust should have
joined in execution of the Partnership Deed.
However, only K. L. Swamy, had signed the
Partnership Agreement, who is not authorized under
the Trust Act or under the Trust Deed to do so.
Therefore, the Partnership is without legal sanction
and such Partnership is non-est.
E. Fifthly, it is contended that the parties have not at all
treated suit properties as properties of the
Partnership Firm and there was no such mutation of
NC: 2024:KHC:12527
the names in the revenue records. Therefore, the
properties continued in the names of the plaintiffs.
F. Sixthly, at the time of partnership, they had no any
business and there was no such developmental work
done in respect of the suit schedule properties and
the first partner never invested anything to promote
the development. Therefore, the Partnership had
never come into existence and it was only for the
purpose of saving the properties from the
acquisition.
G. It is contended that the plaintiffs have filed an
application to the BDA to get the development plan
approved for Group Housing in the year 1990 and no
application was filed at all by the Partnership Firm.
The application filed by the plaintiffs was approved
by the BDA on 22.01.1999. The plaintiffs had also
deposited a sum of Rs.55,75,229/- to the BDA on
19.09.2001. However, it is stated that the
development plan for group housing was sanctioned
NC: 2024:KHC:12527
jointly in the name of the plaintiffs, but not in the
name of the Firm. Therefore, suit schedule properties
never became the properties of the Firm. It is
contended that defendant No.2 prepared a
retirement- cum -reconstitution Deed dated
22.05.2004 and in the said Deed there is no
statement made about the total assets of the Firm
and the total liability of the Firm and no balance was
shown. It is contended that the said Deed of
Reconstitution is cleverly drafted and nowhere in the
said deed was it specifically mentioned as to whether
these lands continued to be the assets of the Firm or
not. Therefore, the lands continued to be the
properties of the plaintiffs.
H. They also contended that on the date of the
Partnership Deed, Sri. K. L. Swamy, had taken a
General Power of Attorney from the plaintiffs and by
virtue of the power of attorney as an agent, Sri. K. L.
Swamy, has the power to enter into the lands, but
such power was withdrawn by the plaintiffs under the
- 10 -
NC: 2024:KHC:12527
legal notice dated 07.02.2006. They also contended
that the lands are only agricultural lands and it is
only after the development plan which was approved
by the BDA that it has become residential.
I. It is also contended that the Retirement-cum-
reconstitution of the partnership is liable for Stamp
Duty under Article 20 of the Karnataka Stamp Act
and no such stamp duty was paid on it. This also
indicates that the alleged partners to the Partnership
Firm had treated the suit schedule properties to be
exclusive properties of the plaintiffs and it was never
considered to be the properties of the Partnership
Firm.
J. It is contended that defendant No.2 entered into an
agreement with defendant No.3- Company for the
purpose of the development and the plaintiffs had
objected and informed the revenue officers of the
BBMP not to change the Khata of the lands in the
name of defendant No.3 or defendant No.2. It was
further alleged that the defendants had taken the
- 11 -
NC: 2024:KHC:12527
signatures on number of documents without allowing
them to read and the plaintiffs have continued to be
the absolute owners of the suit schedule properties
even today and they are in lawful possession of the
same. It is contended that defendant No.1 has no
right, title or interest to develop the suit schedule
properties and the defendants attempted to do the
same and therefore, plaintiffs had to file the present
suit.
5. On the basis of the above contentions, the
following prayers are made by the plaintiffs:-
(a) Plaintiffs pray that this Hon'ble Court
may be pleased to declare that they are not bound
by any arrangements made or the documents
entered into in between the defendants pertaining
to the suit schedule properties;
(b) This Court may pleased to pass a
decree for mandatory injunction directing the
defendants to demolish the construction put up on
the suit scheduled properties;
- 12 -
NC: 2024:KHC:12527
(c) This Court may pleased to pass a
mandatory injunction restraining the defendants or
anybody claiming under the defendants from
alienating the suit schedule properties;
(d) A decree of permanent injunction may
be passed restraining the defendants or anybody
claiming under them from interfering with the
possession of the suit schedule properties and for
costs of the suit.
6. Defendants No.1 and 2 filed the written
statement and contested the suit. In the written statement
the defendants contended that in pursuance to the Deed
of Partnership dated 23.12.1998, the plaintiffs have
surrendered the vacant possession of the suit schedule
properties to the defendants. They contended that the suit
schedule properties which are described to be the
agricultural properties are no longer the agricultural
properties as they are falling within the jurisdiction of the
BBMP and the BBMP has sanctioned the plan in favour of
the defendant No.2 to put up the residential complex.
- 13 -
NC: 2024:KHC:12527
7. It is further contended that the plaintiffs have
gone out of the Partnership Firm vide the Retirement Deed
dated 22.05.2004 after collecting their monies due under
the Partnership Firm. Therefore, plaintiffs are not in legal
or in actual physical possession of the suit schedule
properties. They further contended that the sum of
Rs.50,75,229/- was paid by the Partnership Firm and as
on the date of the payment of the said amount plaintiffs
had absolutely no money.
8. They have also contended that the power of
attorney could not have been withdrawn under a legal
notice as the same is coupled with interest. The said notice
dated 10.07.2006 was replied by the defendants by taking
the above said contentions. It is contended that the
plaintiffs have taken their share of money under the
Retirement Deed without any whisper of protest and they
have sworn to the affidavits on the same date i.e., on
22.05.2004. Therefore, they have contended that the suit
- 14 -
NC: 2024:KHC:12527
schedule properties are remained to be the properties of
the Partnership Firm.
9. They have further contended that the frame of
the suit is not proper and the plaintiffs have not sought for
any declaration that the documents which are executed by
them in favour of defendants No.1 and 2 are illegal and
void. Unless the plaintiffs seek the declaration that the
documents executed by them in favour of defendants No.1
and 2 are void, they cannot claim reliefs sought in the
plaint. Therefore, the plaint is cleverly drafted in order to
avoid the Court fee and limitation.
10. They contended that the plaintiffs have
executed a registered Joint Development Agreement ('JDA'
for short) dated 23.09.2005, as consenting witnesses and
said JDA has been executed by defendants No.1 and 2 in
favour of defendant No.3. Therefore, the plaintiffs knew
about the JDA and they had consented for it.
- 15 -
NC: 2024:KHC:12527
11. They have contended that by the Partnership
Deed dated 23.12.1988, the plaintiffs have in unequivocal
terms admitted that the suit schedule properties are the
properties of the Partnership Firm and not their individual
properties. It is contended that by cleverly drafting the
plaint, the plaintiffs are seeking to assail the Partnership
Deed dated 23.12.1988 after 20 years; and in order to
avoid the limitation, the prayer in the present form has
been sought by them. Therefore, they contended that the
suit is hopelessly time barred and is liable to dismissed
with the exemplary costs.
12. It is contended that the Deed of Retirement
came to be executed on 22.05.2004 and in case the
plaintiffs claim that they have been cheated while entering
into such Retirement Deed and their valuable rights have
been lost, the remedy would be to file suit within 03 years
from the date of execution of the Retirement Deed.
Therefore, on this count also the suit is bad.
- 16 -
NC: 2024:KHC:12527
13. Nowhere in the plaint, have the plaintiffs
contended that they are illiterate and their signatures were
taken out of fraud and coercion. The plaintiffs have failed
to disclose that they had jointly received a sum of
Rs.5,75,00,000/- from the defendants at the time of
retirement from the Partnership Firm. It is contended that
the plaintiffs had also filed the frivolous litigation in the
form of CMP.No.34/2007 seeking an appointment of
Arbitrator and it was dismissed by this Court at the stage
of admission. It is contended that the plaintiffs had also
issued notices to V.S. Gopalswamy and V.S.Nataraj and as
per the terms of the notice, the plaintiffs have sought to
claim an amount due from the said V.S. Nataraj and
V.S.Gopalswamy and as such, by their own admission, the
validity of the Partnership Deed was confirmed. The
amounts were also paid to the said V.S. Gopalswamy and
V.S. Nataraj while re-constituting the Partnership Firm.
Therefore, the defendants contended that the suit of the
plaintiffs is speculative and only to harass the defendants
by making reckless allegations and therefore, the suit is
- 17 -
NC: 2024:KHC:12527
liable to be dismissed. They further contended that the
plaintiffs while assailing the Partnership Deed dated
23.12.1988 and Retirement Deed dated 22.05.2004, they
have to pay the necessary Court fee on the value of the
suit schedule properties and also the money received by
them and a suit without seeking for the accounts of the
Firm, in the present form is not maintainable.
14. Defendant No.3, who was impleaded later has
filed a separate written statement raising similar
contentions. It further contended that the suit is not
maintainable and that the plaintiffs are not in possession
of the suit schedule properties. The very prayer of the
plaintiffs in the suit shows that the plaintiffs are not in
possession of the suit schedule properties and it is an
admitted fact that the defendants are in possession of the
suit schedule properties. It is contended that the
construction in the suit schedule properties is in progress
where several high rise towers have been put up and if
- 18 -
NC: 2024:KHC:12527
the prayers are allowed, defendants No.2 and 3 will be put
untold hardship.
15. On the basis of the above pleadings, the Trial
Court framed the following issues:
«ªÁzÁA±ÀUÀ¼ÀÄ
1. 2 £Éà ªÁ¢AiÀÄÄ zÁªÁ ±ÉqÀÆå¯ï D¹ÛUÀ¼À ªÀiÁ°ÃPÀgÀÄ J£ÀÄߪÀÅzÀ£ÀÄß
ªÁ¢AiÀÄgÀÄ gÀÄdĪÁvÀÄ ªÀiÁrzÁÝgÉAiÉÄÃ?
2. 2£Éà ªÁ¢AiÀÄ ¸ÀºÉÆÃzÀgÀgÀÄ ªÀÄvÀÄÛ 1£Éà ¥ÀæwªÁ¢AiÀÄÄ læ¹ÖÃUÀ¼ÁzÀ
«.J¸ï..£ÀlgÁeï ªÀÄvÀÄÛ «.J¸ï.UÉÆÃ¥Á® ¸Áé«Ä ªÁ¢UÉ zÁªÁ ±ÉqÀÆå¯ï
D¹ÛUÀ¼ÀÄ ©.r.J. ¨sÀƸÁé¢üãÀ ºÉÆAzÀ¨ÁgÀzÉ£ÀÄߪÀ GzÉñÀ¢AzÀ
«.J¸ï.£ÀlgÁeï ºÉ¸ÀjUÉ CzÀ£ÀÄß ªÀiÁgÁl ªÀiÁqÀ®Ä ¥ÀæAiÀÄwß¹zÀgÀÄ
J£ÀÄߪÀÅzÀ£ÀÄß CzÀjAzÁV vÁ£ÀÄ PÀgÁgÀÄ ªÀiÁr «.J¸ï.£ÀlgÁeïUÉ
PÉÆnÖzÁÝV gÀÄdĪÁvÀÄ ªÀiÁrgÀĪÀgÉÃ?
