Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 14.01.2016
Pronounced on: 29.01.2016
+ RFA (OS) 44/2015, C.M. APPL.7123 & 7125/2015
COL. KALYAN SINGH THR. HIS LR. .………Appellants
Through: Sh. Chayan Sarkar with Sh. Kumar Ankur, Sh.
Karan Bindra and Sh. Bipul Kedia, Advocates.
Versus
WIMPY INTERNATIONAL LTD. AND ORS. ……Respondents
Through: Sh. Manav Gupta and Ms. Esha Dutta,
Advocates, for Respondent No.2.
Ms. Simran Brar with Sh. Varun Kumar and Ms. Saloni
Chowdhury, Advocates, for Respondent No.1.
Sh. Arun Bhardwaj, Advocate, for Respondent
No.4/HSIIDC.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
MR. JUSTICE S. RAVINDRA BHAT
%
1. The unsuccessful plaintiff appeals against the judgment and order of a
learned Single Judge, (dated 31.10.2014) rejecting his plaint as barred by
law on the ground of limitation and at the same time, holding that this Court
lacks territorial jurisdiction. The Court heard the counsel for parties finally,
with their consent and also considered the documents and pleadings which
were part of the suit records.
2. The suit averments were that the deceased plaintiff, along with Capt.
H.S. Bajaj (Retd.) and Shri. N.K. Duggal, was carrying on business under
RFA (OS) 44/2015 Page 1
the name and style of M/s. Freezo Freezing Complex in terms of partnership
deed dated 28.08.1979. The plaintiff and Capt. H.S. Bajaj, retired Army
officers, had applied for allotment of an industrial plot at Dhoondahera
under a scheme formulated by the Haryana State Industrial Development
Corporation (fourth defendant “HSIDC”). By allotment letter dated
12.12.1979, HSIDC allotted the suit property (i.e. land bearing No. 245,
Udyog Vihar, Dhoondahera, Gurgaon, Haryana measuring 19516.60 Sq.
Mtrs) jointly to the plaintiff and Capt. H.S. Bajaj. A sale deed (dated
25.02.1983) was executed by HSIDC in favour of M/s. Freezo Freezing
Complex. The plaintiff paid stamp duty of ` 66,750/-; a certificate in this
regard was issued by the Registrar’s Office. The plaintiff and his partners
secured a medium term loan facility from the fifth defendant (“the Bank”).
The partnership firm was the debtor. The loan was for construction upon the
suit property as well as for purchase and installation of plant and machinery.
The suit property was mortgaged to the Bank to secure the loan.
3. After completion of construction, the suit property was let out to M/s.
I. Ahmad & Company. During the 1984 riots, suit property was badly
damaged as a consequence of which the tenant left the premises. The
plaintiff was unable to repay the loan due to the losses suffered by the firm.
He was working as Chief Executive of M/s. Wimpy India Ltd., M/s. Wimpy
Fast Foods Pvt. Ltd and M/s. Wimpy Foods Pvt. Ltd. The second defendant
and one Mr. Keval Singh Sandhu later acquired these companies. M/s.
Goodwill Foods (P) Ltd. was incorporated in the year 1985, of which the
plaintiff became the Executive Director. Thereafter, the plaintiff entered into
a partnership business with the third defendant to carry on the said business
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from the suit property on the assurance of M/s. Goodwill Foods (P) Ltd. that
it would clear the dues and outstanding liabilities of the plaintiff firm. As a
consequence, the plaintiff, Capt. H.S.Bajaj and Shri. N.K. Duggal executed
a dissolution deed, along with a partnership deed as well as certain other
documents in the year 1988. These included an agreement dated 01.12.1988
executed between M/s. Goodwill Foods (P) Ltd., the plaintiff and his
partners, whereby suit property along with the super structures standing
upon it were transferred to M/s. Goodwill Foods (P) Ltd. The consideration
was that the said company, were to clear all the liabilities of the partnership
firm.
4. It was alleged that the first three defendants failed to honour their
obligations under the agreement. No amounts were paid to the fifth
defendant to clear the plaintiff firm’s dues. Later the third defendant, on
behalf of M/s. Goodwill Foods (P) Ltd., executed a rent agreement dated
07.09.1989 in favour of the plaintiff whereby it agreed to pay monthly rent
of ` 1,50,000/- to the plaintiff from the date of initial agreement i.e. 01.12.
