Vishal Sharma And Ors vs Gurprit Singh And Ors
- Court
- Punjab and Haryana High Court
-1-
RSA-1592-2
IN THE HI
Whether onl
full judgmen
VISHAL SH
2008 (O&M)
IGH COURT OF PUNJAB AN
ND HARYANA AT CHANDIG
GARH
RSA-1592-2008 (O&M)
Reserved on: 08.10.2026
Pronounced on: 31.10.2026
Judgment uploaded on: 31.10.2
2026
ly the operative part of the judgm
nt is pronounced: Full.
ment is pronounced or whether t
the
HARMA AND ORS.
…APPELLANT
TS
GURPRIT S
VERSUS
SINGH AND ORS.
...RESPONDEN
NT
CORAM:
Present:
HON'BLE MS. JUSTICE MO
ONICA CHHIBBER SHARMA
A
Mr. Sourabh Bedi, Advocate an
Mr. Shiv Kumar, Advocate for
nd
the appellants.
MONICA C
1.
Mr. Aditya Dassaur, Advocate
for respondent No.1.
*
CHHIBBER SHARMA, J.
The present Regular Second A
Appeal arises out of the judgme
ent
and decree
dated 11.02.2008, passed by Ad
ddl. District Judge, Ambala, in t
the
first appeal,
, whereby the judgment and dec
cree dated 18.05.2007 of the Civ
vil
Judge (Jr. D
Div.), Ambala, dismissing the
suit of the plaintiffs, was part
tly
reversed. T
The First Appellate Court, vi
ide judgment and decree dat
ted
11.02.2008,
partly allowed the appeal, decl
laring plaintiff No.2-Gurprit Sin
gh
(herein refer
rred to as plaintiff No.2), to be
a partner to the extent of a 49 p
per
cent share
in plaintiff No.1-Firm (M/s.
Sharma Service Station) (here
ein
referred t
o as plaintiff No.1), al
longside the Vishal Sharm
ma
appellant/de
efendant No.1 (herein referred to
o as defendant No.1), who holds
s a
RENU SHARMA
2026.10.31 13:59
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integrity of this document
-2-
51 per cent
t share, while declining the ma
andatory injunction against HPC
CL
(defendant N
No.4) (herein referred to as defen
ndant No.4) and the Oriental Ba
ank
of Commerc
ce (defendant No.5) (herein refer
rred to as defendant No.5).
2.
M/S. Sharma Service Station-P
Plaintiff No.2, through its partn
ner
Sh. Gurprit
Singh, and Gurprit Singh hims
elf/plaintiff No.1 (both plaintiff
fs),
filed a suit
for declaration against Vishal S
Sharma-defendant No.1, seeking
g a
declaration
that plaintiff No.2-Gurprit Sing
gh is a partner of plaintiff No.
.1-
Firm. Furth
er, sought relief of a permanent
t injunction restraining defendan
nts
No.1 to 3
from interfering, in any mann
ner, in the peaceful working a
nd
running of t
the plaintiff No.1-Firm (M/s. Sh
harma Service Station) by plaint
tiff
No.2-Gurpri
it Singh, through themselves
or through Police, and furth
er,
prayed for
a mandatory injunction directi
ing the defendant No.4-HPCL
to
supply the d
diesel and petroleum products r
regularly to the plaintiffs, again
nst
advance De
emand Draft, and directing the d
defendant No.5-Bank, to contin
nue
with the op
peration of Cash Credit limit o
of the plaintiff No.1-Firm, bei
ng
operated by
the authorized signatory, namel
y, Sh. Maninder Singh.
3.
Succinctly stated, the facts o
f the case are that M/s. Sharm
ma
Service Sta
ation located at Kuldip Nagar,
G.T. Road, Ambala Cantt., w
was
earlier bein
ng operated by Sh. Om Parka
ash Sharma and his brother S
Sh.
Rameshwar
Dass Sharma in partnership,
since 1971, and defendant No
.4-
HPCL allott
ted a retail outlet/petrol pump t
o the said partnership Firm. Aft
fter
the death of
f Sh. Om Parkash Sharma in the
year 1989, defendant No.1-Vish
hal
Sharma was
s inducted as partner along wi
ith Sh. Rameshwar Dass Sharm
ma,
with prior
approval of Corporation-HPC
CL, and after the death of S
Sh.
Rameshwar
Dass Sharma, the appellant/def
fendant No.1-Vishal Sharma alo
one
RENU SHARMA
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-3-
continued t
the business as sole proprietor
r. The plaintiff No.1-Firm has
a
dealership
with defendant No.4-HPCL,
which is supplying petroleu
um
products to
the plaintiff No.1-Firm. It is f
further averred that the defenda
ant
No.2-Smt.