3. «.J¸ï. £ÀlgÁeïUÉ EªÀgÀ£ÀÄß ªÀÄ£ÀªÉÇ°¹ (persuade)
ªÀiÁrzÀÝjAzÁV ªÁ¢AiÀÄgÀÄ 1£Éà ¥ÀæwªÁ¢AiÉÆqÀ£É MAzÀÄ ¥Á®Ä
§AqÀªÁ¼ÀzÁjPÉ M¥ÀàAzÀ ªÀiÁrPÉÆArzÉ J£ÀÄߪÀÅzÁV gÀÄdĪÁvÀÄ
ªÀiÁrgÀĪÀgÉÃ?
4. ªÁ¢AiÀÄgÀÄ F D¹ÛUÀ¼ÀÄ ¸ÀA§A¢üvÀ ¸ÀA¸ÉÜUÉ vÀªÀÄä capital
contribution EvÀÄÛ J£ÀÄߪÀÅzÀ£ÀÄß gÀÄdĪÁvÀÄ ªÀiÁrgÀĪÀgÉÃ?
5. 2£Éà ¥ÀæwªÁ¢AiÀÄÄ vÁ:22.05.2004 gÀAzÀÄ Retirement cum
Reconstitution Deed ªÀiÁrzÀÝgÀÄ J£ÀÄߪÀÅzÀ£ÀÄß ºÁUÀÆ D
- 19 -
NC: 2024:KHC:12527
ªÉüÉUÉ ¸ÀA¸ÉÜAiÀÄ MlÄÖ ºÉÆuÉUÁjPÉ (liability) J¶ÖvÉÛ£ÀÄߪÀÅzÀ£ÀÄß ¯ÉPÀÌ
ºÁQ¢Ý®è J£ÀÄߪÀÅzÀ£ÀÄß gÀÄdĪÁvÀÄ ªÀiÁrgÀĪÀgÉÃ?
6. zÁªÁ ±ÉqÀÆå¯ï D¹Û ¥Á®Ä §AqÀªÁ¼À ¸ÀA¸ÉÜAiÀÄ ¤tðAiÀÄ
(resolution) ªÉüÉUÉ zÁªÁ D¹ÛUÀ¼ÉÆqÀ£É AiÀiÁªÀÅzÉà ¥Á®ÄUÁgÀjUÉ
(partners) PÀÆqÀ ªÀiÁr®èªÉAzÀÆ DzÀjAzÁV CzÀÄ ªÁ¢AiÀÄjUÉ
G½¢zÉ J£ÀÄߪÀÅzÀ£ÀÄß CzÀÄ ªÁ¢AiÀÄjUÉ G½¢zÉ J£ÀÄߪÀÅzÀ£ÀÄß ªÁ¢AiÀÄgÀÄ
gÀÄdĪÁvÀÄ ªÀiÁrgÀĪÀgÉÃ?
7. ªÁ¢AiÀÄgÀÄ vÀPÀgÁgÀÄ µÀgÀvÀÄÛUÀ½UÉ §zÀÝgÀ®è ªÉ£ÀÄߪÀÅzÀ£ÀÄß ªÁ¢AiÀÄgÀÄ
gÀÄdĪÁvÀÄ ªÀiÁrgÀĪÀgÉÃ?
8. ªÁ¢AiÀÄgÀÄ zÁªÁzÀ°è PÉýzÀAvÉ ¥ÀæwªÁ¢AiÀÄgÀ «gÀÄzÀÞ zÁªÁ ±ÉqÀÆå¯ï
D¹ÛAiÀÄ°è PÀnÖzÀ PÀlÖqÀUÀ¼À£ÀÄß QvÀÄÛ ºÁPÀ®Ä DeÁÕ¥ÀPÀ ¤§ðAzsÀPÀeÉÕUÉ
(Mandatory Injunction) CºÀðjgÀĪÀgÉÃ?
9. zÁªÁzÀ°è PÉýzÀ EvÀgÉà AiÀiÁªÀÅzÉà ¥ÀjºÁgÀPÉÌ ªÁ¢AiÀÄgÀÄ
CºÀðjzÁÝgÉAiÉÄÃ?
10. K£ÀÄ rQæ CxÀªÁ DeÉÕ?
16. In order to prove their case, plaintiff No.1 was
examined himself as PW1 and Exhibits P1 to P40 were
marked in evidence. On behalf of defendants, Trustee of
the defendant No.1 and the partner of defendant No.2 was
examined as DW1 and the authorized signatory of
defendant No.3 was examined as DW2 and Exhibits D1 to
D20 were marked in evidence.
- 20 -
NC: 2024:KHC:12527
17. After hearing both the sides, the Trial Court
answered issue No.1 in the affirmative and issue Nos.2 to
9 in the negative and by the impugned judgment,
dismissed the suit of the plaintiffs.
18. Being aggrieved by the impugned judgment and
decree, plaintiffs have approached this Court in appeal.
19. In the appeal memo, the plaintiffs/appellants
contended that the alleged Partnership itself is null and
void, as it is hit by Section 23 of the Indian Contract Act,
and also when there is a specific Bar under Section 79B of
the Karnataka Land Reforms Act, the Firm could not have
possessed immovable properties of agricultural in nature.
Moreover, the share of the profit which was entitled by the
plaintiffs was hardly about 3%, which could not have been
entered into and which was illegal.
20. On issuance of notice, the respondents have
appeared before this Court through their respective
- 21 -
NC: 2024:KHC:12527
counsels and on admitting the appeal; the Trial Court
records have been secured.
21. The arguments of learned counsel Sri S. Shaker
Shetty along with Sri A. Anil Kumar Shetty, for appellants,
learned counsel Sri Abhinav R, for respondent Nos.1 and 2
and learned Senior Counsel Sri Ganapathi Hegde, for M/s
Dua Associates for respondent No.3 were heard and
perused the materials available on record.
22. During the pendency of this appeal, the
appellants have filed two applications under Order 41 Rule
27 of CPC. I.A.No.1/2012 dated 03.09.2012 was filed
seeking to produce the copy of the agreement dated
18.07.1996 and the endorsement issued by the
Corporation City of Bengaluru stating that the Khata has
not been changed in the name of the defendants.
23. The affidavit filed in support of the application
contends that during the pendency of the suit, the
appellants could not produce the documents as they could
- 22 -
NC: 2024:KHC:12527
not trace the said agreement, which in fact is very
important document. It is stated that the endorsement
issued by the Corporation City of Bengaluru is necessary
to show that the Khata has not been changed in the name
of the defendants, inspite there being alleged partnership
including the plaintiffs. Therefore, in order to establish that
Partnership Deed was never acted upon, these documents
are essential.
24. I.A.No.1/2020 dated 16-3-2020 was filed by
the appellants seeking to produce about 10 documents.
These documents include the order of the BDA dated
09.11.2017 and 05.09.2017, copy of the relinquishment
deed dated 28.07.2000 in favour of BDA, encumbrance
certificates, copy of the Tippani dated 04.07.2017 and the
notice dated 04.07.2017 and also the proceedings before
the Land Grabbing Court, the report and FIR thereof.
- 23 -
NC: 2024:KHC:12527
25. It is contended in the affidavit filed in support of
the application that the plaintiff No.1 and his wife are the
owners of the properties in question; after holding the
enquiry the Town Planning Authority found that plan is
illegally given to the defendants, but the plaintiffs are
owners of the properties and they had given a plan for the
purpose of construction of the row houses and they had
relinquished the portion of the property to the BDA under
a registered document. The BDA had complained to the
Corporation for granting licence illegally and BDA has
passed the appropriate orders holding that the appellants
are the only owners of the properties. Thereafter, the
respondents were found to be grabbing the land belonging
to the BDA as they had constructed a structure over the
property which was relinquished in favour of the BDA by
the plaintiffs. Therefore, the Land Grabbing Court found
that the respondents No.1 and 2 are guilty and had
registered a case. These documents are necessary to show
that subsequent developments that had taken place.
Therefore, the application filed by the plaintiffs be allowed.
- 24 -
NC: 2024:KHC:12527
ARGUMENTS :-
26. The learned counsel appearing for the plaintiffs/
appellants Sri Shaker Shetty, in his elaborate arguments,
has taken this Court through the entire evidence on
record. His argument is multipronged and is basically
concerning the fact that defendants No.1 and 2 were not
entitled to acquire the properties. The contentions of the
learned counsel appearing for the appellants are as below:
a) That the suit scheduled properties are agricultural
land and therefore, under Section 79B of the
Karnataka Land Reforms Act, neither the Trust nor
the Partnership Firm can acquire any agricultural
land. Such acquisition is void under Section 23 of the
Indian Contract Act. Therefore, there is no valid
partnership. Besides, the plaintiffs have taken a
specific plea that the Partnership is executed
between the appellants and respondent No.1 - Trust
and under Section 48 of the Indian Trust Act, all the
Trustees must join in execution of the Partnership.
- 25 -
NC: 2024:KHC:12527
Therefore, the Court ought to have followed the
principles laid by the Hon'ble Supreme Court in the
case of Satheedevi vs. Prasanna and another1.
(This judgment do not pertain to the Trusts)
b) He further contended that the Partnership Deed
entered into between the appellants and the
respondent No.1 is void under Section 79B of the
Karnataka Land Reforms Act, and at the same time,
the document is also void, as all the Trustees did not
join as contemplated under Section 48 of the Indian
Trust Act. Once there is a prohibition to have a
transaction with respect to the agricultural lands and
the Partnership itself is formed without validity under
law, all the transactions subsequent to the
Partnership Agreement and documents executed in
pursuance to the same are void under law. To
contend that the transaction in violation of Section
79B of the Karnataka Land Reforms Act is void, he
AIR 2010 SC 2777
- 26 -
NC: 2024:KHC:12527
relies on the judgment of the Hon'ble Supreme Court
in the case of Sri Chandrashekar and others vs.
The Tuheed Co-operative Housing Society
(Regd.,) and others2, in the case of Smt.
Narayanamma and another vs. Sri. Govindappa
and others3, in the case of The State of
Karnataka and others vs. The Karnataka
Appellate Tribunal and others4.
c) Adverting to the oral testimony, he contends that
defendant No.1 who entered into the Partnership
with the plaintiffs, but it was represented by only one
Trustee. Under the Indian Trust Act, as per Section
48, all the Trustees must join, failing which, the
documents are invalid. In this regard, he relies on
the judgment in the case of L. Janakirama Iyer
and others vs. P. M. Nilakanta Iyer and others5.
He further contended that defendant No.1 has no
ILR 2008 KAR 4003
Civil Appeal Nos.7630-7631 of 2019
AIR 1996 KAR 143
AIR 1962 SCC 633
- 27 -
NC: 2024:KHC:12527
right to represent through one of the Trustees.
