Madras High Court
M.Sulaiman Alias Sulaiman Salt vs S.Saravanan on 12 November, 2024
CRP No.4516 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.11.2024
CORAM:
THE HONOURABLE Mr. JUSTICE V. LAKSHMI NARAYANAN
CRP No.4516 of 2024
M.Sulaiman alias Sulaiman Salt ... Petitioner
Vs
1.S.Saravanan
2.K.Moithutty
3.Ibrahim Kutty
4.Mohammed Rafi
5.Mohammed Taufique .... Respondents
PRAYER: Civil Revision Petition filed under Article 227 of the Constitution of
India to set aside the Order and Decree passed in I.A.No.4 of 2023 in
O.S.No.467 of 2023 on the file of Principal District Judge, Chengalpattu dated
28.06.2024.
For Petitioner : Colonel Ganesan
For Respondents : MrK.Mahalingam
For M.Rajasekaran
1/15
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CRP No.4516 of 2024
ORDER
This Civil Revision Petition arises against the order passed by the
learned Principal District Judge, Chengalpattu in I.A.No.4 of 2023 in
O.S.No.467 of 2023 dated 28.06.2024.
2. O.S.No.467 of 2023 is a suit for declaration and consequential reliefs.
The reliefs are set forth below”-
“ a. For declaration to declare that the make belief
Partnership Firm known as “FOODSCAPE” created by
a deed of Partnership Agreement dated 20.03.2020,
registered as Document No.288 of 2020, dated
18.06.2020 on the files of Registrar o Firms, Chennai
South is null and void.
b. For the sum of Rs.1,20,60,000/- together with interest
at the rate of 16% per annum from the date of filing the
plaint till the date of payment and/or realisation.
c. For permanent injunction restraining the defendants
their men and agents, representatives or any one
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claiming under them from way interfering with the
peaceful possession and enjoyment of the Food Street
shops at Semmanchery and Padur.”
3. The case of the plaintiffs is that the second defendant one Muhammed
Rafi was an employee of the plaintiff's while in Dubai. The said Muhammed
Rafi approached the plaintiffs and others seeking for an investment to start a
“Food Street” business at Semmencherry and Padur. For the said purpose, 11
parties, including the plaintiffs, joined together and invested with a sum of
RS.2,08,00,000/-. The plaint proceeds that Muhammed Rafi had identified
properties in Semmencherry and Padur and had convinced the plaintiffs that the
money they had invested had been paid to the land owners and properties had
been taken on lease.
4. The said Muhammed Rafi had informed the investors including the
plaintiffs that on account of pandemic caused due to Covid-19 virus the
business did not take of. Subsequently, he sent a message as the business did
not take off, he is abandoning the same and going to back to Qatar, in search of
employment.
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5. To shock and surprise of the plaintiffs and the investors, they came to
know that the entire business fell through on account of the fact the first
defendant took over the lease that had been entered into by the said Muhammed
Rafi, on behalf of the investors together with the land and superstructures put
up thereon. They pleaded defendants 1 and 2 started an entirely a new business
under the guise of a make-believe partnership Firm called as “FOOD
SCAPE”. On further probing the matter, they came to know that “FOOD
SCAPE” is a make belief partnership entity that had been created in collusion
by the defendants 1 and 2 and after the first defendant had taken over the
property, the second defendant had subsequently exited from the partnership
firm.
6. The plaint states that the entire idea of having projected a partnership
firm is only to knock off the hard earned money and investments made by the
plaintiffs to start the FOOD STREET business. The plaintiffs also pleaded that
on the lands taken on lease on their behalf by the second defendant, the first
defendant had let out the same to 36 tenants and had collected an advance of
Rs.1,60,00,000/-. On coming to know the manner in which they had been
cheated, they lodged a complaint with the jurisdictional police and a case has
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also been registered. Being left with no other option, they came forward with a
suit for the aforesaid reliefs.
7. On being served with summons, the defendants 1 and 3 took out an
application for rejection of plaint. According to them, the suit is barred by
virtue of Partnership Act and the Commercial Courts Acts. Further, they
pleaded there is no cause of action for the suit. Hence they sought for rejection
of the plaint.
8. A detailed counter was filed by the plaintiffs that the suit to be retained
very much on file and therefore, opposed the application for rejection of plaint.
9. The learned Principal District Judge came to a conclusion that, as the
plea raised by the defendants 1 and 3 is mixed question of law and fact, the
plaint deserves to remain on file and therefore dismissed the application. Hence
this revision.
10. It is pertinent to point out that though the third defendant was a co-
applicant with the first defendant in the application for rejection of plaint, for
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reasons undisclosed, he has not joined the first defendant in this revision.
11. I have heard Colonel Ganesan for the civil revision petitioner and
Mr.M.Rajasekar for the respondent/caveator.