Suraksha Sharma (mother) an
nd defendant No.3-Ms. Anupa
am
Sharma (sis
ster) of defendant No.1-Vishal S
Sharma, all appellants herein, a
are
the legal hei
irs of Sh. Om Parkash Sharma. F
Further, averred that the defenda
ant
No.1-Vishal
l Sharma, was facing a certain m
monetary crisis due to low sales
of
petroleum p
products. Accordingly, defendant
t No.1-Vishal Sharma, approach
hed
plaintiff No
o.2-Gurprit Singh, to be a partne
er in the plaintiff No.1-Firm (M
M/s
Sharma Ser
rvice Station) in March 2003. T
The plaintiff No.2-Gurprit Sing
gh,
accordingly
invested an amount of Rs.20 L
Lac in the Firm, out of which Rs
s.9
Lac were co
ontributed towards capital invest
tment in the Firm, while a sum
of
Rs.11 Lac h
have been availed as Cash Cred
dit limit by plaintiff No.2-Gurp
prit
Singh in the
e name of plaintiff No.1-Firm, af
fter mortgaging his Feed Factory
y at
Dhurkara, w
with defendant No.5-Bank, and
the same has not been cleared
so
far. It is fu
urther the case of the plaintif
ffs that, with the consent of t
the
defendant N
No.1-Vishal Sharma and plainti
ff No.2-Gurprit Singh, brother
of
plaintiff No
o.2, namely Maninder Singh, w
as operating the said CC limit
of
plaintiff No
o.1-Firm. It is further asserted
d that the defendant No.1-Vish
hal
Sharma han
nded over a notarized and attest
ted copy of the documents to t
the
plaintiff No
o.2-Gurprit Singh, assuring that
t he had become a partner in t
the
plaintiff No
o.1-Firm, and the originals of
f the said documents had be
een
forwarded t
to defendant No.4-HPCL. It is
s further asserted that defenda
ant
No.1-Vishal
l Sharma handed over certain do
ocuments to plaintiff No.2-Gurp
prit
Singh, whic
ch are as follows:-
RENU SHARMA
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integrity of this document
-4-
(i)
) Copy of resignation letter
to defendant No.4-HPCL.
by defendant No.1-Vishal Sharm
ma
(ii
i) Copy of request letter by
defendant No.4-HPCL, re
No.2-Gurprit Singh as a p
sharing ratio of 51% of d
49% of plaintiff No.2-Gur
defendant No.1-Vishal Sharma
equesting them to induct plaint
to
tiff
fit-
partner in the Firm, in the prof
efendant No.1-Vishal Sharma a
rprit Singh.
nd
(ii
ii) Copy of commitment lette
and defendant No.1-Visha
ers by plaintiff No.2-Gurprit Sin
al Sharma to Corporation-HPCL.
gh
(iv
v) Copy of undertaking by
defendant No.1-Vishal Sh
for the retail outlet and t
company-owned retail o
defendant No.1-Vishal Sha
plaintiff No.2-Gurprit Singh a
harma to HPCL to lease the la
and
nd
o a
to convert the retail outlet into
outlet, along with affidavit
of
arma.
(v
v) Copy of affidavit of de
HPCL seeking approval
Singh as financial partner
stating his no objection to
efendant No.1-Vishal Sharma
to
prit
and
to induct plaintiff No.2-Gurp
r to the extent of 49% share a
the same.
(v
vi) Copy of affidavit of de
stating financial crisis and
induction of plaintiff No.2
Firm.
efendant No.2-Suraksha Sharm
ma,
qua
d further stating no objection q
2-Gurprit Singh as a partner in t
the
(v
vii) Copy of affidavit of plaint
financial status and other r
the purpose of HPCL.
tiff No.2-Gurprit Singh, stating h
requested information executed f
his
for
It is further asserted by plaint
tiff No.2-Gurprit Singh that, aft
fter
being thoro
oughly satisfied with the afo
oresaid documents/affidavits a
and
undertaking
gs etc., he invested a huge amou
unt in the plaintiff No.1-Firm a
nd
also enhanc
ced the area of the retail out
tlet by obtaining NOC from t
the
concerned d
department. Not only this, the pl
laintiff No.2-Gurprit Singh and h
his
brother, Ma
aninder Singh are instrumental
in increasing sales of petroleu
um
products. It
is further alleged by the plain
ntiff No.2-Gurprit Singh that aft
fter
putting in t
two years of hard labour, inves
sting a huge amount, and havi
ng
increased th
he sale, now dishonest intentions
s have cropped up in the minds
of
defendants
No.1 to 3, and they have start
ted interfering in the working
of
RENU SHARMA
2026.10.31 13:59
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integrity of this document
-5-
plaintiff No
o.2-Gurprit Singh in operating
the petrol pump, for which
he
asserts that
defendants No.1 to 3 have no ri
ight, title, or interest to do so, a
nd
as such, he
sought relief of a declaration th
hat he is a partner of the plaint
tiff
No.1-Firm,
and further sought relief of a per
rmanent injunction, restraining t
the
defendants N
No.1 to 3 from interfering in any
y manner in peaceful working a
and
running of
the plaintiff No.1-Firm by pl
laintiff No.2-Gurprit Singh. It
is
further alleg
ged that defendant No.4-HPCL
L is not supplying the petroleu
um
products to
plaintiff No.2-Gurprit Singh, ow
wing to certain technical objectio
ons
which had
d adversely affected plaintiff
f No.1-Firm’s functioning, a
nd
accordingly
, relief of a mandatory injunctio
on was sought directing defenda
ant
No.4-HPCL
L to supply the petroleum produ
ucts to plaintiff No.1-Firm again
nst
advance De
emand Draft. It was further as
sserted that plaintiff No.2-Gurp
prit
Singh reque
ested the defendants No.1 to 3
to admit him as a partner in t
the
Firm, whic
ch was not acceded to by th
he appellants/defendants. Henc
ce,
necessitated
d the filing of the present suit.
4.
Upon notice, the defendants N
No.1 to 3 contested the suit, taki
ng
preliminary
objections regarding right to
represent the sole proprietorsh
hip
firm; bar un
nder Section 69 of the Indian Pa
artnership Act, 1932; locus stand
di;
maintainabi
lity; misjoinder and non-joinder
r of necessary parties. On meri
its,
the material
l averments made by the plainti
iff No.2-Gurprit Singh, have be
een
denied. It is
s asserted by the defendants No.