Therefore, the Partnership executed by one of the
Trustees is invalid, void and cannot be enforced. Any
further documents executed in furtherance of such
illegal and void partnership are also void.
d) The learned counsel further submitted that the
Retirement- cum- Reconstitution Deed amounts to
dissolution of the earlier Partnership and necessary
stamp duty should have been paid under Article 20
of the Karnataka Stamp Act. The market value of the
suit properties being 132 crores as per Ex.D.8, the
stamp duty at 8% should have been paid and
therefore, on this Count also the Reconstitution Deed
is invalid.
e) He further submitted that the plaintiffs are the
owners of the suit properties and at no point of time,
the properties were transferred in the name of the
Partnership. The oral testimony of DW.1 is clear in
this regard. He submitted that the admission by
- 28 -
NC: 2024:KHC:12527
DW.1 is clear and he admitted that he is not aware of
the Partnership Deed and about the contribution of
the defendant No.1.
f) He also submits that by the evidence of DW.1 as well
as the admission of DW.2, the Khata is continuing in
the name of the plaintiffs even till today and there is
no mutation which had been mutated by way of
transfer of the properties in favour of defendant No.1
-Partnership Firm. It is also submitted that as the
Relinquishment Deed executed by the plaintiffs in
favour of the BDA, the BDA has acquired the portion
of the property and thus, it is also an indication that
the Partnership is not acted upon. Therefore, he
contends that the alleged Partnership Deed was not
acted upon and it was a document to get over the
acquisition of the properties under Section 10 of the
ULC Act and the proposed acquisition by the BDA. He
contended that the defendants had never disputed
the facts narrated by the plaintiffs in plaint Paras
- 29 -
NC: 2024:KHC:12527
No.5, 7, 8 and 9 and there was no cross-examination
on this aspect also.
g) After the alleged Partnership Deed, the plaintiffs
have applied to the BDA for approval of the Group
Housing plan and the same was granted as per the
order of the Government and the BDA. All the
necessary charges were received by the BDA from
the plaintiffs and therefore, several transactions have
taken place after the alleged Partnership Deed
demonstrating the fact that the properties were
never vested with defendant No.1.
h) The learned counsel further submits that on perusal
of the Retirement Deed at Ex D5, it is clear that the
suit schedule properties were not treated as
Partnership properties nor are these properties are
given to the partnership. When there is absolutely no
mention about the suit schedule properties in Ex D5,
it is clear indication that the properties remained
with the plaintiffs. He also submitted that there was
- 30 -
NC: 2024:KHC:12527
no transaction by the Partnership Firm and no bank
account was also opened. Therefore, when the
appellants had retired from the partnership, it
amounts to dissolution and as per Section 48 of the
Partnership Act the accounts should have been
settled amongst the partners. When alleged entire
capital of the partnership had been contributed by
the plaintiffs, such capital should have been returned
to the plaintiffs.
i) The learned counsel also submitted that the
Partnership Firm had no bank account and therefore,
the payment of money to plaintiffs No.1 and 2 under
various cheques is also not true and correct. In fact,
the alleged cheques issued in favour of the plaintiffs
were dishonored.
j) He further submitted that the defendants without
allowing the plaintiffs to read any of the documents
took their signatures on the documents, which has
been pleaded in Para No.13 of the plaint. There is a
- 31 -
NC: 2024:KHC:12527
evidence also by PW.1 in this regard. The defendants
never disputed the same in their written statement
and cross-examined the plaintiffs' witness on that
point. Therefore, the defendants taking several
signatures of the plaintiffs without allowing the
plaintiffs to read the documents has to be accepted.
To augment this contention, he relies on Exs.P.34
and 35, wherein plaintiffs had made it clear by way
of those letters that they were not allowed to read
the documents though they have signed it.
k) The learned counsel further argued that once they
had issued the notices to defendant No.1, it cannot
be believed that the plaintiffs had signed the JDA as
per Ex.D.7 as consenting parties. Even otherwise,
when the plaintiffs are the owners of the properties
and when the properties are not transferred in the
name of the Partnership Firm, the properties had not
vested with the Partnership Firm at any point of
time. It is contended that when there is dissolution,
- 32 -
NC: 2024:KHC:12527
it must be under a registered Deed, otherwise, the
properties will not be transferred. In this regard, he
relies on the judgment in the case of Addanki
Narayanappa and another vs. Bhaskara
Krishnappa (dead) and others6.
l) The learned counsel further contended that when the
plaintiffs have cancelled Ex.D.5 by means of letters
Exs.P.34 and 35, defendants No.1 and 2 have no
right to enter into the JDA. In fact, under Sections 86
and 88 of the Indian Trust Act, they are holding the
properties on behalf of the plaintiffs and therefore,
they cannot deal with the properties adverse to the
interest of the plaintiffs. Therefore, Ex.D.7 is against
the provisions of Sections 86 and 87 of the Indian
Trust Act. As such, the said document is not binding
on the plaintiffs.
m) The learned counsel further submitted that the
lands were never converted into Non-Agricultural
AIR 1966 KAR 1300
- 33 -
NC: 2024:KHC:12527
Land as required under Section 95(2) of the
Karnataka Land Reforms Act, 1961 nor the
defendants have filed any application under Section
14 of the Town and Country Planning Act seeking
permission to change the land use. Therefore, the
construction by the defendant No.3 is illegal,
unlawful and such construction is liable to be
demolished. In this regard, he relies on the judgment
of the Hon'ble Supreme Court in the case of
Narasimhasetty (Deceased) By L.Rs vs Padmasetty7
and Chinnamma and Others vs N. Nagaraj And
Others8.
n) It is further contended that the licence given by the
Municipal Corporation in favour of the defendants,
without adopting the provisions of Section 14 of the
Town and Country Planning Act, was illegal and
therefore, BDA had issued a notice to the Municipal
ILR 1998 KAR 348
ILR 1995 KAR 1542
- 34 -
NC: 2024:KHC:12527
Corporation which was not answered by it. Even the
Corporation proceeded to grant the permission for
occupancy of portion of the construction, but not the
entire construction as per Ex.P.32. It is submitted
that such occupancy is subject to the dispute arising
between the parties.
o) It is further submitted that the order in the writ
petition as per Ex.D.1 is not of much relevance since
the amendment has been made in the plaint. Insofar
as CMP is concerned, since there was no arbitration
clause in the Partnership Deed or Reconstruction
Deed, the said CMP came to be dismissed holding
that the arbitration is not permissible.
p) Regarding the frame of the suit, the learned counsel
appearing of the appellants submits that Ex.D.5-
Reconstitution Deed is entered between the parties
and when the defendants did not perform their part
of the contract, the plaintiffs have every right to
cancel the same. Therefore, when the plaintiffs have
- 35 -
NC: 2024:KHC:12527
cancelled the said Reconstitution Deed by issuing
letters as per Ex.P.34 and 35, there was no necessity
for the plaintiffs to seek for a declaration of
cancellation of Ex.D.5. He also submitted that the
Ex.D.7 is without any jurisdiction since it is against
the interest of the plaintiffs. In this regard, he relied
on the judgment of the Hon'ble Supreme Court in the
case of I. S. Sikandar (D) By Lrs and others vs. K.
Subramani and others9.
q) It is contended that when the plaintiffs had taken
their specific contentions that the Partnership is void
and it is hit by Section 79B of the Karnataka Land
Reforms Act and under Section 48 of the Indian Trust
Act, it was necessary for the Trial Court to frame an
appropriate issue. No such issues were framed by the
Trial Court. Therefore, this Court has to frame an
issue as required under Order 41 Rule 25 of CPC and
2013 (15) SCC 27
- 36 -
NC: 2024:KHC:12527
the matter has to be sent back to the Trial Court for
a finding in that regard.
27. In support of his contentions the learned
counsel for the appellants has placed reliance on the
following decisions :-
i. Annatulla Sudhakar vs. P. Buchireddy10, - regarding
scope of appeal under Section 96 of CPC.
ii. Sri. Chandrashekhar and others vs. Tuhid
Cooperative Housing Society11, - regarding Section 79
(B) of the Karnataka Land Reforms Act.
iii. Union of India vs. K.V. Laxman and others12, -
regarding scope of appeal under Section 96 of CPC and
Order 41 Rule 27 of CPC.
iv. Arm Group Enterprise Ltd., vs. Valdorf Restaurant
and others13, - concerning Section 14 of the Partnership
Act.
v. L. Janakiram Iyer vs. P. M. Nilakanta Iyer14, -
concerning need of all trustees joining conveyance by the
trust.
(2008) 4 SCC 594
ILR 2008 KAR 4003
2016 KCCR 2977
(2003) 6 SCC 423 = AIR 2003 SC 4106
AIR 1962 SCC 633
- 37 -
NC: 2024:KHC:12527
vi. Addanki Narayanappa and others vs. Bhaskar
Krishnappa15, - regarding the nature of the property
during subsistence of partnership and after dissolution.
vii. Gopal Krishnaji Ketkar vs. Mohammed Haji Latif16, -
which lays down that the party whi is in possession of
best evidence has to produce it and if not produced
adverse inference may be drawn.
viii. Sheikh Abdul Kayum vs. Mulla Alibhai and others17,
- concerning all trustees to be impleaded in the suit.
ix. M. Venkatarman Hebbal vs. M. Rajgopal Hebbal18, -
concerning the requirement of specific denial in the
pleadings.
x. C. Venkatswamy vs. H. N. Shivanna19, - concerning
scope of Section 96 of CPC.
xi. Smt. Narayanamma another vs. Sri. Govindappa
and others20, - concerning the Bar under Section 61 of
the Karnataka Land Reforms Act, to alienate the
property.
xii. Kuju Collieries Ltd., vs. Jharkhand Mines Ltd21., -
concerning scope of Section 65 of the Contract Act, where
AIR 1966 SC 1300
AIR 1968 SC 1413
AIR 1963 SCC 309
2007 (6) SCC 401
2018 (1) SCC 604
Civil Appeal No.7630/2019 dated 26.09.1990
AIR 1974 SC 1892
- 38 -
NC: 2024:KHC:12527
the agreement becomes void when it is contrary to
mineral regulations.
xiii. Fakir Chand Sheth vs. Dumbarudhar Baniya22, -
concerning Section 65 of the Contract Act.
xiv. Veeragouda and others Vs. Shantakumar @
Shantappagowda23 - regarding framing of the issues
and the requirement to answer all the issues.
xv. Satheedevi Vs. Prasanna and another24 - concerning
the interpretation of the statutes and that the statutory
bar has to be considered by plain reading of the
provision.
xvi. Devasahayam (dead( by LRs Vs. P. Savithramma
and others25.
xvii. Ratan Lal Sharma Vs. Purushottam Harit26 regarding
requirement of registration of an arbitration award.
xviii. Vinod Kumar Vs. Gangadhar27 - regarding the scope of
the appeal under order 41 Rule 31 of CPC.
xix. Union of India and others Vs. Vasavi Co-operative
Housing Society Limited and others28 regarding
AIR 1987 Orissa 50,
ILR 2009 KARNATAKA 887
AIR 2010 SCC 2777
(2005) 7 SCC 653
AIR 1974 SC 1066
(2015) 1 SCC 391
(2014) 2 SCC 269
- 39 -
NC: 2024:KHC:12527
Section 34 of the Specific Reliefs Act and the principle
that the burden always lies on the plaintiff to make out
and establish a clear case for granting declaration.
xx. Haryana Financial Corporation and others Vs.