1988. Even the rent was not paid. In the meanwhile, M/s. Goodwill Foods
(P) Ltd. was merged with the first Defendant (hereafter “Wimpy”), of which
the second defendant became Chairman and Managing Director while
plaintiff was one of its Directors. Subsequently, plaintiff was illegally
removed from the post of Director of Wimpy. It was alleged thereafter that
the agreement dated 01.12.1988, the partnership deed, the dissolution deed
and other documents were void ab initio since they were entered into by the
plaintiff and his partners as a result of fraud, because, no sale consideration
mentioned in the agreement had been paid. The plaintiff also alleged that he
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and Capt. H.S. Bajaj were owners of the suit property and that Wimpy and
the second as well as third defendants had no right to deal with the same in
any manner whatsoever.
5. Wimpy, in its written statement, submitted that the suit was
hopelessly barred by time since the agreements and other documents alleged
in the plaint were executed in 1988; the suit was filed in 2004, that is, after
about 16 years. It was argued that the plaintiff was not the owner of the suit
property, thus, had no locus standi to file the suit. The suit property
belonged to the firm M/s. Freezo Freezing Complex and since other partners
of the firm had not been impleaded, the suit was bad for non-joinder of
necessary parties. Capt. H.S. Bajaj and Shri N.K. Duggal, ex-partners of
M/s. Freezo Freezing Complex, were also signatories to the agreement dated
01.12.1988 and had not approached the court. The rent agreement dated
07.09.1989 was disputed as forged. Wimpy claimed that the assets and
liabilities of M/s. Freezo Freezing Complex were taken over by it pursuant
to the agreement dated 01.12.1988. It had cleared the dues payable to the
Bank in terms of the agreement. After the Bank’s dues had been cleared by
Wimpy, original title deeds had been released to it long ago. It was stated
that the suit property been mutated in Wimpy’s favour in the records of
HSIDC. Wimpy stated that its balance sheets were signed by the plaintiff as
one of its Directors, in which the suit property has been shown as an asset.
Wimpy also submitted that it had cleared dues of the other creditors of M/s.
Freezo Freezing Complex to the extent it was limited in the agreement dated
01.12.1988 by making such payments to the plaintiff and other partners
RFA (OS) 44/2015 Page 4
through cheques. Wimpy’s position in short was that it was the lawful owner
of the suit property.
6. Wimpy filed an application on two grounds, first, that the Court
lacked territorial jurisdiction to try the suit as the suit property is situated in
Gurgaon, Haryana and second, that the suit is barred by limitation as the
action seeking declaration of invalidity of the agreement dated 01.12.1988,
was filed in the year 2004 as against the prescribed period of limitation of 3
years as per the Limitation Act. The application contended that though the
plaintiff sought to invoke the territorial jurisdiction of the Court on the
ground that Wimpy is a registered company located in Delhi and the Bank
also carries on business in Delhi, however, this Court would not have
territorial jurisdiction as the plaintiff in substance claims a right or interest in
immovable property which is situated outside the jurisdiction of this Court,
in view of Section 16(d) of the Civil Procedure Code, 1908. As regards
limitation, it was argued that being a legal issue, it could be urged at any
stage, and in case this Court found on the face of pleading and documents
that the suit filed by the plaintiff was time barred, no separate application
was required.
7. The plaintiff’s response to the application, was that this Court has
territorial jurisdiction, and that this fact is not denied in the written
statement. It is stated that the documents in question including the impugned
agreement dated 01.12.1988 were executed at Delhi. Wimpy has its
registered office at Delhi as also the Bank and the cause of action arose in
Delhi. It is stated the suit was instituted in the year 2004 and the written
statement itself was filed by Wimpy in February, 2005. The application was
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an afterthought and moved to harass the plaintiff and delay the proceedings.
The plaintiff contended that he was not claiming any relief with regard to the
suit property but only for declaration of certain documents as illegal and
void. He also sought a permanent injunction against Wimpy compelling
them by personal obedience that the suit property should not be dealt with
on the basis of the alleged documents. The plaintiff denied that the suit in
substance is a suit regarding determination of right to or interest in
immovable property situated in Gurgaon.
Impugned judgment
8. The learned Single Judge heard counsel for parties and considered the
materials adduced by the plaintiff. He noticed that the impugned agreement
dated 01.12.1988 was executed by all the three partners i.e. the plaintiff,
N.K. Duggal & H.S. Bajaj on behalf of M/s. Freezo Freezing Complex. The
agreement stated that the assets of the partnership firm, including the suit
property, was being taken over by the first two defendants. The suit property
stood conveyed/mutated in the name of the first two defendants by HUDCO.