1 to 3 that after the deaths of bo
oth
Om Parkas
sh Sharma and Rameshwar D
Dass, the defendant No.1-Vish
hal
Sharma, alo
one has been the sole proprieto
or carrying on the business. It
is
further adm
mitted that defendants No.2
and 3 are mother and sist
er,
respectively
y, of defendant No.1 and the de
efendants No.1 to 3 are the leg
gal
RENU SHARMA
2026.10.31 13:59
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integrity of this document
-6-
heirs of Sh.
Om Parkash Sharma. It is vehem
mently denied by defendants No
o.1
to 3 that the
e petrol pump is situated in Kh
hasra No.44/2 having total area
of
4K-14 Marl
las. The allegation of decreased s
sales of plaintiff No.1-Firm is al
lso
denied; even
n the financial crisis, as pleaded
d by plaintiff No.2-Gurprit Sing
gh,
are vehemen
ntly denied. Further denied that
t plaintiff No.2-Gurprit Singh w
was
inducted as
s a partner in the firm. The a
appellants/defendants also deni
ied
investment
of Rs.20 Lac in the Firm,
i.e., Rs.9 Lac lying as capi
tal
investment,
while Rs.11 Lac having been a
availed as CC limit by the plaint
tiff
No.2-Gurpri
it Singh, in the name of plaintif
ff No.1-Firm, after mortgaging h
his
Feed Factor
ry. The appellants/defendants av
verred that they wanted to obta
ain
the Cash C
Credit limit from the responden
nt-Bank, and the bank had ask
ked
defendant N
No.1-Vishal Sharma to provide
some persons as guarantors a
nd
accordingly
, the plaintiff No.2-Gurprit Sing
gh, who happened to be a friend
of
defendant N
No.1-Vishal Sharma, was reque
ested to give his guarantee to t
the
Bank. It is
further averred that plaintiff N
No.2-Gurprit Singh agreed to gi
ive
guarantee to
o the Bank, subject to the condi
ition that he may be inducted as
s a
partner in th
he Firm. It is further asserted tha
at since nobody could be induct
ted
as a partner
r in the Firm without prior app
proval of the Corporation-HPC
CL,
therefore, th
he proposed documents were
prepared in accordance with t
the
guidelines o
of the Corporation for its app
proval, but in the meantime, t
the
defendant N
No.1-Vishal Sharma grew appreh
hensive of the conduct of plaint
tiff
No.2-Gurpri
it Singh and accordingly did
not submit the proposal to t
the
Corporation
n-HPCL for its approval. As such
h, the plaintiff No.2-Gurprit Sin
gh
was never in
nducted as a partner in the Firm,
nor did he ever invest any amou
unt
of Rs.20 La
ac as alleged. It is further averr
red that the CC limit account w
was
opened by t
the appellants/defendants in the
name of plaintiff No.1-Firm as
s a
RENU SHARMA
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integrity of this document
-7-
sole proprie
etorship, which clearly shows th
hat the allegations of the plaint
tiff
No.2-Gurpri
it Singh that he is operating th
he bank accounts of the Firm a
are
totally false
e. The appellants/defendants fu
urther denied that the brother
of
plaintiff No
.2-Gurprit Singh, namely, Mani
inder Singh, was operating the C
CC
limits of the
e Firm, i.e., M/S. Sharma Servic
ce Station. However, it is admitt
ted
that the ban
nk account of the CC limit wit
th defendant No.5-Bank is in t
the
name of pla
aintiff No.1-Firm, and defenda
ant No.1-Vishal Sharma has be
een
recorded as
a sole proprietor of the Firm.
Hence, pleaded that the plaint
tiff
No.2-Gurpri
it Singh was never inducted as a
a partner in the Firm.
5.
The defendant No.4-HPCL, in
its written statement, has assert
ted
that as per D
Dealership Agreement dated 30
.03.1992 (Ex.D-4), after the dea
ath
of Sh. R
Rameshwar Dass Sharma, th
he surviving partner and t
the
appellant/de
efendant No.1-Vishal Sharma, w
were allowed to manage the affa
airs
of the servi
ice station, vide letter dated 26
6.01.2000. It is further averred
by
HPCL that t
till date no reconstitution of the
e Firm has been approved by the
em
and as per t
the company's record, the said
defendant No.1-Vishal Sharma
is
only a work
king partner of the said service
station. HPCL has further deni
ied
that defend
dant No.1-Vishal Sharma is ru
unning the dealership as a so
ole
proprietor.
Further, as per the company’
s record, defendant No.1-Vish
hal
Sharma wa
s allowed to continue with th
he supply of company petroleu
um
products aft
ter the death of Sh. Rameshwar D
Dass Sharma, till the reconstituti
on
of the Mem
morandum of Agreement. HPCL
L further denied, having admitt
ted
plaintiff No
.2-Gurprit Singh, as a partner in
n the Firm and further asserted th
hat
induction of
f a partner without their prior wr
ritten consent is impermissible a
nd
void. Simil
larly, the defendant No.5-Ban
nk in its written statement h
has
RENU SHARMA
2026.10.31 13:59
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integrity of this document
-8-
categorically
y stated that as per Bank’s rec
cords, the plaintiff No.1-Firm is
s a
sole proprie
etorship, which had opened a Cas
sh Credit limit, and plaintiff No
.2-
Gurprit Sin
gh is a guarantor of the said C
CC limit, who has mortgaged h
his
property wi
th the Bank. The Bank further
stated that defendant No.1-Vish
hal
Sharma is th
he sole proprietor of M/s Servi
ce Station and Maninder Singh
is
the authoriz
zed signatory. Ultimately, den
nying other material avermen
nts,
defendant N
No.5-Bank prayed for dismissal o
of the suit with costs.
6.
On the basis of the pleadings, th
he said suit filed by plaintiff No.