Jagadamba Oil Mills and others29 regarding the
manner in which precedents are to be considered by the
Courts and they are not to be read as Euclid's Theorems.
xxi. Mahendra Manilal Nanavathi Vs. Sushila Mahendran
Nanaavati30 regarding the requirement of the Court to
remit back the matter if the issue framed was not proper.
xxii. Delhi Transport Corporation Vs. Shyam Lal
regarding a person making admission to show why
admission is not to be acted upon.
xxiii. Nagubai Ammal Vs. B. Shama Rao and others32
xxiv. Krishna Menon Vs. Narayana Iyer and others33
regarding Section 23 of the Contract Act and agreement
in contravention of statute is void.
xxv. N. Srinivasa Rao Vs. Special Court under the AP
Land Grabbing (Prohibition) Act, and others
regarding the applicability of Section 43 of TP Act, when
initial transfer itself was invalid.
AIR 2002 SC 834
AIR 1965 SC 364
AIR 2004 SC 4271
Civil Appeal No.216/1953 DD 26.4.1956
AIR 1962 Kerala 2021
(2006) 4 SCC 214
- 40 -
NC: 2024:KHC:12527
xxvi. State of Karnataka and others Vs. The Karnataka
Appellate Tribunal and others35 regarding prohibition
under Section 79-B of the Karnataka Land Reforms Act
and order granting permission in violation of the provision
being void.
28. Per contra, the learned counsel Sri Abhinav R.,
appearing for respondents No.1 and 2 submitted the
following contentions:-
A. That the suit is wrongly framed. He submits that the
plaint is cleverly drafted with a view to avoid the
payment of the court fees as well as to overcome the
question of limitation. He submits that the plaintiffs
have withdrawn the prayer regarding alienation and
injunction. When the prayer for injunction, injucting
the defendants from alienating the properties was
withdrawn by the plaintiffs, several transactions have
taken place and the plaintiffs suit, without such a
contention is not properly framed. He submits that the
AIR 1996 Karnataka 143
- 41 -
NC: 2024:KHC:12527
prayers are vague and therefore, there cannot be a
relief in favour of the plaintiffs.
B. He submitted that the plaint Paras Nos.8, 9 and 12,
there is no specific prayer sought regarding the
partnership. It is submitted that CMP.No.34/2007 was
filed and the order of the Court is produced at Ex.D.4.
In the said order, the High Court had accepted the fact
that there was a Reconstitution Deed and therefore, it
directed the plaintiffs to go to the Civil Court. The
plaintiffs have suppressed the said direction issued by
the High Court.
C. He further contended that Exs.P.25 and 26 show that
plaintiff No.2 had converted the land into Non-
Agricultural use. Therefore, there is no truth in the
contention that defendants No.1 and 2 could not have
held the agricultural lands in contravention of Section
79B of the Karnataka Land Reforms Act. It is
contended that in order to avoid seeking cancellation
of the Dissolution Deed as per Ex.D.5, the plaintiffs
- 42 -
NC: 2024:KHC:12527
have made a prayer by way of clever drafting that 'all
the arrangements entered between the defendants'
are not binding on the plaintiffs. In fact, the plaintiffs
should have sought for cancellation of the
Reconstitution Deed in order to succeed in the suit, as
they were executants of such deeds. Therefore, the
prayer of the plaintiffs is vague and in the absence of
any prayer for the cancellation of the Reconstitution
Deed, it is not in the mouth of the plaintiffs to seek
any relief.
D. He points out that in Ex.D.7, which is the JDA, the
plaintiffs have signed as consenting parties. When the
defendants No.1 and 2 had entered into a JDA with a
third party (defendant No. 3) as per Ex.D.7 and the
said agreement was within the knowledge of the
plaintiffs as consenting parties. In Ex.D.7, it was
categorically mentioned that defendants No.1 and 2
are the owners and title holders of the suit schedule
properties and had entered into a JDA with M/s.
Prestige Estate Project Limited. Therefore, he
- 43 -
NC: 2024:KHC:12527
contends that the said agreement being dated
23.09.2005, the plaintiffs should have filed the suit
within 03 years from the date of the same. Therefore,
the suit is barred by limitation.
E. He submits that the plaintiffs are totally silent about
Ex.D.7 and when the plaintiffs knew about the JDA
entered into with defendant No.3, they should have
disclosed the same in the plaint. Therefore, he submits
that the plaintiffs have suppressed the material facts
in order to make unlawful gain. He submits that the
suit of the plaintiffs is only a ploy to extract money
from the defendants.
F. He submits that PW.1 in Paras No.9 and 10 of his
testimony deny any amount paid to him. Whereas, a
perusal of Ex.D.5 and also perusal of Ex.D.7, clearly
goes to show that the plaintiffs had admitted that the
entire amount as mentioned in Ex.D.5 was paid to
them. When in Exs.D.5 to 7, they admit the receipt of
entire amount, a contention that no amount paid to
- 44 -
NC: 2024:KHC:12527
the plaintiffs cannot be accepted. In fact, the plaintiffs
have received the Rs.5,75,00,000/- as per the
Reconstitution Deed at Ex.D.5 and they cannot say
that they have not received the amount. Though the
plaintiffs contended that the cheques issued were
dishonored, no proof of such dishonor is placed on
record by the plaintiffs.
G. He submits that when the plaintiffs are parties to all
these documents i.e., Ex.D.5 and 7, they should have
sought for cancellation of these documents. A
declaration should have been sought regarding title
and Court fee should have been paid by the plaintiffs
on the market value. Therefore, by seeking a vague
prayer, they have tried to avoid the court fee.
H. He submits that when the plaintiffs are parties to
Ex.D.5 and Ex.D.7, without seeking cancellation of
these documents, the present suit to avoid these
documents is not maintainable.
I. He further submits that Section 34 of the Specific
Relief Act, mandates that the effective prayers are to
- 45 -
NC: 2024:KHC:12527
be made. The plaintiffs only seek avoidance of the
arrangement made interse between the defendants,
but do not seek any effective prayer by way of
declaration that Ex.D.5 and 7 are void. Therefore,
when the effective prayer is not made, the suit is
liable to be dismissed. The proviso to Section 34 of the
Specific Relief Act, is clearly applicable to the case on
hand. He submits that the judgment in the case of Sri
Aralappa vs Sri Jagannath (referred infra) is
applicable to the facts and circumstances of the
present case.
J. Regarding the contention that the portion of suit
properties was relinquished in favour of the BDA, it is
evident that the suit properties were not the exclusive
properties of the plaintiffs as claimed by them in the
plaint. Therefore, they could not have maintained this
suit, when they admit that the portion of the
properties were relinquished in favour of the BDA.
K. He submits that the plaintiffs contend that they had
signed on the series documents, but in fact they were
- 46 -
NC: 2024:KHC:12527
not allowed to read them. If that is so, the plaintiffs
should have contended that they were misrepresented
by the defendants and when no such fraud, coercion
or misrepresentation is pleaded in the plaint, they
cannot say that whatever permission or approval given
under Ex.D.5 is illegal. When the plaintiffs exit from
the partnership, they have come up with the
contention that such Reconstitution is not binding on
them.
L. It is submitted that the plaintiffs having accepted the
benefit under the documents, now they cannot go
back and contend that the all Trustees should have
joined for the Reconstitution Deed. He submits that in
view of the provisions of 30 of the Specific Relief Act,
all the Trustees should join in filing the suit. Now, the
plaintiffs have not impleaded all the Trustees of
defendant No.2. Therefore, the plaintiffs could not
seek any relief as against the Trust. There are
absolutely no pleadings in respect of the Trust.
- 47 -
NC: 2024:KHC:12527
Therefore, the contention that all the Trustees of
defendant No.2 had not joined the Partnership Deed,
cannot be accepted.
M. He submits that, if there is any violation of law, either
the Bengaluru City Municipal Corporation or the
concerned Revenue Authorities, will have to take
action and the Government has to enforce the same.
The plaintiffs cannot contend that such violation would
enure to their benefit. Therefore, he submits that the
suit of the plaintiffs is a ploy to extract money and the
frame of the suit is also not proper and correct.
Hence, he has sought for the dismissal of the appeal.
29. In support of his contention, the learned
counsel for respondents No.1 and 2 has placed reliance on
the following decisions :-
i. Ramesh B. Desai and others vs. Bipin Wadilal
Mehta and others36, - concerning the requirement
of specific pleading regarding fraud and coercion.
2006 (5) SCC 638
- 48 -
NC: 2024:KHC:12527
ii. Ranganayakamma vs. K.S. Prakash and
others37, - concerning the requirement of pleadings
regarding fraud and misrepresentation.
iii. Suhrid Singh vs. Randhir Singh and others38, -
concerning the requirement of declaration by
executant for cancellation of a deed executed by him.
iv. S. P. Changavaraya Naidu vs. Jaganath and
others39, - which lays down the meaning of the
fraud and non-disclosure of relevant and material
document with a view to obtain advantage
amounting to fraud.
v. Sri. Aralappa vs. Sri. Jaganath and others40, -
concerning the scope of Section 34 of the Specific
Relief Act and possession of the property.
vi. Ramtidevi (Smt.) Vs. Union of India 1995 (1)
SCC 198 regarding the limitation for challenging a
document has to be laid within three years from the
date when the cause of action had accrued.
vii. Jayalakshmamma Vs. Vasantha Ammal
reported in 1981 (1) Karnataka Law Journal 487
2008 (15) SCC 673
2010 (12) SCC 112
1994 (1) SCC 1
ILR 2007 KAR 339
- 49 -
NC: 2024:KHC:12527
laying down that consenting witness as good as
executants.
30. The learned counsel appearing for the
defendant No.3- M/s. Prestige Estate Project Private
Limited, in all respects has supported the arguments of
the learned counsel appearing for defendants No.1 and 2.
In addition, he contended as follows:-
a. That the suit schedule properties were contributed to
the Partnership Firm in the year 1988 itself. In the
year 1999, the Group Housing Scheme was
sanctioned by the BDA in favour of the plaintiffs since
the plaintiffs had suppressed about the partnership
that they had entered into. Therefore, when the BDA
was unaware about the contribution of the suit
schedule properties to the partnership, such
suppression would only to the peril of the plaintiffs.
