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SUNIL GOEL vs M/S RATIONAL ENTERPRISES & OTHERS

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 12th January, 2024
Pronounced on:22nd March, 2024

+ CS(COMM) 536/2016
SUNIL GOEL ….. Plaintiff
Through: Mr. Kunal Lakra, Advocate.

versus

M/S RATIONAL ENTERPRISES & OTHERS ….. Defendants
Through: Mr. Prosenjeet Banerjee, Ms. Anshika Sharma and Mr. Sarthak Bhardwaj, Advocates for D-2. Mr. Vijay Mishra, Advocate for D-3. Mr. Tarun Rana, Mr. Sunny Pandey, Mr. Anis Singh and Mr. Shivam Verma, Advocates for D-5 & D6.
CORAM:
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G M E N T
NEENA BANSAL KRISHNA, J.
I.A.12063/2018 (under Order 12 Rule 6 CPC filed by the plaintiff)
1. The application under Order 12 Rule 6 read with Section 151 Code of Civil Procedure, 1908 (hereinafter referred to as ‘CPC’) has been filed on behalf of the plaintiff seeking a Judgment and decree, on the basis of unambiguous admissions made by the defendants in the present Suit and also in the documents pertaining to the admitted litigations by the defendant No. 1.
2. To appreciate the contentions of the plaintiff, it would be pertinent to refer to the respective cases of the parties. The plaintiff has filed the Suit for Dissolution of Partnership, Rendition of Accounts and recovery of the amount due and payable after the Rendition of Accounts, Cancellation of Documents, Declaration and Permanent Injunction.
3. It is the case of the plaintiff that the defendant No. 1 is the Partnership firm comprising of three partners, namely, the plaintiff, defendant No. 2 and defendant No 3, who all are the brothers and have been trading in the papers and paper products, in the name of defendant No. 1. The share of each of the three partners, was equal to the extent of 33%.
4. The plaintiff has asserted that from the funds of the partnership business, defendant Nos. 2 and 3 purchased the property bearing No. 14-B, Orchid, Shushant Lok, Gurgaon (Haryana), in their personal name and included the name of their mother, Smt. Seema Goel. The defendant No. 1 also owned a flat in Mercantile House, K.G. Marg, Connaught Place, New Delhi, which had been let out by the defendant No. 1 to American Express Bank. The Gurgaon property has been let out by the defendant No. 1, to one M/s Honeywell International.
5. The plaintiff has stated that he was based in Mumbai and was being assured regularly by the defendant No. 3 that his share was being transferred to his capital Account. However, since the year 2001, no amount has been paid to him from the account of the defendant No. 1. The relationship being cordial between the three brothers, he never made any grievance against his brothers.
6. In sometime September 2007, when the plaintiff approached the defendant Nos. 2 and 3 to see the Accounts, they evaded it by saying that the account was being finalized. In the interim, some relatives and the mother of the parties intervened and requested them to settle their disputes in respect of the properties, whether owned by the defendant No. 1 Firm or by Sh. O.P. Goel (HUF) and in respect of the estate left by their father. The plaintiff on failing to receive any attention, addressed a letter dated 10.07.2009, requested the defendant Nos. 2 and 3, to allow him to inspect the records but no reply was forthcoming from them.
7. The plaintiff claimed that on a recent enquiry, he came to know that the defendant Nos. 2 and 3 are not only operating the regular Bank Account of the defendant No. 1 in Standard Chartered Bank, which has been maintained since the inception of the partnership firm but they have also manipulated and transferred the other amounts of the partnership Firm, without the consent, approval and confirmation of the plaintiff. Some fraudulent activities have also been undertaken by the defendant Nos. 2 and 3, to keep the plaintiff away from the partnership business.
8. The plaintiff thus served Notice dated 08.11.2009 upon the defendants, informing them that since a partnership was at Will, he did not want the partnership to continue and sought dissolution of the firm with immediate effect from the date of the receipt of the said Notice. The plaintiff also called upon the defendants to render the accounts of defendant No. 1. The plaintiff thus filed the present Suit for Dissolution of Partnership and Rendition of Accounts.