.2-
Gurprit Sing
gh was put to trial, framing the fo
following issues: -
(i) Whether the defendant
as partner in the par
Station to the extent of 4
(ii) Whether the plaintiff no
firm M/s Sharma Servic
(iii) Whether a sum of Rs. 1
No. 1 inducted the plaintiff No.
rtnership of M/s Sharma Servi
. 2
ice
49%? OPP
o.2 invested Rs.20,00,000/- in t
ce Station? OPP
the
11,00,000/- is availed as CC lim
n the name of plaintiff no.1 aft
ctory? OPP
mit
fter
by the plaintiff no.2 in
mortgaging his feed fac
iv) Whether the plaintiff
prayed for? OPP
(v) Whether the plaintiff n
sole proprietorship firm
(vi) Whether the suit on beh
under section 69 of the I
(vii) Whether the suit is not m
(viii) Whether the suit is bad
is entitled to the injunction
as
no.2 has no right to represent t
m? OPD
the
half of the plaintiff No. 1 is barr
red
Indian Partnership Act? OPD
maintainable? OPD
d for non-joinder or mis-joinder
D
of
necessary parties? OPD
(ix) Whether the plaintiff ha
OPD
(x) Relief.
as no locus standi to file the su
it?
RENU SHARMA
2026.10.31 13:59
I attest to the accuracy and
integrity of this document
-9-
7.
The trial court dismissed the
suit of the plaintiffs/responden
nts
vide judgme
ent and decree dated 18.05.2007,
, holding that:
(i) M/S. Sharma Service S
proprietorship
(ii) Document Exhibit PW
deed" pending approval
(iii) In the absence
respondent/defendant N
partnership came into le
(iv) Plaintiff No.2-Gurprit
partner in the Firm, tho
to secure the CC limit
was not established th
claimed. Further, the pr
69 of the Indian Partn
maintainable.
Station (plaintiff No.1) was a so
ole
W4/1 was a "proposed partnersh
hip
l from defendant No.4-HPCL.
of formal approval
No. 4-HPCLand registration,
egal existence.
of
no
Singh, not being a register
ough had pledged his feed facto
red
ory
and had some business interest,
at he had invested Rs.20 Lac
resent suit is barred under Secti
nership Act, 1932, and thus, n
, it
as
on
not
However, the First Appellate C
Court partly reversed the judgme
ent
and decree
of the trial court, vide its judgm
ment and decree dated 11.02.200
08,
holding ther
rein:
(i) That under Section 4 an
1932, the true relation
gathered from the surrou
execution of contempora
(ii) Both parties fulfilled t
plaintiff No. 2, Gurprit
his Feed Factory, and op
brother, namely Maninde
No.1-Vishal Sharma ex
letters acknowledging th
No.2-Gurprit Singh.
d 6 of the Indian Partnership A
n between the parties must
unding circumstances, conduct, a
Act,
be
and
aneous documents.
their part of obligations; wh
ile
ged
Singh, invested funds, mortgag
perated bank accounts through h
his
ant
ted
tiff
er Singh, for two years, defenda
xecuted affidavits and request
he 49% share induction of plaint
(iii) Defendant No.1-Vishal
Sharma cannot approbate a
ying the benefits of financ
nd
ial
prit
reprobate, after enjoy
investments and guaran
Singh.
ntees from plaintiff No.2-Gurp
(iv) The partnership was c
between plaintiff No.2-G
complete and binding inter
Gurprit Singh and defendant No
se
.1-
RENU SHARMA
2026.10.31 13:59
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integrity of this document
-
10-
Vishal Sharma, even if
defendant No.4-HPCL.
f the same was not binding
on
(v) Section 69 of the Indian
apply as the suit was mai
Singh’s individual capaci
n Partnership Act, 1932, does n
not
prit
intainable in plaintiff No.2-Gurp
ity.
8.
The substantial questions of law
w for consideration of this Court
in the presen
nt appeal are as follows: -
(i) Whether a Court can
thereto in the absence
constitute the partnershi
(ii) Whether the Court can c
parties?
(iii) Whether a proposed pa
the parties can be sa
partnership between the
(iv) Whether the Court c
constitution of a partner
that any change in cons
to approval of Hindusta
which granted dealershi
(v) Whether a suit filed b
barred by Section 69 of
(vi) Whether a partner of u
file a suit against other
partner?
Submissions on behalf of the
create a contract and give effe
e of fulfillment of condition
ip contract?
ect
to
create a partnership between the
artnership deed executed betwe
aid to amounting to creation
e parties?
een
of
can grant declaration declari
ng
act
ect
ed,
rship in full knowledge of the fa
stitution of the firm is to be subje
an Petroleum Corporation Limite
ip and not granted the approval?
by unregistered partnership is n
f the Partnership Act?
not
unregistered partnership firm c
r partner for declaration that he
can
is
9.
appellants/defendants:-
Learned counsel for the a
appellants/defendants vehement
tly
argued that
the First Appellate Court erre
ed in partly allowing the appe
eal,
without app
preciating the pleadings, oral evi
idence, and documentary eviden
nce
available on
n the record. He further asserts th
hat (M/S. Sharma Service Station
n),
plaintiff No
.1-Firm, was a sole proprietorsh
hip concern of the defendant No.