12. Colonel Ganesan pleads that the suit is liable to be rejected as it is
barred under Sections 44 and 69 of Partnership Act of 1932. He adds the firm
“FOOD SCAPE” has not been impleaded as a party defendant to the suit and
the same applies to the 36 tenants also. He argues the firm, tenants and the land
owners should have been made parties to the suit. Therefore, the suit has to fail
for non-impleading of parties. He further pleads that the suit being a
commercial suit under Section 2(1)(c)(i) and 2(1)(c)(vii) of the Commercial
Courts Act, the jurisdiction of the Civil Court is barred and the suit has to be
thrown out as it is hit by Section 41(h) of Specific Relief Act. He states that
there is no privity of contract between the plaintiffs and the first defendant and
similarly with the tenants and the plaintiffs and since there is no privily of
contract, the suit has to fail. His final submission is that the FOOD SCAPE had
received a sum of Rs.1,85,00,000/- from the tenants and not Rs.1,20,60,000/- as
alleged in the plaint and therefore, the suit is hit for under valuation and
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consequently, is liable to be rejected under Order VII Rule 11(b) of Code of
Civil Procedure.
13. I have carefully gone through the records and I have analysed the
submissions of Colonel Ganesan.
14. Insofar as the first two submissions are concerned that the suit is
barred by virtue of Sections 44 and 69 of Partnership Act. I have to refer to the
said provisions. Under Section 44 of the Partnership Act, it gives the manner
in which a suit for dissolution has to be presented. Similarly, Section 69(2)
speaks about the presentation of the suit by or against a Firm. According to
Colonel Ganesan, the reliefs that have been sought for under clause (a) implies
that, the plaintiffs are seeking for dissolution of Firm FOOD SCAPE.
15. A careful perusal of the plaint shows that the plaintiffs do not concede
to the existence of the entity by name “FOOD SCAPE”. According to them,
“FOOD SCAPE” is a device that has been invented by the defendants 1 and 2
in order to knock off the investments that had been made by the plaintiffs at
Semmancherry and Padur through the second defendant/their former employee.
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Section 44 contemplates a situation where there exists a Firm and the person
suing for dissolution claims that he was a partner of the Firm and had agreed to
the profit and loss of the Firm and finds that the purpose for which the Firm
was floated need not be continued and hence sues for its dissolution.
16. On the contrary, in this particular case, the plaintiffs do not accept to
the existence of the Firm. According to them, as pointed out above, the Firm
itself is a device to take away the assets of the plaintiffs. Therefore, the question
of Section 44 applying does not arise. In addition, under Section 44 of the
Partnership Act, a suit can be presented only by the partners. The plaintiffs,
even as per the best case of the first defendant, are not partners of the said Firm.
Therefore, Section 44 of the Act is a red herring argument raised only for the
purpose of its rejection.
17. The second plead is that Section 69 is a bar for presentation of the
plaint. The relief as pointed out above seeks for cancellation of the Partnership
Firm as it is a fraudulent entity. It is not a case where the plaintiffs agreed that
the partnership firm had lawfully entered into occupation of the properties at
Semmencherry and Padur. The plaintiffs states that the lease belongs to them as
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investors and on the basis of the agreement entered into by the landowners with
their Manager, the 2nd defendant. The second defendant was acting as a
Manager for their investments. The plaintiffs in clear and categorical term state
is that the second defendant had at all points of time intimated the investors
about his contract with the land owners at Semmencherry and Padur.
Subsequently, the investment was utilised for the purpose of starting a “FOOD
STREET”. It is not the plaintiffs case that the entity has taken the property on
lease/sub lease from the plaintiffs' Manager. The plaintiffs' Manager viz., the
second defendant, in order to cheat the plaintiffs, had come up with this make
belief partnership Firm. To this act of the defendants 1 and 2, there is no
necessity to apply the bar under Section 69 of the Partnership Act. In any event
the bar applies only if the Firm is unregistered. If th Firm is registered, Section
69 does not operate.
18. It is here, I have to refer to the judgment that is pleaded by Colonel
Ganesan in Sharad Vasant Kotak and Ors vs Ramniklal Mohanlal Chawda
and another AIR 1998 SC 877 . He placed reliance on this pleading that this
judgment clinches the issue in his favour.
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19. I have carefully gone through this judgment. The issue that was
framed for the Supreme Court to answer was whether the suit for dissolution of
partnership firm is hit by Section 69(2A) of the Partnership Act. I find Section
69(2A) of the Act was an amendment that was made to the Partnership Act by
the State of Maharashtra. It is unnecessary to deal with this issue any more
since the amendment made by the Legislature in the State of Maharashtra does
not apply in the State of Tamil Nadu.
20. A plea was raised by the revision petitioner stating that the Firm is a
legal entity. I am unable to agree with the said submission because it is settled
that a Firm is a result of contract between persons who wants to do or join
together to do business or other activities in the name of such entity. A
partnership firm is not a legal entity and it is merely a business entity.