He submits that even though the Para No.5 of the
plaint contends that the partnership deed was
drafted in a way that is it is invalid, the plaintiffs
- 50 -
NC: 2024:KHC:12527
knowingly allowed the partnership to act upon. The
layout was formed in the suit schedule property and
third party interest was created. It is submitted that
as per Ex.D.7, the partnership Firm entered into a
JDA with defendant No.3 and the plaintiffs had
consented for the same. Therefore, he contends that
the plaintiffs very well knew that they had retired
from the Partnership Firm and later a JDA was
entered into, for which, they have signed as a
consenting parties. Therefore, he submits that unless
the plaintiffs seek a declaration that the Retirement
or Reconstitution of the Partnership is invalid, they
are not entitled for any relief in the suit.
b. He submits that much prior to the partnership, the
land use was changed on 02.04.1988 as evidenced
by Ex.P.8 and Ex.P.9. Therefore, the contention that
the Trust as well as the Partnership Firm could not
own agricultural properties as there was a Bar under
Section 79B of the Karnataka Land Reforms Act,
1961, does not hold any water. Therefore, he
- 51 -
NC: 2024:KHC:12527
contends that contribution to the said partnership
cannot be invalidated on the ground that the
partnership could not have possessed an agricultural
lands.
c. He submits that much prior to the partnership, the
properties were non-agricultural lands. The fact that
there was no mutation etc., is of no consequence,
since the title of suit schedule properties had vested
with the Partnership Firm. It was for the Revenue
Authorities to make necessary entries and therefore,
the mutation entries cannot play a vital role to hold
that the partnership was not acted upon. He submits
that the properties were non-agricultural lands and
the plaintiffs contributed the suit schedule properties
as capital contribution to the Partnership by virtue of
the Partnership Deed.
d. It is contended that the said partnership was acted
upon and a third party interest created by entering
into a JDA with defendant No.3. Therefore, it cannot
be said that the Partnership Deed was not acted
upon. In that view of the matter, it was essential for
- 52 -
NC: 2024:KHC:12527
the plaintiffs to seek a declaration that they are still
holders of title in respect of the suit schedule
properties and that the Reconstitution Deed as per
Ex.D5 was invalid and the same has to be canceled.
The plaintiffs could not have unilaterally cancelled
the Retirement- cum- Reconstitution Deed as per
Ex.D5 by issuing letters and notices. Therefore, he
contends that the title of the plaintiffs was itself in
cloud as per the averments made in the plaint. When
a vague prayer is made that all the inter-se
arrangements made between the defendants are not
binding on the plaintiffs, it was incumbent upon the
plaintiffs to specifically seek proper prayer.
e. He further submitted that the subsequent
developments show that the suit schedule properties
were the subject matter of JDA, whereby, the
interest in favour of defendant No.3 was created. By
virtue of deletion of prayer for not to alienate the
properties, the plaintiffs had agreed for alienations
- 53 -
NC: 2024:KHC:12527
being made. In pursuance to which, defendant No.3
has alienated the certain portion of the properties
and therefore, the suit also suffers from non-joinder
of necessary parties. It is submitted that the Trial
Court discussed all these aspects in detail in Para
Nos.7, 8, 9, 10, 14 to 17.
f. He further contended that Ex.D5- Reconstitution
Deed was entered into and stamp duty of
Rs.46,00,000/- was paid and therefore, the
contention that it is insufficiently stamped cannot
hold any water. He submits that, it is Article 40 of
the Stamp Act, which is applicable, but not Article 20
as contended by the plaintiffs. Further, he submitted
that the Trial Court has come to the conclusion that
the payments were made to the plaintiffs at the time
of Reconstitution of Partnership Deed, therefore, it
cannot be said that the plaintiffs were left high and
dry without making any payment to them regarding
their capital contribution to the partnership.
Therefore, he submits that the plaintiffs never raised
- 54 -
NC: 2024:KHC:12527
locus standi of the Trust and all the Trustees to be
the signatories and therefore, the Trust Deed was
not produced. If such questions were raised, the
Trust Deed would have been produced and therefore,
the contention of the plaintiffs cannot be accepted.
In this regard, he relies on the judgment reported
in AIR 1960 SC 1300 and several other decisions.
Hence, he has sought for dismissal of the appeal.
31. In support of his arguments, he relied on the
following decisions:
1. Madhusudan Das Vs. Narayanibai (1983) 1 SCC
35 wherein it is held that the findings of fact of the
trial court based on oral evidence should not
ordinarily be disturbed by first appellate Court.
2. Santosh Hazari Vs. Purushottam Tiwari
(deceased) by Lrs. 2001(3) SCC 179 regarding the
scope and ambit of the first appeal and the
requirement that the first appellate court should not
ordinarily interfered with the findings of the trial
Judge on a question of fact unless the later has
overlooked some peculiar future.
- 55 -
NC: 2024:KHC:12527
3. Sarju Pershad Ramdeo Sahu Vs. Jwaleswari
Pratap Narain and others reported in AIR (38)
1951 SCC 120 which also reiterates the view taken
in Santosh Hazari's case.
4. Jahruddin and others Vs. Magutumsabz 1998 (3)
CCC 10 rendered by Karnataka High Court regarding
the requirement of specific, clear an catagaric
pleading.
5. Arjun Kanoji Tankar Vs. Shantaram Kanoji
Tankar reported in 1969 (3) SCC 555 regarding
Section 14 of the Partnership Act and that the
property under the Agreement of Partnership to be
treated as the property of the partnership.
32. In view of the above submissions made by the
rival parties to the appeal, the points that arise for
consideration in this appeal are as below:-
I. Whether the plaintiffs have proved that the partnership
firm, defendant No.2, comprising of the plaintiffs and
defendant No.1 is nominal, null and void and only for
saving the property from the acquisition?
- 56 -
NC: 2024:KHC:12527
II. Whether the defendant No.2 firm could not have owned
the suit schedule properties as there was an embargo
under Section 79B of the Karnataka Land Reforms Act,
1961?
III. Whether the plaintiffs have proved that they had signed
the reconstitution deed at Ex.D.5 without reading and
knowing the contents of it?
IV. Whether the suit schedule properties never vested with
the partnership firm i.e., defendant No.2?
V. Whether the suit of the plaintiffs in the present form is
bad and not maintainable?
VI. Whether the proper issues were not framed by the Trial
Court?
VII. Whether the suit is barred by limitation?
33. Before adverting to the questions raised above,
it would be proper to refer to the documents relied by the
parties. The plaintiffs have not produced the Partnership
Deed which was entered into in the year 1988, though an
elaborate contention is taken up by the plaintiffs in plaint
at Para No.8. The plaintiffs have nowhere mentioned the
date of the First Partnership Deed. However, the records
reveal that the First Partnership Deed was dated
- 57 -
NC: 2024:KHC:12527
23.12.1988 as mentioned in the Reconstitution Deed at
Ex.D5. It is therefore, the Partnership Deed, which is
disputed by the plaintiffs, is to be construed as the one
dated 23.12.1988. In this background, it would be proper
to consider the documents available on record.
a. Exs.P16 and 17 are the Sale Deeds under which the
plaintiffs No.1 and 2 are acquired the suit schedule
properties. Both these sale deeds are dated
20.06.1980. There is no dispute in respect of the
contention that plaintiffs No.1 and 2 had purchased
these properties and therefore, they were the holders
of the title to these properties.
b. Ex.P1 and Ex.P2 are the RTC in respect of the suit
schedule properties i.e., Sy.No.43 and 125 wherein
the names of plaintiffs No.1 and 2 are entered in the
same. It is relevant to note that these RTCs do not
show that they are used for agricultural purposes in
any way.
- 58 -
NC: 2024:KHC:12527
c. Ex.P6 dated 11.03.1988 is the letter written by
plaintiff No.1 to the Secretary of the Government of
Karnataka seeking exemption of the lands under
Section 20 of the ULC Act and to grant the
permission to sell the properties to M/s. Atlanta
Investment Properties in order to construct a
Hospital and residential accommodation. Similarly,
Ex.P7 is the letter written by Sri. V. S. Nataraj to the
Government seeking exemption of the lands for the
purpose of construction of the Super Specialty
Hospital.
d. Exs.P8 and P9 are dated 02.04.1988 and plaintiffs
No.1 and 2 were granted the change of land use in
Sy.No.43 and 125 measuring 04 acres 01 gunta and
05 acres 09 guntas and also to sell the portion of the
excess of lands in favour of the Sri. V. S. Nataraj.
Thus, by virtue of Exs.P8 and P9, the Government
had granted permission to convert the lands into
non-agricultural use. From 02.04.1988, the suit
schedule properties had lost the character of the
agricultural lands. Therefore, it cannot be said that
- 59 -
NC: 2024:KHC:12527
from the said date, the lands were agricultural in
nature.
e. Ex.P.10 is the sanction plan for Group House in
favour of the plaintiffs, but conspicuously, the date of
such grant is not available.
f. Ex.P18 dated 19.09.2000 is the order passed by the
BDA intimating the Group Housing Plan was adopted
as per the order of BDA dated 22.01.1999 and called
upon the plaintiffs to pay certain amounts and
imposing certain conditions.
g. As per Exs.P19 and P20, plaintiff No.1 intimated the
BDA that a portion of the amount demanded by the
BDA was paid by the plaintiffs. Such payment was
made in pursuant to the demand made by the BDA
as per Ex.P20.
h. Ex.P21 dated 22.01.1999 is the resolution of the BDA
whereby the Group Housing Project was allowed
subject to the condition that the acquisition
proceedings by the Government dated 17.11.1995
needs to be verified and subject to the order of the
- 60 -
NC: 2024:KHC:12527
Government de-notifying them from the acquisition,
such permission may be given to the plaintiffs.
i. Ex.P22 dated 12.07.2000 is the agreement whereby
the plaintiffs had entered into an Agreement with
BDA and had agreed to surrender the CA sites, public
utility area etc., in the properties which are to be
developed.
j. Ex.P23 is the Relinquishment Deed whereby the
portion of the property at Ex.P22 was relinquished in
favour of the BDA. According to this document total
area measuring 3967.47 Sq. Mtrs. was relinquished
by the plaintiffs in favour of BDA.
k. Ex.P24 is the demand notice by the BDA for payment
of certain amounts and the said amount was paid by
the plaintiffs as per the challan at Ex.P.25. Similar
are the challans and demand notices which are
produced at Ex.P26 to Ex.P.31.
l. Ex.P32 dated 29.06.2011 is the partial occupancy
certificate issued by the BBMP concerning the
residential apartments constructed over the suit
schedule properties. It is evident that from 2000 to
- 61 -
NC: 2024:KHC:12527
2011, there are no such documents which are
forthcoming on the part of the plaintiffs.
m. Exs.P35 is the letter dated 13.11.2004 under which
the plaintiffs called upon defendant No.1 to supply
all the documents, which were signed by the
plaintiffs and also intimating that the cheques issued
by the plaintiffs were dishonored. Defendant No.1-
Trust was called upon for the settlement of the
payment for the lands dealing which was pending for
nearly 20 years and it was stated that inspite of
several requests, such request was not heeded to. A
deadline was set and if the demands were not met
by 22.05.2004, the alleged Retirement- cum-
Reconstitution Deed dated 22.05.2004 will be
deemed to be dissolved and withdrawn without any
further reference to the defendants. Then by letter
dated 01.02.2004 as per Ex.P.34, the plaintiffs wrote
a letter stating and declaring that the Retirement-
cum-Reconstitution Deed dated 22.05.2004 is
- 62 -
NC: 2024:KHC:12527
dissolved and withdrawn and that they are not at all
bound by the said deed.
n. Ex.P.37 is the letter of the Chartered Accountant who
informed the Income Tax Authorities that there was
no transaction taken place in the name of defendant
No.2-Partnership Firm. This letter is dated
15.11.2005. Ex.P38 is the letter by the Chartered
Accountant dated 11.10.2006, wherein it was stated
that there was no income for the last 03 years, as
per the Books of Accounts of Partnership Firm.
o. Ex.P39 and Ex.P40 are the bank statements of the
appellants to show that certain cheques issued by
the defendants were dishonored.