.1-
Vishal Shar
rma, and plaintiff No.2-Gurprit
Singh, was never legally induct
ted
as a partner
r. The proposed partnership dee
ed was never registered under t
the
RENU SHARMA
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integrity of this document
-
11-
Indian Partn
nership Act, 1932. Consequently
y, he submits that the suit is barr
red
under Secti
on 69 of the Indian Partnershi
ip Act, 1932, and plaintiff No
.2-
Gurprit Sing
gh, has no locus standi to claim t
the rights of a partner. The couns
sel
further cont
ends that no valid and enforceab
ble partnership agreement was ev
ver
executed be
etween the parties. The alleged
d proposed Partnership Deed (E
Ex-
PW-4/1) wa
as undated, contained blank c
olumns, and did not specify t
the
commencem
ment of the partnership, capital c
contribution, assets and liabilitie
es,
or the taking
g over of the business. He furth
er argues that the documents we
ere
not proved
to have been executed in the p
presence of relevant witnesses a
and
were brough
ht on record at a later stage. The
e counsel further submits that the
ere
is no satisfa
actory proof of investment of t
the alleged amount of Rs.20 La
ac,
share in pro
ofits, maintenance of joint accou
unts, or other necessary requisit
tes
of partnersh
hip, under Section 6 of the Indian
n Partnership Act, 1932. He furth
her
contends th
at the First Appellate Court fai
iled to carefully consider the or
ral
testimony o
of the witnesses and the admiss
sions made by the plaintiff No
.2-
Gurprit Sing
gh, and other witnesses during th
heir cross-examination. He furth
her
relies upon
the evidence, i.e., Cash Credit A
Account (Exhibit-D-5/1) opened
in
the name of
f a sole proprietorship concern, w
wherein the plaintiff No.2-Gurp
prit
Singh had fu
furnished a guarantee in connecti
ion with the bank facilities, and h
his
brother, Ma
aninder Singh, was authorized t
to operate the account. He furth
her
submits tha
at the alleged investment and sh
hare of profits by plaintiff No.
.2-
Gurprit Sin
ngh were not satisfactorily prov
ved, and the evidence, read as
s a
whole, does
s not establish the existence of
a partnership between the partie
es.
Counsel fur
rther asserts that the First Appel
llate Court failed to appreciate t
the
written state
ement and the documentary evid
dence produced by defendant No.
.4-
HPCL, and
d defendant No.5-Bank. It is fu
further contended that as per t
the
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-
12-
Dealership
Agreement dated 30.03.1992
(Ex. D-4), the constitution
of
dealership c
could not be changed, and no par
rtner could be inducted without t
the
prior permis
ssion and approval of defendant
t No.4-HPCL. The counsel for t
the
appellant, p
particularly, relies upon the dea
alership records (Ex. D-4), Ba
nk
documents
(Ex. D-5/1, D-5/2), affidavits
s (Ex. D-5/6, D-5/22) and oth
her
account-rela
ated documents, to substantiate
e his status as a sole proprieto
or.
Accordingly
y, the counsel submits that the f
finding regarding the existence
of
the partners
ship held by the First Appellate
Court is contrary to the eviden
nce
on record, a
and that the impugned judgment
dated 11.02.2008, to that extent,
, is
challenged,
warranting interference by this C
Court.
10.
Submissions on behalf of the
respondent/plaintiff No.2:
Per contra, learned counsel for
r the plaintiff No.2-Gurprit Sing
gh,
contends tha
at he was inducted as a partner
r in M/S. Service Station, plaint
tiff
No.1-Firm,
owing to the financial difficult
ties of the firm and to ensure
its
continued o
operations. He further contends t
that his induction was based up
on
an understa
anding between the parties, s
supported by partnership-relat
ted
documents a
and a substantial financial contri
ibution, to the tune of Rs.20 Lac
in
the Firm, in
ncluding Rs.9 Lac towards capi
ital, and approximately Rs.11 L
Lac
through a C
Cash Credit Limit facility, secured
d by mortgaging his Feed Factor
ry.
The counse
l, therefore, submits that all the
ese circumstances established th
hat
his associati
ion with the plaintiff No.1-Firm
was not merely that of a lender
or
financial gu
uarantor, but arose from an agree
ement intended to confer upon hi
im
the status an
nd rights of a partner. Accordin
ngly, he relies upon the propos
sed
Partnership
Deed (Ex. PW-4/1), commit
tment letter (Ex. PW-6/1), joi
int
undertaking
g (PW-6/2), affidavits (Ex.PW
-6/3 and P/4), indemnity-relat
ted
documents
(Ex-PW-6/4), request letters (E
Ex.PW-6/5 and Ex.P/2), and N
No
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-
13-
Objection
Certificate (Ex.PW-6/7); and
other documents, executed
in
connection w
with his induction. He further co
ontends that these documents we
ere
supplied to
him by defendant No.1-Vishal
Sharma, and the originals there
eof
were forwa
arded to defendant No.4-HPC
CL, for obtaining the requis
ite
approval. B
Based on the said arrangement, t
the respondent invested his fun
nds
and exposed
d his property to financial risk
k, for the benefit of the Firm. H
He
further relie
es upon the cheque payment
of Rs.1,00,000/-, dt.18.12.20
02
(Ex.PW-1/C
C and PW2/2), bank stateme
ents (Ex.PW-3/2 and PW-2/
1),
guarantee a
and mortgage documents (Ex.P
PW-2/5), including the guarant
tee
agreement (
(Ex. PW-2/6). He further submit
ts that all these documents must
be
read collect
tively, in the context of parties
’ subsequent conduct, rather th
han
treating the
deed merely as “ proposed .” Th
he proposed deed should be tak
ken
as conclusiv
ve against the existence of the p
partnership agreement. He furth
her
substantiate
s his case by the operational an
nd banking arrangements made
in
connection
with the business of the Firm
m, wherein his brother, Manind
der
Singh, was
authorized, with the consent o
of the appellant/defendant No.