It was held that:
“13. The reliefs sought for in the present suit are merely
declaratory in nature without seeking the necessary
consequential reliefs in terms of Section 34 of the Specific Relief
Act, 1963. It is settled law that where the plaintiff being able to
seek further relief than a mere declaration of title, omits to do so,
the plaintiff shall be precluded from seeking such consequential
reliefs at a belated stage and the Court would reject the suit on
this ground alone.
14. As far as the issue of invoking territorial jurisdiction is
concerned, it is settled law that while considering the application
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under Order 7 Rule 11 CPC, the Court is to examine the
averments made in the plaint and documents filed along with
plaint. In view of averments made in the plaint, the contention of
the defendant Nos. 1 and 2 cannot be accepted.
15. With regard to other objection raised in the application that
the suit is barred by limitation, there is no specific prayer in the
application but in the body of the application, the said objection
was raised. In the matter, when the issue of limitation is a
doubtful case, normally, it becomes mixed question of facts and
law. But at the same time, if Court would find that on the face of
averment and facts made in the plaint, the suit is time barred,
then the Court can reject the plaint.
16. The plaintiff had not denied the fact that the suit property was
in the name of partnership firm. The deceased plaintiff himself
had admitted that he had signed the agreement dated 1st
December, 1988 and he was the partner of partnership firm. The
said agreement is challenged in the present suit which was filed
in the year 2004 after the expiry of 16 years. The deceased was
the signatory to the agreement. Now the issue before this Court is
as to whether on the face of admissions made by the deceased
plaintiff himself, the suit was time barred and the plaint is likely
to be rejected or not.”
9. The learned Single Judge then relied on the decision of the Supreme
Court in Commissioner of Income Tax, Madhya Pradesh Vs. Dewas Cine
1
Corporation to the effect that under the Indian Partnership Act, 1932,
property brought into the firm by partners at the stage of initial constitution,
or acquired in the course of the business, becomes the property of the firm
and a partner is, subject to any special agreement between the partners,
entitled upon dissolution to a share in the money representing the value of
the property. The impugned judgment then held:
1
AIR 1968 SC 676
RFA (OS) 44/2015 Page 7
“19. It is a matter of record that in pursuance to the Agreement
dated 1st December, 1988 the assets (including the suit property)
and liabilities of M/s Freezo Freezing Complex had been taken
over by the defendant No.1 along with the liability existing
towards defendant No.5 i.e. State Bank of Saurashtra and
thereafter has been duly discharged by the defendant No.1.
20. The plaintiff has made an admission by way of an affidavit
dated 1st December, 1988 and indemnity bond executed by him
in favour of defendant No.1 (M/s Wimpy International Ltd.
earlier known as M/s Goodwill foods P. Ltd.), whereby he admits
that he is a partner in M/s Freezo freezing Complex and that
there exist no lien over the suit property and further undertakes
to indemnify the defendant Nos.1 & 2 against any loss suffered.
*
26. It is an admitted position that the possession of the suit
property has since 1st December, 1988 been with the defendant
No.1. A bare perusal of the reply filed by the plaintiff to the
present application filed under Order 7 Rule 11 CPC as well as
Para 21 and prayer [b] of the present suit would show that the
plaintiff admits that the possession has all along been with
defendant No.1.
27. For this purpose, reliance has been placed on the judgment
of the Supreme Court in the case of N.V.Srinivasa Murthy vs.
Mariyamma, (2005) 5 SCC 548 (paras 10-12, 14-18), wherein
the Court had observed that the mutation proceedings in the year
1994 did not give rise to a fresh cause of action as it was only in
furtherance to the sale deed dated 5th May, 1953 and that it
appeared to have been made as a camouflage to get over the bar
of limitation. Therefore, the Court had dismissed the suit under
Order 7 Rule 11 CPC.
28. After considering the abovementioned circumstances and
facts of the case, this Court is of the considered opinion that the
present suit is hopelessly barred by limitation as in the present
case, the right to sue, if any, first accrued at the time of execution
RFA (OS) 44/2015 Page 8
of the Agreement dated 1st December, 1988 and handing over of
the possession. However, the present suit has been filed belatedly
only on 10th December, 2004 i.e. after a period of 16 years. The
plaintiff and defendant Nos.1 & 2 have duly acted upon the
Agreement dated 1st December, 1988 as it is evident from a bare
perusal the terms of the said agreement.”