34. As against the above documents, which are of
importance, the defendants have also produced the certain
documents which depict as below:-
a. Ex.D.1 is the memo filed by the petitioners
(Plaintiffs) in W.P.5440/2009 dated 27.05.2009. By
- 63 -
NC: 2024:KHC:12527
accepting the said memo, the said writ petition came
to be disposed of. Under the said memo, the prayer
in the suit to the effect that there should be an
injunction restraining the alienation by the
defendants was withdrawn.
b. Ex.D1 is the Memo filed by the petitioners in writ
petition in W.P.No.5440/2009, Ex.D2 is the certified
copy of the Memo filed by respondent No.3 and
Ex.D.3 is the certified copy of the order sheet in
W.P.No.5440/2009 whereby the Memo at Ex.D1 was
accepted.
c. Ex.D4 is the certified copy of the order in Civil
Miscellaneous Petition No.34/2007, wherein this
Court had rejected the petition for Appointment of
Arbitrator, on the ground that the Partnership Deed
did not contain any clause for Arbitration and
moreover, there were allegations of fraud, coercion
and misrepresentation, which could not be gone into
in arbitration proceedings.
- 64 -
NC: 2024:KHC:12527
d. Ex.D5 is the original Retirement- cum- Reconstitution
Deed entered into between the parties. This
document is of pivotal importance in the present
case.
e. Ex.D6 is the declaration by the plaintiffs, whereby
both the plaintiffs had accepted that they do not
have any liability due from the Partnership Firm.
f. Ex.D7 is the JDA between defendants No.1 and 2 and
defendant No.3, where the plaintiffs had signed as
consenting parties.
g. Ex.D8 is the legal notice dated 10.07.2006 issued by
the plaintiffs to respondents No.1 to 3. Therefore,
this notice is also of importance to consider the
contentions taken by the plaintiffs in respect of the
Partnership Deed as well as the Retirement- cum-
Reconstitution Deed.
h. Exs.D9 to 17 are the photographs showing the
construction made by defendant No.3 over the suit
schedule properties and Ex.D18 is the sanction plan
for construction of the apartments.
- 65 -
NC: 2024:KHC:12527
i. Exs.D19 and 20 are the affidavits by plaintiffs No.1
and 2 confirming the Retirement -cum-
Reconstitution Deed dated 22.05.2004.
Reg: Points No.1 to 4:
35. The plaintiffs specifically contend that the
partnership is invalid and not to be acted upon and
therefore, it was null and void.
36. The first ground on which the plaintiffs would
seek the nullity of the Partnership Deed is that there was
no contribution by defendant No.1. It is cardinal principle
of any Partnership that there need not be any contribution
by some of the partners. The essential requirement of a
Partnership Firm is enunciated in several judicial
pronouncements. The requirement of partnership as
defined in Section 4 of the Partnership Act are that, (1)
there is an agreement, (2) that such agreement is for the
sharing of the profits of a business and (3) such business
is carried on by all or any of them acting for all. If these
ingredients are there, then evidently the partnership
- 66 -
NC: 2024:KHC:12527
comes into effect. It is not necessary that every partner of
the Partnership Firm need to contribute to the Partnership
Firm. Therefore, contention of the plaintiffs on this count
cannot be accepted.
37. The second contention of the plaintiffs is that,
the ratio of the profit as agreed between the parties was
3% to the plaintiffs and 97% to defendant No.1. It is
submitted that this agreement is one sided and when
there was no contribution by defendant No.1- Trust, it
would not have been entitled for 97% of the profit. It is
pertinent to note that defendant No.1 is a Trust and it
wanted to construct such structure in the suit schedule
properties. Evidently, the objective of the Partnership is
not available before this Court. It is not known with what
object the plaintiffs entered into such Partnership, as it is
not produced. The plaintiffs want to avoid the partnership
entered into with defendant No.1, without producing the
Partnership Deed and without seeking its annulment.
Therefore, the reason as to why the parties had entered
- 67 -
NC: 2024:KHC:12527
into the profit sharing 3% - 97% is not available on
record. Except the simple oral testimony of PW.1 that
objective of the Partnership Firm was only to avoid the
acquisition of the properties by the BDA or the Bengluru
Municipal Corporation, there is nothing on record.
Obviously, the best evidence was the Partnership Deed
itself. The acquisition of the properties by the Government
was avoided by entering into an agreement of sale with
V.S. Nataraj and one Atlanta Investments Properties Inc,
for construction of a Hospital. It is evident that, at later
point of time, the purpose for which the suit schedule
properties were to be used was changed into a residential
purpose. Therefore, this objective stated by the plaintiffs is
also not appealing.
38. The judgment in the case of Addanki
Narayanappa, referred supra, lays down that whatever
may be the character of the property which is brought in
by the partner, when the partnership is formed, it
becomes the property of the Firm and what a partner is
- 68 -
NC: 2024:KHC:12527
entitled to is his share of profits and upon dissolution of
the Partnership, to a share in the money representing the
value of the property. Upon dissolution, his right is to
obtain such profits as fallen to his share. It was also held
that the person who brought the property into the
Partnership would therefore, not be able to claim any
exclusive claim over the property which he has brought. In
that view of the matter, the said decision is not of any
help to the appellants herein. Similarly, the judgment in
the case of Arm Group Enterprises Limited, referred
supra also cannot be applied, for, it lays down that the
trade name is not a legal entity independent of proprietor
of the business carried out in the name, when the sole
Proprietorship or a Partnership Firm, which has come into
existence later on and taken on the trade name.
39. The third contention is that, the suit schedule
properties are hit by Section 79B of the Karnataka Land
Reforms Act, 1961 and the Trust as well as the Partnership
- 69 -
NC: 2024:KHC:12527
Firm (defendants No. 1 and 2) could not have acquired or
held any agricultural properties. Section 79B of the
Karnataka Land Reforms Act, 1961, as stood repealed in
the year 2020. Section 79B of the Karnataka Land
Reforms Act, as it existed, reads as below:-
"79-B. Prohibition of holding agricultural land
by certain persons.- (1) With effect on and from
the date of commencement of the Amendment Act,
except as otherwise provided in this Act,
(a) no person other than a person cultivating
land personally shall be entitled to hold land; and
(b) it shall not be lawful for.-
i) an educational, religious or charitable
institution or society or trust, other than an
institution or society or trust referred to in
sub-section (7) of Section 63, capable of
holding property;
ii) a company;
iii) an association or other body of individuals
not being a joint family, whether incorporated
or not; or
iv) a co-operative society other than a co-
operative farm, to hold any land.
- 70 -
NC: 2024:KHC:12527
(2) Every such institution, society, trust, company,
association, body or co-operative society.-
a) which holds lands on the date of
commencement of the Amendment Act and
which is disentitled to hold lands under sub-
section (1), shall, within ninety days from the
said date, furnish to the Tahsildar within whose
jurisdiction the greater part of such land is
situated a declaration containing the
particulars of such land and such other
particulars as may prescribed; and
b) which acquires such land after the said date
shall also furnish a similar declaration within
the prescribed period.
(3) The Tahsildar shall, on receipt of the declaration
under sub-section (2) and after such enquiry as may
be prescribed particulars relating to such land to the
Deputy Commissioner who shall, by notification,
declare that such land shall vest in the State
Government free from all encumbrances and take
possession thereof in the prescribed manner."
40. It is evident that though there is a prohibition
for the Partnership Firm or the Trust to hold any
agricultural properties, it is evident that when the
- 71 -
NC: 2024:KHC:12527
partnership was entered into the suit schedule properties
were converted into a Non-Agricultural Land. For this, it is
relevant to note that, Exs.P7 and 8. Ex.P8 is the
proceedings of the Karnataka Government, whereby, the
land use in Sy.No.43 regarding the suit schedule property
was permitted to be utilized from residential use to
commercial use. This document also mention that by an
order dated 16.03.1988, BDA had permitted the suit
schedule property i.e., Sy.No.43 to be used for
commercial purpose for construction of Orthopaedic
Hospital and by virtue of Ex.P8 dated 02.04.1988, the said
purpose of construction of the said Hospital was to be
changed to a residential purpose. Therefore, it is evident
that by 16.03.1988, the land use was converted to the
residential purpose from agricultural purpose. Ex.P7 dated
14.03.1988, is the letter written by the said V.S. Nataraj
to the Government. In this letter, he had clearly
mentioned that the land was to be used for residential as
well as the commercial purpose and requested the
Government to change the land use. Obviously, the said
- 72 -
NC: 2024:KHC:12527
V.S. Nataraj was acting on the basis of the agreement of
sale entered with the plaintiffs. It is pertinent to note that,
by order dated 11.10.1988, again certain modifications
were made and the permission was granted for alienation.
It was only after conversion of lands to non-agricultural
purpose that the Partnership was entered into. Obviously,
the said V. S. Nataraj was also a consenting party as
admitted by PW.1 in the cross-examination. The cross-
examination of PW.1 dated 27.01.2012 reads as below:
"It is true on 23.12.1988 I entered into a
Partnership Agreement with the 2nd defendant. It is
true under the terms of the said Partnership
Agreement I had given my immovable properties
as capital contribution to the Partnership Firm. It is
true I parted procedure (possession) of the
schedule property to 2nd defendant firm, as per the
terms of the Partnership Deed. It is true defendant
No.1 & 2 subsequently entered into a development
agreement with 3rd defendant. It is true as per the
with defendant no.3, constructions have come up
and nearing completion. It is true myself and my
wife signed the agreement entered into between
- 73 -
NC: 2024:KHC:12527
defendant no.1 & 2 with 3rd defendant as
consenting witnesses. It is true our signatures are
found at Ex.D.7(a) and 7(b) respectively."
41. Thus, it is clear that the plaintiffs had entered
into the Partnership only after the exemption was granted
by the Government under the ULC Act and the lands were
converted into non agricultural purpose. It is also pertinent
to note that as admitted by the plaintiffs, partnership deed
23.12.1988 was also with the consent of V.S. Nataraj with
whom the agreement of sale was entered into. Therefore,
the plaintiffs knowingly had entered into the Partnership
Deed. This say of PW.1 clearly indicates that they had
entered into the Partnership with the full knowledge that
the properties which were to be sold to V.S. Nataraj would
now become the properties of the Partnership Firm.