1-
Vishal Shar
rma, to operate the Firm’s C
Cash Credit account jointly. T
The
Counsel als
o relies upon the oral testimony
y of himself, PW-6, and Manind
der
Singh, exam
mined as PW-7, to corroborate
the financial transactions and t
the
nature of th
heir association with the Firm. H
He further relies upon the eviden
nce
of the notar
ry (Ex. PW-9A), who attested th
he relevant documents, to suppo
ort
their execut
ion and authenticity. It is further
r contended that after the propos
sed
arrangemen
t had been acted upon for a con
nsiderable period of time, disput
tes
arose when
the appellant/defendants alleged
dly began denying the partnersh
hip
status and
started interfering in his righ
ht to do the business, which
is
unacceptabl
le and cannot be justified in any
y manner. He further contends th
hat
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-
14-
though the
trial court, in its judgment
t and decree dated 18.05.200
07,
categorically
y acknowledges plaintiff No.2-G
Gurprit Singh’s investment and h
his
role in secu
uring the cash credit, but declin
ned to recognize him as a partn
er,
particularly
on the ground that the final
l partnership deed had not be
een
executed an
nd the request for approval from
m the defendant No. 4-HPCL h
had
not been ob
btained. The counsel for the resp
pondent relies upon Sections 4 a
nd
6 of the Ind
dian Partnership Act, 1932, in su
upport of his contention and argu
ues
that the tru
ue nature of partnership relat
tionship must be determined
by
examining
the agreement between the
parties and all the releva
ant
circumstanc
ces. The counsel further submits
that the suit seeking declaration
of
his individu
ual partnership status, and conse
equential injunction relief must
be
examined i
independently, for the purpos
e of Section 69 of the Indi
ian
Partnership
Act, 1932, having due regard
to the nature of claim and reli
ief
being sough
ht. Therefore, the counsel supp
ports the First Appellate Cour
rt’s
judgment, a
as far as it recognizes the parti
ies’ relationship, the documenta
ary
evidence, a
and the subsequent conduct of
f the parties, irrespective of t
the
existence of
f a final executed partnership dee
ed.
11.
I have heard the learned co
ounsel for the parties, and ha
ave
carefully pe
rused the record, with their able
assistance.
Court’s ana
alysis with respect to question
of law (i) to (iii), (v) and (vi).
12.
It is a settled proposition of la
aw that the Court does not crea
ate
contracts or
r force partnership upon unwilli
ng partners. However, true natu
ure
of partnersh
hip is determined by Section 4 an
nd 6 of the Indian Partnership A
Act,
1932. The r
relevant provisions of Sections
4 and 6 of the Indian Partnersh
hip
Act, 1932, a
are reproduced as under: -
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“Section-4:- Definition of “partner
name”. —
rship”, “partner”, “firm” and “fi
irm
"Partnership” is the relation betwee
profits of a business carried on by a
who have entered into partnership w
“partners” and collectively a “fir
business is carried on is called the “f
“Section-6:- Mode of determining e
en persons who have agreed to share t
all or any of them acting for all. Perso
the
ons
ally
heir
with one another are called individua
rm”, and the name under which th
“firm name.”
existence of partnership. —
In determining whether a group of p
person is or is not a partner in a
relation between the parties, as show
Explanation 1. —The sharing of p
property by persons holding a join
does not of itself make such persons p
Explanation 2. —The receipt by a
business, or of a payment contingen
with the profits earned by a busines
with the persons carrying on the bus
and in particular, the receipt of such
(a) by a lender of money to pers
business,
(b) by a servant or agent as rem
(c) by the widow or child of a de
(d) by a previous owner or part
for the sale of the goodwill o
the receiver a partner with th
persons is or is not a firm, or whethe
r a
eal
r.
firm, regard shall be had to the re
wn by all relevant facts taken together
rofits or of gross returns arising fro
nt or common interest in that prope
om
erty
partners.
person of a share of the profits of
nt upon the earning of profits or varyi
f a
ing
ner
ss, does not of itself make him a partn
siness;
h share or payment—
sons engaged or about to engage in a
any
uneration,
eceased partner, as annuity, or
owner of the business, as considerati
or share thereof, does not of itself ma
he persons carrying on the business”.
ion
ake
For this Court to assess, wheth
her the partnership exists betwe
een
the parties,
the real relation between the pa
arties, as depicted by the releva
ant
facts are to
be taken together. The evidence
e on record clearly established th
hat
the executio
on of documents, Exhibit-P-4/1
(Proposed Partnership Deed); a
and
Exhibit-P-1
(Resignation of Vishal Sharm
a); Exhibit-P-2 (Request letter
of
Vishal Shar
rma); Exhibit-P-3 & 4 (Affidavi
its of Vishal Sharma); Exhibit-P
P-5
(Request le
etter of appellant/defendants);
and Exhibit-P-6 (Affidavit
of
Suraksha S
Sharma), similarly, PW-6/1 (Jo
oint commitment letter); PW-6
6/2
(joint under
rtaking); PW-6/3 (Affidavit of p
plaintiff No.2-Gurprit Singh); PW
W-
6/4 (Indemn
nity bond); and PW-6/5 (reque
st letter by plaintiff No.2-Gurp
prit
Singh), wer
re accompanied by extensive pe
erformance of obligations, on t
the
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-
16-
part of the p
plaintiff No.2-Gurprit Singh, his
substantial financial investment
of
Rs.20 Lac,
opening of cash credit limit
account by mortgaging his Fe
eed
Factory, as
collateral security with the ban
nk, to secure a cash credit limit
of
Rs.11,50,00
00/-, for running the plaintiff No
.1-Firm and, further, operating t
the
Firm’s Ban
nk Account for over two years
s. All these facts prove that t
the
partnership
deed was straightaway acted
upon, and plaintiff No.2-Gurp
prit
Singh, did
his part of obligation, whate
ever was necessary to give t
the
partnership
a working shape. It is thus evid
dent that essential pre-requisites
of
partnership
i.e. an agreement to share pro
ofit and losses, a business to
be
carried on b
by the persons, acting as agents fo
for all, are being fulfilled, which
h is
well depict
ted from the evidence on r
record and hence, conclusive
ly,
established t
the inter se existence of the partn
nership.