Arguments of parties
10. Counsel for the plaintiff/appellant argued that the learned Single
Judge failed to observe the provisions of Order VII Rule 11 in the strictest
sense and erroneously passed an order dismissing the plaint after almost
about 10 years of it being initiated by the plaintiff. It was urged that the
Court should have taken into account the date of knowledge of misuse of a
certain document even if it had been executed much prior to such misuse.
The learned Single Judge- stressed counsel, failed to take into account that
the cause of action first arose was when the plaintiff obtained knowledge of
the alleged misuse of the documents on 07.11.2004. Having secured
knowledge of the designs of the first two defendants, the plaintiff also sent
them a notice.
11. Learned counsel relied on Ram Prakash Gupta Vs. Rajiv Kumar
2
Gupta and Ors , where it was held that limitation would begin from the date
of knowledge of the decree which had been obtained fraudulently by the
Respondents and not from the date when the decree was passed even though
the petitioner was appearing regularly in that case. Counsel also relied on
3
Daya Singh and Anr. Vs. Gurdev Singh (dead) by LR's and Ors where it
was held that the right to sue solely accrues when there is unequivocal and
2
(2007) 10 SCC 59
3
(2010) 2 SCC 194
RFA (OS) 44/2015 Page 9
clear threat to the infringement of any right. The appellant was one of the
directors of Wimpy and was unscrupulously removed in 2004. Till then
Wimpy was duly paying rent against the use of the land owned by the
appellant. Only after he was removed as a Director, did the appellant
become aware of the plaintiffs’ mala fide intentions, thus leading to the suit.
12. It was contended that the question of limitation is a mixed question of
law and fact, which could have only been dealt with along with the final
disposal of the suit on merits and not at such an early stage. The judgment of
the Supreme Court, in Balsaria Construction (P) Ltd. Vs. Hanuman Seva
4
Trust and Ors which held that a "Question of limitation is a mixed question
of law and fact. Ex facie in the present case on reading of the plaint it
cannot be held that the suit is barred by time." was relied upon. Next, Alka
5
Gupta Vs. Narender Kumar Gupta by a three-judge bench judgment was
relied upon to say that
“A civil proceeding governed by the code will have to be
proceeded with and decided in accordance with law and the
provisions of the code and not on the whims of the court. There
are no short-cuts in trial of suits, unless they are provided by
law. A civil suit has to be decided after framing and trial
permitting the parties to lead evidence on the issues, except in
cases where the code or any other law makes an exception or
provides any exemption.”
13. It was submitted that a partnership firm is not a separate legal entity
and in no manner whatsoever, can it claim ownership of any particular
property, both movable and immovable. The Supreme Court judgment, in a
4
(2006) 5 SCC 658
5
(2010) 10 SCC 141
RFA (OS) 44/2015 Page 10
three-judge bench judgment in N. Khadervali Saheb (Dead) by LRS & Anr.
6
Vs. N.Guddu Saheb (Dead) & Ors was relied on. The Court held that:
"A partnership firm is not an independent legal entity, the
partners are the real owners of the assets of the partnership firm.
Actually the firm name is only a compendious name given to the
partnership for the sake of convenience. The assets of the
partnership belong to and are owned by the partners of the firm.
So long as partnership continues each partner is interested in all
the assets of the partnership firm as each partner is the owner of
all the assets to the extent of his share in the partnership.”
14. Counsel argued that not only can a firm not own business assets, even
a partnership deed without any consideration cannot be the source of a valid
transfer. It is hereby also pointed out that the partnership deed per se cannot
confer title rights on a particular property on any one partner. Furthermore,
the same was without any consideration and hence a void agreement under
the Indian Contract Act, 1972.
15. The appellant, it was urged, had the right of redemption under Section
58 of the Transfer of Property Act, 1882, and as such the transfer of his title
by the Bank completely ignored provisions of law. Reliance was placed on
7
the judgment of the Supreme Court in L.K Trust Vs. E.D.C Ltd. & Ors ,
which categorically held that the right of redemption of a mortgaged
property can be extinguished only on execution of conveyance of mortgaged
property by a registered instrument or by decree of a court. As an original
mortgagor, the appellant had the right to redeem the mortgaged premises- a
6
(2003) 3 SCC 229
7
(2011) 6 SCC 780
RFA (OS) 44/2015 Page 11
right that could not be unilaterally deprived.