42. It is evident that in none of the
correspondences with the BDA or the Government
Authorities, the plaintiffs had disclosed that the properties
which were the subject matter of the agreement with V.S.
- 74 -
NC: 2024:KHC:12527
Natraj had become the properties of the Partnership Firm
as the capital contribution to the Firm. This clearly shows
that the plaintiffs had suppressed certain aspects before
the Government Authorities, when they made a
representation for change of the land use etc.
43. Under these circumstances, it is not possible for
this Court to hold and appreciate that the Partnership Firm
could not have held the suit schedule properties since it is
continued to be the agricultural properties and hit by
provision of Section 79B of the Karnataka Land Reforms
Act, 1961. Therefore, none of the decisions relied by the
learned counsel for the appellants which lay down that the
Partnership Firm could not have possessed any agricultural
properties, as it would be hit by Section 79B of the
Karnataka Land Reforms Act, would be of any relevance.
The properties were ceased to be an agricultural
properties when the partnership was constituted.
44. The fourth contention of the plaintiffs is that, all
the Trustees of defendant No.1 had not joined. If this
- 75 -
NC: 2024:KHC:12527
contention is to be accepted, the present suit is also not
maintainable since the plaintiffs had not joined the
Trustees of defendant No.1. Obviously, without arraying all
the necessary Trustees of defendant No.1- Firm, the
plaintiffs could not have maintained the present suit. It is
also pertinent to note that, the plaintiffs had not raised
any voice when the alleged Reconstitution Deed was
entered into. Insofar as the Reconstitution Deed is
concerned, its veracity will be discussed by this Court in
the following paragraphs.
45. Again in Para No.9 of the cross-examination of
PW.1, he categorically admits that he and plaintiff No.2
had signed the Reconstitution Deed. Therefore, the
Reconstitution Deed to the Partnership Deed which is at
Ex.D5 shows that the plaintiffs had received a sum of
Rs.5,75,00,000/-. There was no reason for the plaintiffs to
suppress this fact from being mentioned in the plaint.
Therefore, the plaintiffs had acted on the premise that
defendant No.1-Trust is also a partner. The Trustees of
- 76 -
NC: 2024:KHC:12527
defendant No.1 had not joined either for the Partnership or
in the present suit. There is absolutely no mention as to
who are all the Trustees of defendant No.1-Trust. The
defendants have also not disclosed as to who are the
Trustees of defendant No.1-Trust. Under these
circumstances, it cannot be said that the partnership is to
be discarded on this count.
46. The judgment in the case of L. Janakiram
Iyer, referred supra, lays down as below:-
"20. As we have seen S. 48 contemplates that its
provision will not apply where the instrument of
trust otherwise provides. In other words if the
trustee under which more trustees than one are
appointed expressly provides that the execution of
the trust may be carried out not by all but by one
or more, then of course the matter would be
governed by the special provision of the trust deed.
The argument urged by the learned Attorney
General is that Clause 23 of the Trustee Deed in
suit, make such a provision..........."
47. In the case on hand, the plaintiffs had not
raised any objections while entering into the Partnership or
- 77 -
NC: 2024:KHC:12527
while Retirement-cum-reconstitution Deed was entered
about inclusion of all the Trustees. They also did not array
all the Trustees as defendants in the present suit.
Therefore, this contention also cannot be accepted.
48. The fifth contention is that, the properties never
treated as that of the Firm. It is trite law that the mutation
entries, RTC and change of the Khata etc., are only the
actions which are to be taken by the Revenue Authorities.
Merely because the revenue entries were not made in
respect the suit schedule properties that they belong to
Partnership Firm, it cannot be said that the vesting of the
properties by virtue of the Partnership Deed in the
Partnership Firm is not sustainable. The properties had
vested with the Partnership Firm by way of capital
contribution by the plaintiffs. Therefore, mere non
transfer of Khata in the name of Partnership Firm, cannot
be a ground to say that the properties still remain with the
plaintiffs.
- 78 -
NC: 2024:KHC:12527
49. Sixthly, it is the contention of plaintiffs that
there was no activity or business by the Partnership Firm.
It may be true that there are no such activities. It may
also be true that the partnership wanted to start a
business, but did not materialise. It is a fact that the
plaintiffs wanted to sell the suit properties to V. S. Nataraj
and later the said V. S. Nataraj had to construct a Hospital
through Atlanta Investments Properties Inc, and he did not
proceed in the matter. What transpired between defendant
No.1 and Sri. V. S. Nataraj is not forthcoming. The said V.
S. Nataraj was not a party to the present suit and he was
not at all examined on behalf of either the plaintiffs or the
defendants. Therefore, the nexus alleged by the plaintiffs
that V. S. Nataraj and V.S.Gopalswamy acted at the
instigation of the Trustees of defendant No.1 - Firm
persuading the plaintiffs is not forthcoming from the
evidence. When the plaintiffs made a specific allegation
that V. S. Nataraj and V.S. Gopalswamy had a nexus with
the Trustees of defendant No.1- Firm, it was incumbent
upon the plaintiffs to establish this aspect. Therefore,
- 79 -
NC: 2024:KHC:12527
when the plaintiffs contend that they were parties to the
Partnership Deed, it cannot be said that such entry to the
partnership and the vesting the properties with the
Partnership Firm has to be doubted on that aspect.
Therefore, these contentions of the plaintiffs are not
sustainable in law.
50. Next aspect would be whether the plaintiffs
proved that they had signed the Reconstitution Deed at
Ex.D5 without reading and knowing the contents of the
same. Though, there is feeble averments that defendant
No.2 prepared Retirement Deed dated 22.05.2004 and in
the said deed no statement is made about the total assets
of the Firm etc., the plaint fails to mention that sum of
Rs.5,75,00,000/- was also received by the plaintiffs. Of
course, allegedly, a sum of Rs.1,20,00,000/- was not paid
out of the said amount since cheques issued by the
continuing Partnership Firm was dishonoured. Evidently,
those cheques were not produced before the Court.
- 80 -
NC: 2024:KHC:12527
Therefore, the fact remains that the plaintiffs had received
a sum of Rs.5,75,00,000/- at the time of the Retirement
or Reconstitution of the Partnership. The second
contention regarding the Reconstitution about the
payment of the stamp duty, evidently, in the cross-
examination of the PW1, he admits that there is an
endorsement that a sum of Rs.46,00,000/- was paid as a
stamp duty. Therefore, the contention that the required
stamp duty was not paid is not sustainable in law. Of
course the calculation of the stamp duty cannot be entered
into at this juncture since there is no such declaration
sought by plaintiffs that such reconstitution deed is void. It
is only that the plaintiffs want to ignore the Retirement-
cum-reconstitution Deed which is at Ex.D5. Though, PW.1
admits that plaintiffs No.1 and 2 are signatories to Ex.D5,
he wants to ignore the same. The cross-examination of
PW.1 in this aspect reads as below:-
"It is true that the document now shown to me is
the original of Retirement cum Reconstitution
- 81 -
NC: 2024:KHC:12527
deed dated 22.05.2004. It is now marked as
Ex.D.5. Now I see the Certificate U/Section 10(A)
of K.S.Act 1957 on the reverse of Ex.D.5 or
remission of Rs.46,00,000/-, this endorsement on
Ex.D.5 is now marked at Ex.D.5(a). The
document now shown to me is the deed of
declaration between me and defendant no.1 and
2. It is now marked as Ex.D.6. The suggestion
that under Ex.D.5 and Ex.D.6 the Partnership
Deed is cancelled is not fully correct. The
suggestion that I have suppressed Ex.D.5 and
Ex.D.6 from this Court is not correct."
51. This admission of PW.1 is sufficient to hold that
plaintiffs wanted to declare that Ex.D5 as void. In the
absence of any specific prayer in this regard to declare
Ex.D5 as void, it cannot be avoided by the plaintiffs.
52. The plaintiffs contend that the defendants have
taken the signatures of the plaintiffs on a number of
documents without allowing them to read. This contention
of the plaintiffs appears to be unacceptable. The plaintiffs
are not the illiterate people and they were not simpletons.
The plaintiffs had entered into an agreement with the said
- 82 -
NC: 2024:KHC:12527
V.S. Nataraj. Later they have also entered into a
partnership in the year 1988. Thereafter, they had
received a sum of Rs.5,75,00,000/- at the time of the
Reconstitution of the Partnership. The cross-examination
of PW.1 is as under :-
"It is true earlier to the agreement to Ex.D.7, my
self and my wife retired from the partnership firm-
2nd defendant on 22.05.2004 by virtue of
retirement cum reconstitution deed marked at
Ex.D.5. Witness adds there is disputed about
payment of money in respect of this settlement. It
is true myself and my wife signed Ex.D.5 as
outgoing partners as shown to me, they are now
marked at Ex.D.5(a) Ex.D.5(b) respectively. It is
true as per the terms of Ex.D.5, I have received as
outgoing partner a sum of Rs.5 crores and 75
lakhs. Witness adds several of those cheques were
dishonored. About six cheques were dishonored
amounting in all Rs.1 Crore 20 Lakhs
approximately. I have not produced those
dishonored cheques before the Court. I have not
pleaded dishonor of cheques amounting to Rs.1
Crore 20 Lakhs approximately. The suggestion that
I have received the entire settlement amount of Rs.
5 Crores and 75 Lakhs and I am falsely stating of
- 83 -
NC: 2024:KHC:12527
dishonor of several cheques amounting to Rs.1
Crore 20 Lakhs."
53. It discloses that he and his wife at Ex.D5 had
entered into partnership and he admits their signatures.
He has also categorically admits that he has received a
sum of Rs.5,75,00,000/- as a outgoing partner. He states
that a sum of Rs.1,20,00,000/- was not paid since the
cheques were dishonored. He admits that he has not
produced the dishonored cheques. He also admits that
there was no pleading about the dishonored cheques in a
sum of Rs.1,20,00,000/-. This categorically shows that the
plaintiffs are dealing with the money in crores and it was
in the year 2004. So also there is several correspondences
by the plaintiffs with the Government Authorities. It is not
that the plaintiffs were unaware of the consequences of
Ex.D5. Therefore, the contention of the plaintiffs that they
were unaware of the contents of Ex.D5 and Ex.D7 cannot
be accepted. This contention of the plaintiffs that they
signed the documents at the instance of V. S. Nataraj,
- 84 -
NC: 2024:KHC:12527
who was under the instigation of defendant No.1, cannot
be an acceptable fact. Moreover, except a feeble mention
that the plaintiffs were not allowed to read the documents,
there is no averment that such document was outcome of
fraud, coercion and misrepresentation. Evidently, the
fraud, coercion and misrepresentation have not been
proved by the plaintiffs. The plaintiffs even after coming to
know that such documents were created and outcome of
the fraud, coercion and misrepresentation, they have not
taken any action. There is absolutely no reason as to why
the plaintiffs have kept mum. Obviously, the plaintiffs had
received a sum of Rs.5,75,00,000/- towards the value of
their properties. Under these circumstances, it cannot be
said that they had signed the Reconstitution Deed at
Ex.D5 without reading the contents of the same.