9. The defendants in their Written Statement took up the defence that during the lifetime of Sh. O.P. Goel, the father of the parties, all the three sons were carrying on the following business under the supervision and control of their father, namely:
(i) M/s Rational Enterprises at Delhi in partnership of the plaintiff and defendant Nos. 2 and 3, and
(ii) Business was in the name of M/s Sanil Industries at Mumbai, in the partnership of the plaintiff and defendant No. 2.
10. It was claimed that both these businesses were part of the family business and were being carried out under the supervision of their father Sh. O.P. Goel. The plaintiff proposed the partition of the businesses inter se the three brothers since he had shifted to Bombay. Accordingly, in the year 2001-2002, there was an Oral Family Settlement by mutual consent amongst all the three sons in the presence of their mother, Smt. Seema Goel and family friend Sh. Tarun Batra. According to the Family Settlement, Sh. O.P. Goel decided that the Bombay business of M/s Sanil Industries would go to the plaintiff alone and defendant Nos. 2 and 3 would not claim any share in the same. Likewise, since they were settled in Delhi, the Delhi business of M/s Rational Enterprises would be carried on by the defendant Nos. 2 and 3 and plaintiff would not have any share in the same. Acting on the said settlement, the defendant No. 3 did not ask the plaintiff to pay the sum of Rs. 20,36,264.50/-, which was due from the plaintiff to the defendant No. 3.
11. Pursuant to the settlement, Bombay business of M/s Sanil Industries, was taken over by the plaintiff, who still continuing the business as the Sole Proprietorship Firm. At the same time, Delhi business of M/s Rational Enterprises was taken over by the defendant Nos. 2 and 3 and plaintiff has not been participating since then nor showing any capital contribution or income from the said firm in his Income-Tax Returns.
12. For the sake of convenience, the defendant Nos. 2 and 3 had re-written the Partnership Deed dated 01.04.2004, whereunder they have been doing the business in the name of M/s Rational Enterprises, in which the plaintiff is not a partner. Subsequently, vide Take Over Agreement dated 01.08.2009, the Partnership Firm along with its assets and liabilities as on 31.07.2009, was taken over by the M/s Rational Sales Private Limited, a Private Limited Company. It is claimed that the Partnership Firm M/s Rational Enterprises had thus ceased to exist.
13. It is claimed by defendants No.2 & 3 that the plaintiff out of malafide, has filed the present Suit after six years, in order to harass the defendant Nos. 2 and 3. He also before filing the Suit, filed a false and frivolous Criminal Complaint against the defendant Nos. 2 and 3, wherein the statement of Sh. Tarun Batra and their mother, Smt. Seema Goel, were recorded, who disclosed the true facts.
14. It is submitted that now defendant No. 1 M/s Rational Enterprises is a non-existent entity. The Suit is bad in law for mis-joinder of parties and it is also claimed that the Suit is barred by time and also is not maintainable.
15. By way of the amended plaint, the plaintiff had refuted all the contentions made by the defendants in their Written Statement.
16. The plaintiff, by way of the present application, has contended that there has never been admittedly any dissolution of the partnership M/s Rational Enterprises, as it was originally constituted. The defendant Nos. 2 and 3 could not have re-written the Partnership Deed on 01.04.2004, which is not permissible under law and the said Partnership Deed is null and void. Further, it is alleged that the defendant No. 1 could not have been dissolved by the alleged Oral Agreement as claimed by the defendant Nos. 2 and 3. Furthermore, the Takeover Agreement Deed dated 01.08.2009 by M/s Rational Sales Pvt. Ltd., is against the law. The sale of first floor of Mercantile House, Connaught Place, New Delhi, the property owned by the Partnership Firm to defendant Nos. 5 and 6, is a concocted story merely to deprive the plaintiff of the lawful rights in the property of the Partnership Firm.
17. It is claimed that the Partnership Firm as was originally constituted is continuing as there can be no oral dissolution. This fact is further confirmed from the fact that the defendant No. 1 Firm, M/s Rational Enterprises, had filed a Suit No. 56/2003 against M/s Balkrishna Industries Limited which is still pending disposal. The very fact that the Suit was filed in the name of the defendant No. 1 in the year 2003, clearly reflects that it had never been dissolved as claimed by the defendants.