16. Reliance was also placed on Sidharth Choudhary Vs. Mahamaya
8
General Finance , in which the Court held that when relief sought in the suit
is only for directing the defendant to execute the sale deed and where the
latter had its registered office in Delhi and also carried on business in Delhi,
the courts in Delhi had territorial jurisdiction to try the suit.
17. Relying on the decisions in Popat and Kotecha Property v. SBI Staff
9
Association and C. Natrajan v. Ashim Bai & Anr 2007 (14) SCC 183.
Learned counsel for the appellant argued that the Court's jurisdiction to
reject a plaint on the ground that the law bars it is extremely limited. In this
context, it was highlighted that where the question of possession itself is in
dispute and issues had to be framed, the Court had to decide the suit on
merits after considering the evidence.
18. Learned counsel next submitted that the property of a partnership firm
vests in its partners and that there is no transfer or extinguishing of any right
with respect to the firm's assets, without dissolution. In this context, learned
counsel relied upon the decision reported as N. Khadervali Saheb v. N. Gudu
10
Saheb . He also relied upon the judgment in Malabar Fisheries Company,
11
Calcutta v. CIT . It was urged that for transfer of assets, an inter se
distribution of the rights and responsibilities of the partners has to take
place, upon which the mutual adjustments of their rights accrues. In the
absence of these pre-requisites, it cannot be said that the firm or the partners
8
80(1999) DLT 460
9
2005 (7) SCC 510
10
2003 (3) SCC 229
11
1979 (4) SCC 766
RFA (OS) 44/2015 Page 12
are divested of their entitlements to the properties. It was argued that the
learned Single Judge fell into error in confining his enquiry under Order VII
Rule XI CPC to the agreement, dated 01.12.1988 and the documents
executed at that point of time. Learned counsel relied upon the additional
documents written by the State Bank of Saurashtra particularly and the
correspondence by the plaintiff with the subject bank in that regard,
particularly the letter dated 27.06.2003 received by the appellant which
indicated that outstanding amounts were due and payable. His further letter
(Ex.P-14) dated 01.07.2002) and the bank's later letter dated 01.07.2003
were relied upon in this regard. Since these were part of the record and they
clearly showed that the plaintiff's liabilities had not been discharged which
in fact disclosed fraud on the part of the defendants, the suit was clearly
maintainable. Learned counsel also relied upon Ex.P-25, i.e. the certified
copy of the sale deed executed by HSIDC in favor of M/s. Freezo Freezing
Complex to say that the cause of action arose within the time and the plaint
could not have been rejected as was done by the learned Single Judge.
19. The defendant argued that the original sale deed relied upon by the
plaintiff clearly showed that the suit land was owned by the partnership firm
'M/s. Freezo Freezing Complex' and the plaintiff was only a partner in the
said firm and not the owner of the land. Therefore, the plaintiff had no locus
standi to file the present suit in his individual name and in terms of Order
XXX Rule I of the CPC the suit deserved to be, and was correctly dismissed
on this account alone. It was argued that all the three partners of the firm,
M/s. Freezo Freezing Complex, i.e. the plaintiff, N.K. Duggal, and H.S.
Bajaj had entered into an Agreement on 28.08.1979, whereby the business of
RFA (OS) 44/2015 Page 13
firm was to be carried out by all of them jointly and the land in question was
to be used as the place for carrying out the business. Thereafter, the said
partnership was dissolved by deed dated 01.12.1988 and the business of the
partnership was exclusively taken over by Wimpy. A copy of the
Dissolution Deed is part of the record. It was highlighted that ownership of
the land by the Firm was admitted by the Plaintiff in the agreement dated
01.12.1988 of which he is a signatory as a partner of firm where it was
stated that the suit land was purchased by Wimpy from M/s. Freezo Freezing
Complex and not the plaintiff. This agreement was signed/executed by all
the three partners. The agreement stated that the assets of the partnership
firm including the suit property was being taken over by Wimpy. Thus, the
first two defendants purchased the land in question from its rightful owner,
i.e. firm and the land stood conveyed/mutated in their name by the fourth
Defendant HSIDC. The appellant had no title or interest in M/s. Freezo
Freezing Complex, had no locus standi in any case whatsoever to initiate the
suit and it was not maintainable in the form it was presented in. For this
purpose reliance was placed on this Court’s judgment in Tarachand v.