13.
In the present case, the nomenc
clature to the partnership deed w
was
given as “P
Proposed Partnership Deed,” an
nd the real intention of the parti
ies
was to start
and join the business, from the v
very beginning, which they did,
in
as much as
s, the plaintiff No.2-Gurprit S
Singh invested an amount in t
the
plaintiff No
o. 1, Firm, and Maninder Sing
gh was working as an authoriz
zed
signatory, w
who operated the bank accounts
s of the Firm, till 07.10.2005.
In
view of this
s Court, the parties to an agreeme
ent have already begun to carry
on
the business
s, and they will be termed as “pa
artners” . This Court is fortified
in
its view by
observation of the Hon’ble Ap
pex Court in “K.D. Kamath an
nd
Company V
V. Commissioner of Income Ta
ax (1971) 2 SCC873” wherein, t
the
Apex Court
held as under:-
“(28). From a review of the abov
ve decisions, it is clear that the me
ere
nomenclature given to a document i
is by itself not sufficient to hold that
the
document in question is one of part
tnership. Two essential conditions to
be
satisfied are: (1) that there should b
be an agreement to share the profits
as
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17-
well as the losses of business; and (2
2) the business must be carried on by
all
or any of them acting for all, wi
ithin the meaning of the definition
of
partnership under section 4 of th
he Partnership Act. The fact that
the
exclusive power and control, by ag
reement of the parties, is vested in o
one
partner or the further circumstance
e that only one partner can operate t
the
bank accounts or borrow on behalf
lf of the firm are not destructive of t
the
theory of partnership provided the
e two essential conditions, mention
ned
earlier, are satisfied.”
Doctrine of
f Approbate and Reprobate:
It is settled legal principle tha
at a litigant cannot approbate a
and
reprobate si
imultaneously. The conduct of
defendant No.1 in accepting t
the
financial inv
vestments and bank guarantees,
while subsequently attempting
to
repudiate th
he partnership, pleading its in
nvalidity to evade correspondi
ng
liabilities, v
violates the foundational Doctrin
ne. As elucidated by the Hon’b
ble
Apex Court
, in the case of “R.N. Gosain Vs
s. YaspalDhir, (1992)4 SCC 683
3” ,
wherein the
Apex Court held as under:-
“8. Law does not permit a perso
n to both approbate and reprobate. T
This
principle is based on the doctrine of
f election which postulates that no pa
arty
can accept and reject the same instr
rument and that “a person cannot say
y at
one time that a transaction is valid
and thereby obtain some advantage,
to
which he could only be entitled on t
the footing that it is valid, and then tu
urn
round and say it is void for the purp
pose of securing some other advantage
e”.
(See: Verschures Creameries Ltd. V
V. Hull and Netherlands Steamship C
Co.
Ltd., 1921(2) R.B. 608, Scrutton, L
L.J.). According to Halsbury’s Laws
of
th
England, 4 Edn., Vol. 16, “after ta
aking an advantage under an order (f
(for
example for the payment of costs)
a party may be precluded from sayi
ing
that it invalid and asking to set aside
e.”
14.
In the case in hand, the defe
endant No.1-Vishal Sharma, aft
fter
having mad
de plaintiff No.2-Gurprit Singh,
, as his partner, utilized the ca
ash
credit limit,
and after making him invest a h
huge amount in the plaintiff No
.1-
Firm, canno
ot be allowed to leave plaintiff N
No.2-Gurprit Singh in dismay, a
nd
hence, no e
equity is drawn, in favour of the
e appellant/defendant No.1-Vish
hal
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-
18-
Sharma. In
view of this Court, the First A
Appellate Court did not “Create”
” a
contract or
partnership; rather, it merely re
ecognized the existing factual a
and
legal relat
tionship, established by the
e acts, conduct, profit-shari
ng
arrangemen
t, and mutual undertakings of the
e parties.
15.
While examining the statutory
bar under Section 69 of the Indi
ian
Partnership
Act, 1932, this Court finds that
a vital distinction exists between
n a
suit by an un
nregistered Firm to enforce cont
tractual rights, against third parti
ies
and an actio
on by an individual partner seekin
ng a declaration of inter se again
nst
co-partner. W
Wherein an individual seeks dec
claration, regarding his status as
s a
partner or
asserts individual contractual/
/equitable rights against anoth
her
individual c
co-partner, who has resiled from
m the agreement after taking t
the
financial be
enefits the suit in his individual
capacity is maintainable. Secti
on
69(1) and (2
2) of the Indian Partnership Act,
1932, provide as under: -
“Effect of non-registration. —
(1) No suit to enforce a right a
this Act shall be instituted in any co
as a partner in a firm against the firm
been a partner in the firm unless the
is or has been shown in the Register
(2) No suit to enforce a right ar
in any Court by or on behalf of a firm
is registered and the persons suing
of Firms as partners in the firm.”
arising from a contract or conferred
ourt by or on behalf of any person sui
by
ing
ave
m or any person alleged to be or to ha
e firm is registered and the person sui
ing
of Firms as a partner in the firm.
rising from a contract shall be institut
ted
irm
ster
m against any third party unless the fi
are or have been shown in the Regis
The view of this Court is fort
tified by the judgment of Hon’b
ble
Apex Court
t in the case of “Mukund Ba
alkrishna Kulkarni V. Kulkar
rni
Powder Me
etallurgical Industries, (2004)
13 SCC 750” wherein, the Ap
pex
Court observ
ved as under: -
“ 7. We are of the view that the
decision of the High Court on the fi
first
two questions were outside the scope
e of its jurisdiction under Section 100
0 of
the Code. The inclusion of the word
ds "perverse" and "interpretation" in t
the
questions did not give a licence to th
he High Court to in fact sit in appeal a
and
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-
19-
reappraise the entire evidence as if
it were sitting as a court of first appe
eal.