18. It is submitted that there is a clear admission of the defendant Nos. 2 and 3 that the Partnership Firm is continuing. Further the Form ‘A’ vide which the Firm was purportedly registered in the year 2002, the plaintiff is shown as a Registered partner of the Firm. It is thus, claimed that there is no change in Constitution of the Firm nor was it ever taken over by M/s Rational Sales Private Limited. Though the defendant Nos. 2 and 3 have claimed that a fresh Partnership was written between them in the year 2004, but in the Suit before the learned ADJ, Delhi, another partnership of the year 2002, has emerged where defendant No. 1 is suing M/s Balkrishna Industries, showing the defendant Nos. 2 and 3 as the partners.
19. It is evident from the documents of the defendant Nos. 2 and 3 that the status of the defendant No. 1 till date, is that of a Partnership Firm. It is, therefore, submitted that from the admissions of the defendants itself as made in a Suit, pending before the learned ADJ, Delhi, the Partnership Firm/defendant No. 1 continues to exist; on the basis of these admissions the Suit of the plaintiff be decreed.
20. The plaintiff in his Written Submission has relied on the case of Dhulia-Amalner Moto Transport Ltd. v. Raychand Rupsi Dharamsi (1951) (DLT Soft) 1334 and R.Subbulakshmi & Ors. v. R. Venkitapathy & Ors. 2023 SCC Online MAD 53O3 to assert that in case of Partnership at Will, Section 43 of the Indian Partnership Act, 1932 requires three things: issuance of a notice, notice to be in writing and the notice must be express with the intention to dissolve the firm and without the same, Section 43 is inapplicable.
21. Reliance has also been placed on Sanjay Kumar Bhagat v. Sanjan Kumar Bhagar 2023 SCC OnLine Cal 911 where it was held that in case of Partnership at will under Section 43 of the Indian Partnership Act, 1932 if it is found that a Company is formed with the assets of the partnership firm without the consent of all the partners, then the same shall be vitiated.
22. The defendants in their reply to the application, have clarified that since after the Oral Settlement, plaintiff had opted out of the Partnership Firm/defendant No. 1, the same has been continued by the defendant Nos. 2 and 3, who had re-written the Partnership Deed in April, 2004 and therefore, only the defendant Nos. 2 and 3 have continued to be the partners of the defendant No.1, till it was taken over by the Company. It is further explained that M/s Rational Enterprises had filed the Suit for Recovery against M/s Balkrishna Industries, on or around 04.02.2003 and had also filed the last Partnership Deed registered with the Registrar of Firms. Furthermore, the Suit amount was not taken over by M/s Rational Sales Private Limited. Therefore, the name of the Company was not substituted and the Suit was continued in the name of erstwhile Partnership Firm. However, in order to sabotage the said litigation, the plaintiff had moved an application under Order 1 Rule 10 CPC, to be impleaded as a party after 15 years.
23. The defendants have claimed that the assertions of the plaintiff are without any merit, since the locus of the plaintiff has to be seen as on the date of filing of the Suit and subsequent dissolution of the Firm, makes no difference. At the time, when the Suit was filed, the Partnership Deed dated 01.04.2004 was not in existence. It is submitted that there is no merit in the present application, which is liable to be dismissed.
24. Submissions heard.
25. It is an admitted case that Sh. O.P. Goel, the father of the parties had been running two businesses, one at Delhi as M/s Rational Enterprises of which the plaintiff and defendant Nos. 2 and 3, were the partners; and the second business was being done at Mumbai in the name of M/s Sanil Industries under the partnership of the plaintiff and defendant No. 2. According to the defendants, pursuant to the Oral Settlement, their father gave the business of Delhi to defendant Nos. 2 and 3 and the business of Mumbai to plaintiff. Consequently, the plaintiff ceased to be the partner of the defendant No. 1 and the business of Mumbai became his sole Proprietorship business.