12
Hulkar Mal & Ors , and the judgment in M/s. Shankar Housing
13
Corporation v. Smt. Mohan Devi where it was held that the correct
procedure of bringing a suit under Order XXX Rule 1 was to sue in the
name of the firm as a plaintiff or in the name of all the partners of the firm
failing which the suit had to be dismissed. Similarly, the judgment of Orissa
14
High Court in the case of Afsar Hussain & Anr v. Trilokchand Premchand
12
AIR 1979 Del 160
13
AIR 1978 Del 255
14
AIR 1975 Orissa 84
RFA (OS) 44/2015 Page 14
was relied on.
20. It was also highlighted that by the judgment and order dated
09.01.2012 the Court finally vacated the interim injunction operating in
favor of the plaintiff since 15.12.2004 and had been further pleased to hold
that the plaintiff is not the owner of the said land and has got no right, title or
interest therein the following terms:
"11……It is, thus clear that plaintiff had himself admitted that
the suit property belonged to M/s. Freezo Freezing Complex and
thereafter assets and liabilities including the immovable property
had been taken over by the defendant no.1. Be that as it may,
from the agreements executed between defendant no.4 and M/s.
Freezo Freezing Complex, it is clear that the plaintiff is not the
owner of the suit property nor has got any right, title and interest
therein.
12……Plaintiff has filed this suit claiming himself to be the
owner of the suit property. As already held above, M/s. Freezo
Freezing Complex was the owner of the suit property and later
on, the defendant no.1 having taken over the assets and liabilities
of M/s. Freezo Freezing Complex became the owner of the suit
property along with the super structures on it. Thus, plaintiff,
acting as an individual, had no right to challenge the ownership
rights of the defendant no.1."
It is further a matter of record that the FAO (OS) 100/2012 preferred by the
plaintiff against the said judgment and order was dismissed as withdrawn by
order, dated 02.03.2012.
21 The defendants contended that the suit was hopelessly barred by
limitation as in the present case, the right to sue, if any, first accrued at the
time of execution of the Agreement dated 01.12.1988 and the handing over
of the possession of the suit property. However, the suit has been filed
RFA (OS) 44/2015 Page 15
belatedly on 10.12.2004, i.e. after a period of 16 years. The parties, i.e. the
plaintiff and Wimpy acted upon the Agreement dated 01.12.1988 as is
evident from a perusal of the terms of the document. Furthermore, the
plaintiff admitted through an affidavit dated 01.12.1988 and indemnity bond
executed by him in favor of M/s. Wimpy International Ltd. [earlier known as
M/s. Goodwill Foods P. Ltd.], whereby he admits that he was a partner in
M/s. Freezo Freezing Complex and that there existed no lien over the suit
property and further undertook to indemnify the first two Defendants against
any loss suffered. The said affidavit dated 01.12.1988 and the indemnity
bond have been before the Court.
22. The defendant contends that it is a matter of record that further to the
Agreement dated 01.12.1988, the assets [including the suit property] and
liabilities of M/s. Freezo Freezing Complex were taken over by Wimpy
along with the liability existing towards the Bank and which was thereafter
duly discharged by Wimpy. Copies of the Certificate dated 26.12.1989 along
with the Fixed Deposit Receipt dated 14.12.1988, Promissory Note dated
01.12.1988 and the Letter of Guarantee dated 01.12.1988 were filed by the
plaintiff as part of the record. The decision in N.V. Srinivasa Murthy v.
15
Mariyamma was relied on to say that the mutation proceedings did not
give rise to a fresh cause of action as it was only in furtherance to the sale
deed and doing so is a camouflage to get over the bar of limitation.
23. It is argued that it is a settled position in law that if by means of clever
drafting, a camouflage or illusory cause of action is created, such cases
should be nipped in the bud at the first hearing itself, i.e. even before
15
2005 (5) SCC 548
RFA (OS) 44/2015 Page 16
admission of the suit and the issuance of summons, or any time thereafter.
Reliance in this regard has been placed on the judgments of the Supreme
Court in T. Arivandandam v. T.V. Satyapal 1977 (4) SCC 467; Church of
Christ Charitable Trust v Ponniamman Education Trust 2012 (8) SCC 706
and Ajay Goel v. K.K. Bhandari 1999 (48) DRJ 292.