54. It is trite law that a party who contend that
there was fraud and misrepresentation has to aver and
prove the same. The judgment in the case of
Ranganayakamma, referred supra, lays down that where
- 85 -
NC: 2024:KHC:12527
a contract of settlement is alleged to be vitiated by fraud
or misrepresentation, particulars thereof must be pleaded
specifically and clearly. Though, the plaintiffs had issued a
notice as per Ex.D8, wherein such a contention was taken
up, such contentions were not taken in the plaint.
Therefore, the contention of fraud and misrepresentation
cannot be accepted. For aforesaid reasons, points No. 1 to
4 are answered in the negative.
Re: Point No. 5:
55. The next contention would be about the
maintainability of the suit in the present form. The above
discussion with regard to points No. 1 to 4 shows that the
suit schedule properties had vested with the Partnership
Firm. It is evident that the plaintiffs have filed a suit which
is speculative in nature. The plaintiffs have not sought for
any declaration in respect of the several documents which
they had entered into. The Partnership Deed dated
23.12.1988, the Reconstitution Deed at Ex.D5 and the
agreement at Ex.D7 under which they were the consenting
parties were sought to be avoided just by ignoring them.
- 86 -
NC: 2024:KHC:12527
PW.1 admits that the signatures of the plaintiffs are found
in the documents. Therefore, without seeking a declaration
in respect of these documents and by allowing defendant
No.3 to sell the suit schedule properties to various
purchasers after constructing about 264 flats in the
buildings, the plaintiffs are seeking demolition of those
constructions. It is not the case of the plaintiffs that they
were ignorant about the constructions made by defendant
No.3. Defendant No.3 had entered into the JDA with
defendant No.2- Firm and the plaintiffs were consenting
parties for the same. It cannot be said that the plaintiffs
were totally unaware of the contents of Ex.D7 also. They
could not have sought any relief without seeking
declaration that Ex.D5 and D7 and the Partnership Deed of
1988 are void.
56. In the case of Suhrid Singh vs. Randhir
Singh, referred supra, the Apex Court holds as below:-
"7. Where the executant of a deed wants it to be
annulled, he has to seek cancellation of the deed.
- 87 -
NC: 2024:KHC:12527
But if a non-executant seeks annulment of a deed,
he has to seek a declaration that the deed is
invalid, or non est, or illegal or that it is not binding
on him. The difference between a prayer for
cancellation and declaration in regard to a deed of
transfer/conveyance, can be brought out by the
following illustration relating to A and B, two
brothers. A executes a sale deed in favour of C.
Subsequently A wants to avoid the sale. A has to
sue for cancellation of the deed. On the other hand,
if B, who is not the executant of the deed, wants to
avoid it, he has to sue for a declaration that the
deed executed by A is invalid/void and non
est/illegal and he is not bound by it. In essence
both may be suing to have the deed set aside or
declared as non-binding. But the form is different
and court fee is also different. If A, the executant
of the deed, seeks cancellation of the deed, he has
to pay ad valorem court fee on the consideration
stated in the sale deed. If B, who is a non-
executant, is in possession and sues for a
declaration that the deed is null or void and does
not bind him or his share, he has to merely pay a
fixed court fee of Rs. 19.50 under Article 17(iii) of
the Second Schedule of the Act. But if B, a non-
executant, is not in possession, and he seeks not
only a declaration that the sale deed is invalid, but
also the consequential relief of possession, he has
- 88 -
NC: 2024:KHC:12527
to pay an ad valorem court fee as provided under
Section 7(iv)(c) of the Act."
57. The judgment in the case of Sri. Aralappa vs.
Sri. Jaganath, referred supra, refers to Section 34 of the
Specific Relief Act and lays down that the plaintiff failing to
seek a further relief is not entitled to mere relief of
declaration. Sec 34 reads as below:
"34. Discretion of court as to declaration of
status or right.- Any person entitled to any legal
character, or to any right as to any property, may
institute a suit against any person denying, or
interested to deny, his title to such character or
right, and the court may in its discretion make
therein a declaration that he is so entitled, and the
plaintiff need not in such suit ask for any further
relief:
Provided that no court shall make any such
declaration where the plaintiff, being able to seek
further relief than a mere declaration of title, omits
to do so".
58. Therefore, the plaintiffs without claiming the
possession of the properties, without claiming the
- 89 -
NC: 2024:KHC:12527
declaration to annul Ex.D5 and Ex.D7 and also the
Partnership Deed dated 23-12-1988, could not have
maintained a suit of this nature. Evidently, the frame of
the suit is bad and cannot be maintained. Despite they
knew that the possession is with defendant No. 3, and it
has alienated the interest in the property to third parties,
the plaintiffs have not claimed the possession of the same.
They expressly deleted the prayer from seeking injunction
against defendant No.3 in restraining the alienation.
59. It is also relevant to note that the plaintiffs not
only stated that they had received all the receivables from
the defendants, but also had entered into the agreement
with defendants No.1 to 3 as per Ex.D7. Ex.D7 was
subscribed by the plaintiffs, as consenting parties and the
clause No.29 pertaining to the consenting parties states as
below:-
"29) CONSENTING WITNESSES:
Smt. Kalavathi, Aged about 48 years, Wife of
Sri V.S.Balasubramanyam and Sri
V.S.Balasubramanyam, aged about 64 years, son
- 90 -
NC: 2024:KHC:12527
of Sri.V.S.Sesha Iyer, Both at No.7/3, Bull Temple
Road shankarapuram, Bangalore, declare that the
First Party alone is the full and absolute owner of
the Schedule Property and they have no manner of
right, title or interest therein and they also declare
and confirm that the Schedule Property which was
in fact held, owned and possessed by them was
contributed into a Partnership Firm under the name
and style of First Party in terms of a Partnership
Deed dated 23.12.1988 and subsequently they
retired from the Firm of First Party in terms of
Retirement-cum-Reconstitution Deed dated
22.05.2004 leaving the schedule Property with the
First Party and thereby the First Party continued to
own, possess and enjoy the Schedule Property as
absolute owner and said Smt. Kalavathi and Sri.
V.S.Balasubramanyam thereby cease to be the
owners thereof. They declare and reconfirm that
they have no subsisting right, title or interest in the
Schedule Property and they have no objection for
the First Party entrusting the development and sale
of the Schedule Property to the Second Party in
terms of this Development Agreement in token of
their consent, they have signed this Development
Agreement as Consenting Witnesses after going
through the contents of this agreement and
accepting the correctness thereof and they also
declare and confirm that they have no claims
- 91 -
NC: 2024:KHC:12527
against the First Party or its partners or against the
Schedule Property and all their accounts are fully
and finally settled to their satisfaction."
60. In the cross-examination of PW.1, he has
categorically admitted that his signatures as well as the
signatures of the plaintiffs which are marked Ex.P.7(a) and
Ex.P.7(b).
61. Therefore, it is evident that the suit of the
plaintiffs is not maintainable. Unless they had sought for
declaration that the documents are to be null and void,
which they had subscribed, the suit is devoid of any
merits. Therefore, the suit in the present form is not
maintainable. Hence, point No. 5 is answered in
affirmative.
Point No. 6: Reg Issues
62. Learned counsel for the appellants contended
that when the plaintiffs had taken specific contention that
the partnership is void and it is hit by Section 79-B of the
Karnataka Land Reforms Act, and under Section 48 of the
- 92 -
NC: 2024:KHC:12527
Indian Trust Act, it was necessary for the trial Court to
frame an appropriate issue. It is worth to note that though
the plaint allege about the Partnership Deed, it do not
mention the date of such partnership. It also does not
seek annulment of the partnership in the prayer. On the
contrary, the plaint seeks declaration that all
arrangements inter-se between the defendants is void. In
other words, the plaint in a veiled attack on the
Partnership Deed as well as the Retirement- cum -
Reconstitution Deed, seek to avoid those documents.
Therefore, the contention of the learned counsel for the
plaintiffs that issue had to be framed by the trial Court in
this regard cannot be entertained. In the first place, the
plaint was vague regarding the Partnership Deed. Plaintiffs
wanted to treat the partnership a non-est and ignore it.
Therefore, this Court does not find any ground that the
issues framed by the trial Court are erroneous. It is
evident that the parties have led evidence by
understanding the dispute between them. Hence, this
point is answered in the negative.
- 93 -
NC: 2024:KHC:12527
Point No. 7: Re. IAs U/O 41 Rule 27 CPC
63. As noted supra, there are two applications filed
by the plaintiffs seeking to produce several documents.
Though some of the documents pertain to the dates
subsequent to the filing of the suit, they are not
necessary for an effective adjudication of the case. In
para 16 and 18 of the judgment, the grounds on which the
plaintiffs wanted to produce the documents are narrated.
Under IA No.1/2012, plaintiffs wanted to produce an
agreement dated 18-07-1996. The plaint is totally silent
regarding this agreement. Nothing prevented the plaintiffs
to say about this agreement in the plaint.
64. Sofar as the documents sought to be produced
under IA No.1/2020, these documents are not necessary
for an effective adjudication of the matter. Therefore,
these applications are bereft of merits and as such, they
are liable to be dismissed.
- 94 -
NC: 2024:KHC:12527
65. The trial Court, though has considered the
evidence in the right perspective, there is no critical
analysis of the evidence on record. The conclusions
reached by the trial Court cannot be faulted with. In paras
13 to 17, it has considered all the points and has rightly
dismissed the suit.
66. Thus, the plaintiffs despite admitting execution
of the Partnership Deed, Retirement- cum- Reconstitution
Deed do not seek a declaration that they are void; though
they are consenting parties to JDA at Ex.D7, do not seek
its cancellation; suppress receipt of Rs.5,75,00,000/- and
do not prove dishonor of cheques; cleverly claim the
avoidance of these documents in the jargon of
"arrangements among defendants interse"; fail to seek
possession having permitted alienations by defendant
No.3; they also failed to prove that the defendants got
their signatures without permitted them to read.
Therefore, the suit of the plaintiffs is only speculative.
- 95 -
NC: 2024:KHC:12527
Therefore, the present appeal deserves to be dismissed
with exemplary costs. Hence, the following:
ORDER
i. The appeal is dismissed with cost of
Rs.50,000/- payable by the appellants to the
respondents.
ii. The judgment and decree passed by the I
Additional City Civil and Sessions Judge,
Bangalore, in O.S.No.4030/2009 dated
30.07.2012, is hereby confirmed.
iii. I.A.No.1/2012 and I.A.No.1/2020 are also
hereby dismissed.
Sd/-
JUDGE
KJJ