The finding that there was a partn
nership firm, had been arrived at as
s a
conclusion of fact not only on the
basis of the material which had be
een
produced before the lower courts bu
ut also on the basis of the deposition
n of
the parties. The High Court could
not have disturbed the finding, witho
out
demonstrating that the conclusion w
was such that it was wholly irrational
or
was arrived at without taking in
nto consideration matters which we
ere
relevant or that the conclusion wa
as based upon legally inadmissible
or
irrelevant evidence.
8. As far as the third question is con
ncerned, that, no doubt, is a question
n of
law. But the conclusion arrived at b
by the High Court is fallacious. Secti
ion
69(1) of the 1932 Act reads:
"69. (1) No suit to enforce a right a
arising from a contract or conferred
by
this Act shall be instituted in any co
ourt by or on behalf of any person sui
ing
as a partner in a firm against the firm
m or any person alleged to be or to ha
ave
been a partner in the firm unless the
e firm is registered and the person sui
ing
is or has been shown in the Register
of Firms as a partner in the firm."
9. The sub-section contains embarg
gos which must coexist before a plain
ntiff
can be non-suited under that sub-s
section. The two embargos relevant f
for
this case are: (1) that the suit should
d be filed by person "suing as a partn
ner
in a firm" and (2) that the suit mus
st be to enforce a right arising from
m a
contract. The submission of the re
espondents which was accepted by t
the
High Court was that the prayer of t
the appellant, namely, for a declarati
ion
of the existence of the partnership a
and the share between the parties was
s a
suit to enforce a right under a contr
ract against the firm. A prayer for su
uch
declaration could not be said to be
e made by person suing as a partner.
. It
was a prayer to be a partner and
d is therefore not debarred under
the
provisions of Section 69(1). Furtherm
more, what was in fact being prayed f
for
by the appellant was a declaration of
of the existence of a contract between t
the
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-
20-
parties. That could not be said to be
e a suit to enforce a right arising from
m a
contract. The second prayer of th
e appellant was not to continue as
s a
partner of the firm but to dissolve th
he firm. To that extent the appellant w
was
suing "as a partner". This he was
s entitled to do under Section 69(3)
(a)
which insofar as it is relevant, reads
as follows:
"69. (3) The provisions of sub-sectio
ns (1) shall not affect?
(a) the enforcement of any right to
sue for the dissolution of a firm or f
for
accounts of a dissolved firm, or any
right or power to realise the property
y of
a dissolved firm;"
In view of the above, this Cou
urt finds that the Appellate Cou
urt
correctly he
eld that plaintiff No.2-Gurprit Si
ingh has litigated in his individu
ual
capacity, an
nd, therefore, the suit was not n
non-suited under Section 69 of t
the
Indian Partn
nership Act, 1932.
16.
Insofar as substantial questio
on No.4 is concerned, a cruc
ial
distinction e
exists between internal rights ( in
nter se) among the co-partners a
and
external rig
ghts enforceable against the co
orporation/HPCL. Admittedly, t
the
dealership a
agreement between the plaintiff
f No.1-Firm and defendant No
.4-
HPCL mand
dates prior written approval/NO
OC before any reconstitution of t
the
Firm. Whil
le an unproved internal partn
nership deed cannot be bindi
ng
unilaterally
on defendant No.4-HPCL, or c
compel HPCL to alter its offic
ial
dealership r
ecords without prior statutory co
onsent, the civil contract governi
ng
profit-sharin
ng and financial accountability
y (49% share of plaintiff No.
.2-
Gurprit Sing
gh and 51% share of defendant N
No.1-Vishal Sharma) remains ful
lly
valid, bindin
ng and enforceable inter se the p
parties.
17.
Accordingly, this Court finds,
that the First Appellate Court h
has
meticulously
y appreciated the oral and docu
umentary evidence on record. T
The
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-
21-
impugned ju
udgment and decree dated 11.0
02.2008, does not suffer from a
ny
illegality, pe
erversity, or misinterpretation o
of law. The declaration granted
by
the First Ap
ppellate Court strictly governs th
e inter se financial obligations a
and
profit-sharin
ng ratio (49% share to plaintiff N
No.2-Gurprit Singh and 51% sha
are
to defendant
t No.1-Vishal Sharma), without
in any manner infringing upon t
the
independent
t statutory and contractual rights
of defendant No.4-HPCL.
18.
Consequently, the present Reg
ular Second Appeal, being devo
oid
of merit, is
dismissed, with no order as to
o costs. The judgment and decr
ree
dated 11.02
2.2008, passed by the Addl. D
District Judge, Ambala, is here
by
affirmed. De
ecree sheet is being prepared acc
cordingly.
19.
Pending application(s), if any, s
shall stand disposed of.
31.10.2026
Renu Sharma
( MO
ONICA CHHIBBER SHARMA
A)
JUDGE
Whether speaking /reasoned
Whether Reportable
Yes / No
Yes / No
RENU SHARMA
2026.10.31 13:59
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integrity of this document