24. It is an admitted position that the possession of the suit property has
been with Wimpy since 01.12.1998. Learned counsel pointed to the reply
filed by the plaintiff to Wimpy’s application under Order VII Rule 11, as
well as para 21 and prayer (b) of the suit to show that the plaintiff admits to
the same. In this view, the reliefs sought for in the suit were merely
declaratory without seeking the necessary consequential reliefs in terms of
Section 34 of the Specific Relief Act, 1963. Where the plaintiff can seek
relief other than a mere declaration of title, but omits to do so, the plaintiff
shall be precluded from seeking such consequential reliefs at a belated stage
and the Court would reject the suit on this ground alone. Reliance was
placed on the Division Bench judgment of this Court in Virender Gopal v.
16
Municipal Corporation of Delhi , where the Court had outlined the law
regarding the workability of Section 34 of the Specific Relief Act 1963 and
held that once the possession was taken over by the defendant, the plaintiff
had to claim the relief of possession failing which the suit was hit by the
provisions of Section 34 of the Act, and therefore, liable to be dismissed.
17
The Supreme Court judgment of Vinay Krishna v. Keshav Chandra held
that the plaintiff ought to have asked for the relief of possession and the
failure to do so clearly barred the discretion of the Court in granting the
16
AIR 2007 Del 183
17
1993 Supp SCC 129
RFA (OS) 44/2015 Page 17
decree of declaration. Admittedly, the the suit was filed to seek a declaration
that documents misused by the defendants for claiming title over the land
were null and void and not for claiming title on the said piece of land.
Stressing that since no claim for possession had been made, the Supreme
18
Court in Adcon Electronics Pvt. Ltd. Vs. Daulat & Anr applied wherein it
was held that where there is no specific prayer in the suit for giving
possession of a land, the same cannot be interpreted by the court on its own.
25. The defendants highlight that after vacation of the interim injunction
operating in favor of the plaintiff by the Court by its judgment and order
dated 09.01.2012, the plaintiff along with his family members had instituted
a frivolous suit for declaration on 30.01.2012 before Civil Judge, Gurgaon
District Court seeking a declaration that he be declared as the owner of the
suit property by falsely asserting that he is the owner of the suit property and
completely suppressing the pendency of the suit before this Court and the
order dated 09.01.2012 vacating the interim injunction, and obtained a
fraudulent consent decree dated 01.02.2013 from the Gurgaon District
Court. On the strength of such fraudulent decree the plaintiff filed another
suit for Wimpy’s eviction from the suit property. The learned Civil Judge,
Gurgaon District Court dismissed the suit for eviction by its judgment and
order dated 31.05.2014 and further held that the said decree dated
01.02.2013 was a nullity as it was obtained by playing fraud on this Court
and unsustainable in law. The Court observed that the plaintiff had
“deliberately concealed the judgment and order dated
09.01.2012 from this Court. The judgment dated 09.01.2012
18
(2001) 7 SCC 698
RFA (OS) 44/2015 Page 18
clearly holds that Col. Kalyan Singh is not the owner of the suit
property. As far as the consent decree in favor of the petitioner is
concerned, it can be safely said that a decree obtained by
collusion and by playing fraud with the Court is not sustainable
in the eyes of law. No other document of ownership has been
filed by the petitioner. Accordingly the present suit is not
maintainable and the issues is decided in favor of respondent and
against the petitioner."
Analysis and Findings
26. The plaintiff appellant, as is evident from the above discussion of
facts, sought a declaration that the agreement dated 01.12.1988 was
unenforceable. This was essentially based on allegations of fraud and
illegality. So far as the fraud alleged went, it was submitted that firstly M/s.