26. No doubt, a Suit for Recovery bearing No. 56/2003 had been filed in the name of the defendant No. 1 against M/s Balkrishna Industries, but it has been explained by the defendants that at that time in 2003, the registered Partnership Deed that was existing, had been annexed along with the Suit. It has thus, been explained that subsequently in the year 2004, the Partnership Deed had been re-written with defendant Nos. 2 and 3, as its partners.
27. The first aspect which has been agitated on behalf of the plaintiff, is that no dissolution of the defendant No. 1/Partnership Firm, has ever taken place and it continues to exist and do the business.
28. Section 43 of the Indian Partnership Act, 1932 provides for the mode of dissolution of Partnership at Will. It provides that the same can happen only by service of a Notice in writing. However, this is not a case where the partnership got dissolved but is a case of resignation of one of the three partners. Section 32 of the Partnership Act, clearly provides that a partner may retire with the consent of all the parties.
29. The Plaintiff has relied upon Dhulia-Amalner Moto Transport Ltd. v. Raychand Rupsi Dharamsi (1951) (DLT Soft) 1334 and R.Subbulakshmi & Ors. v. R. Venkitapathy & Ors. 2023 SCC Online MAD 53O3 which essentially state that in case of Partnership at Will, applicability of Section 43 of the Indian Partnership Act, 1932 requires issuance of a Notice in writing with the express intention to dissolve the firm. Further, reliance has been placed on Sanjay Kumar Bhagat v. Sanjan Kumar Bhagar 2023 SCC OnLine Cal 911 which state that in case of Partnership at Will consent of all parties is required if a company is formed with the assets of the partnership. The judgments relied on by the Plaintiff do not aid his case as the present case is inherently of Section 32 of the Partnership Act.
30. In the present case, the defendants have pleaded that it was by virtue of the mutual consent of all the partners, in reverence to the desire of their father and on the request of the plaintiff that the plaintiff made an exit from the Partnership business and took over the Bombay business, as the sole proprietor.
31. The defendants have taken a specific plea of Oral Agreement inter se the parties and at this stage, it cannot be said that there was no exit/resignation of the plaintiff, from the defendant No. 1, especially when after 2001-2002, the plaintiff has asserted its right only by way of this Suit, which has been filed in the year 2016. The silence of the plaintiff, for last about 15 years, needs to be explained by him, the conduct of the plaintiff rather corroborates the assertions of the defendants that there was an exit of the plaintiff from the Partnership Firm.
32. The plaintiff has asserted that because a Civil Suit No 56/2003, had been filed in the name of the defendant No. 1 in the year 2003, is a clear indicator of the continuation of the business of the defendant No. 1. Pertinently, the Suit was filed in the year 2003, while as per the defendant Nos. 2 and 3, the Partnership Deed with the defendant Nos. 2 and 3 as partners, had been written in the year 2004. At the time of filing of the Civil Suit, the Partnership Deed that existed was in the name of all the three partners, which was filed with the plaint. It is, therefore, explained why the Suit got filed in the name of the defendant No. 1 in the year 2003, as the re-writing of the Partnership Deed, pursuant to the Oral Settlement of the parties, had been done only in the year 2004. Therefore, mere filing of a Suit in the name of the Partnership Firm in the year 2003, cannot be held to be an unambiguous, unequivocal admission of the defendants, that Partnership Firm has continued.
33. The defendants have further taken a specific plea that after re-constitution of the Partnership Firm in the year 2004, it has been taken over dated 01.08.2009 by M/s Rational Sales Private Limited/defendant No. 4.
34. There are specific pleas taken by the defendants, about the change in Constitution of the Partnership Firm and also it being taken over by a Private Limited Company and that the original partnership of which the plaintiff is claiming himself to be a partner, having been reconstituted way back in the year 2004 on the exit/resignation of the plaintiff.
35. In the light of the above discussion, it is observed that the defences of the defendant warrant consideration on merit and it cannot be said that there are any unequivocal, unambiguous admissions entitling the plaintiff to a judgement on admissions.
36. The application is without merits and is hereby dismissed.
CS(COMM) 536/2016
37. Be listed before the learned Joint Registrar for recording of evidence on 02.05.2024.

(NEENA BANSAL KRISHNA)
JUDGE
MARCH 22, 2024/RS

CS (COMM) 536/2016 Page 1 of 11