Therefore, the plea of Colonel Ganesan that Firm should have been impleaded
is without merits. The partners represent the Firm and the partners before the
Court. He argues that non partners cannot sue a Firm. This issue does not arise
in the present case since neither the existence of the partnership has been
admitted by the plaintiffs nor is this a suit filed by a person, claiming to be a
partner, seeking dissolution under Section 44 of the Partnership Act.
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21. With respect to the plea on privity of contract, it has to be answered
in the light of under Order I Rule 9 of the Code of Civil Procedure . Under the
said provision, no suit or claim can be defeated on account of mis-joiner or
non-joinder of parties. This is purely a dispute between the plaintiffs, who, as
investors, has given money to the second defendant to enter into lease
agreements with the owners to occupy the land under lease and put up
superstructure to run a Food Court. In such a proceedings, the presence of the
land owners or the tenant is neither essential nor necessary.
22. With respect to the plea that the tenants have not been impleaded as
parties to the proceedings, it is well too settled that where a person receives
money and diverts it to the hands of other person, the hands of law are long
enough to trace the amounts into the hands of the persons with whom the
assets are currently situated. The plaint states that the money was paid to the
second defendant and the second defendant had in turn transferred the interest
to the first defendant. The claim for recovery of money as well as for injunction
is in order. The Enforceability of the right that the investors has as against the
second defendant, and the first defendant being a successor in interest to the 2nd
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defendant is answerable to the claim. I need not dilate too much on the plea of
non joinder of cause of action because, in terms of Order II Rule 6 of the Code
of Civil Procedure, if the court comes to a conclusion that two causes of action
are going to lead to embarrassment of the trial, it is always open to the Court to
order separate trial. It is unknown that a suit to be rejected on the grounds of
joinder or mis-joinder of cause of action.
23. Now turning to the plea that Commercial Courts bars the civil suit, I
have to point out that the Commercial Courts Act has not created a new entity
for the purpose of dealing with commercial dispute. The existing civil courts
have been declared as Commercial courts and they apply the fast track
procedure evolved by the Parliament under the Commercial Courts Act for the
purpose of disposal. In fact, the jurisdiction of the Commercial Court is limited
whereas the jurisdiction of the civil court which is plenary.
24. Neither Section 2(1)(c)(i) nor Section 2(1)(c)(vii) apply to the facts
of this case. It is not the plaintiffs case that they entered into agreement with the
first defendant or FOOD SCAPE. Their simple case is that the second
defendant/their Manager had cheated them and had diverted funds with the
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assistance of the first defendant. Section (2)(1)(c) (i) applies when any
transaction between bankers, financiers or traders is admitted. None of these
provisions apply to this case. Similarly, the plaintiffs have not entered into an
agreement with respect to the immovable property with the defendants 1 and 2.
Through their Manager, they had entered into an agreement with the land
owners for running a Food Street.
25. To reiterate the plea in the plaint is that the business commenced by
the plaintiff was taken over by the defendants 1 and 2 by coming up with a
device of a partnership firm. There being no agreement between the plaintiffs
and the defendants with respect to any immovable property, Section 2(1)(c)(vii)
also does not apply to the facts of this case.
26. With respect to the bar of suits under Section 41 of Specific Relief
Act, 1963, yet again I have to point out that the lease agreement between the
owners and the plaintiffs had been entered at the hands of their Manager/
second defendant. Therefore, the lessees are the plaintiffs. If the lessees are the
plaintiffs, they can only be dispossessed in a manner known to law. This bar
applies even to the lessors. The first defendant, having surreptitiously taken
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over the property with the able assistance of the second defendant, cannot be
said that he is in legal occupation of the property and therefore, Section 41(h)
of the Act is a bar.
27. Finally, turning to the issue of Court fee for the purpose of court fee
and jurisdiction, the averments made in the plaint alone matter. The averments
made in the plaint disclose that the defendants 1 and 2 had received a sum of
Rs.1,20,60,000/- as advance. The plaint shows that they have also paid court fee
accordingly. If the first defendant wants to plead that he has received
Rs.1,85,00,000/-, then it is always open to the plaintiffs in case they succeed in
the suit to amend the plaint and seek for recovery of the amount from the first
defendant.
28. In the light of the discussions, I find no merits in the revision. The
only order that I have to pass in this revision is confirming the order of the
Principal District Judge in I.A.No.4 of 2023 in O.S.No.467 of 2023 dated
28.06.2024.
29. I have to add the usual Manthra. Being a plea for rejection of plaint, I
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have taken the averments made in the plaint be true and thereafter I have
pronounced the order. I did not and cannot enter into the merits of the case. It is
open to the parties to fight out the litigation in the manner known to law.
V.LAKSHMINARAYANAN,J.,
sr
30. In the result, the Civil Revision Petition is dismissed. No costs.
12.11.2024
Index:Yes/No
Speaking order/Non-speaking order
sr
To
The Principal District Judge, Chengalpattu
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