Goodwill Foods (P) Ltd (Wimpy’s predecessor) agreed to pay rent to the
plaintiff, which it did not; and that the plaintiff was removed from the
position of Director of Wimpy. The other ground was illegality: here it was
argued that the property belonged to the plaintiff in his capacity as a partner
of the firm and that Wimpy could not claim ownership as a result of the
documents executed on 01.12.1988. It was sought to be urged that the
partner’s rights as mortgagor to redeem the mortgage of the property: as it
was secured to the fifth defendant Bank too could not be prejudiced. To
resist the ground of limitation, the plaintiff relied on certain letters received
from the bank, in 2002 and 2003. It was urged that he continued to be shown
as a debtor- this was possible given his status as a partner. It was argued that
all these questions required decision after trial and that hence, the learned
Single Judge erred in rejecting the plaint. The plaintiff also urged that the
Court possessed territorial jurisdiction to entertain and try the suit, because
all the defendants were in Delhi and carried on business within jurisdiction;
RFA (OS) 44/2015 Page 19
the reliefs claimed could be enforced through personal injunction. In this the
plaintiff sought to invoke the explanation to Section 16 of the Civil
Procedure Code. The defendants pointed out, on the other hand, that the
documents sought to be impugned as void, were old and had been acted
upon; they were executed 16 years before the filing of the suit. That the
HSIDC issued a formal conveyance much later, did not mean that a fresh
cause of action arose. The plaintiff’s claim about becoming aware of fraud,
etc. later are questionable, since Wimpy discharged the debts of the
erstwhile firm of which he was a partner. It was also urged besides that the
plaintiff could not assert rights or title over the property as an individual
partner, because the firm owned the asset. Furthermore the defendant
(Wimpy) argued that the form of the suit was defective; if the plaintiff
wished to assert that his rights as a partner could not be preserved, he should
have instituted the suit in the form prescribed under Order XXX, CPC.
27. The agreement of 01.12.1988 shows that Wimpy’s predecessor,
Goodwill Foods Pvt Ltd agreed to take over the firm and its assets. This was
preceded by another agreement whereby Goodwill Foods Pvt. Ltd became
70% partner of Freezo Freezing Complex; the existing partners of the latter
firm became owners to the extent of 10% each. The third agreement
produced along with the suit was a Dissolution deed, dated 1.12.1988
whereby all partners (including the plaintiff, whose shareholding had been
reduced to 10%) agreed to dissolve Freezo Freezing Complex; Wimpy was
to take over the assets and liabilities of the said firm (Freezo Freezing
Complex). The plaintiff also executed an indemnity bond the same day,
RFA (OS) 44/2015 Page 20
agreeing to part with all his rights in the firm as well as in relation to the
property.
28. The defendants are correct in asserting that the plaintiff cannot take
advantage of two contradictory pleas. On the one hand, he could not have,
consistent with his plea of being a victim of fraud, claimed sole ownership
without impleading other members of the dissolved firm. The documents
produced along with the suit clearly reveal that the firm Freezo Freezing Co
owned the suit property. The decisions of this Court in Tarachand and
Shankar Housing (supra) and of the Orissa High Court in Afsar Hussain
(supra) are authorities to say that since a firm is not a legal entity, but a
compendium term denoting all partners, a suit to enforce its rights should
have to be instituted in the name and on behalf of the firm. In the present
case, this was concededly not the position; the suit was filed by the plaintiff
alone, as if he was the owner of the property- clearly he was not, at the time
its assets were made over to the defendants. Order XXX Rule 1 applied; the
form of the suit itself was defective; the plaintiff could not lay claim to the
title to the suit property, assuming his argument to be correct. On this count,
the learned Single Judge’s judgment, in this court’s opinion, is
unexceptionable.
29. Turning next to the substantial issue of whether the suit was time
barred. There is no doubt that as to whether an action is time barred or not,
is not a pure question of law, but fact dependent. However, that alone is
indeterminate about the nature of the court’s power under Order VII Rule 11
CPC. The Court has to be vigilant, and is a sentinel in ensuring that claims
that should not be let into the docket are weeded out. Therefore, the power
RFA (OS) 44/2015 Page 21
conferred says that the court may at any time, exercise its jurisdiction and
reject a plaint, on the ground that law bars the action. Here the necessary
facts are that all the transactions which were impugned took place in
December 1988; the dissolution deed, the agreement and the indemnity
bond. The plaintiff could not have claimed ignorance; he was a highly
qualified man. He, together with other partners consciously chose to give
away his rights. Arguendo, though he was right in contending that notices
were received sometime in 2002 or 2003 from the Bank, that does not
explain why in the first instance he did not approach the court for the
declaration which he sought in 2004, within the time granted by law, i.e.
three years. The cause of action arose in 1988. The time for filing the suit
would have reasonably expired in 1992. Even if the plaintiff’s contention
were assumed to be correct that some amounts were payable to him as
rentals, that does not in any way extend the period of limitation. The
plaintiff is quite vague on this count in the suit; no specific amount is
mentioned; more importantly it was never claimed. The same logic would
prevail over his removal from directorship of the defendant, and removal
from the post of Director. These are ex facie unrelated events and have no
co-relation with the alleged fraud played upon the plaintiff for which he
sought relief in the suit. As a result, the decisions cited, i.e. Ram Prakash
Gupta (supra) and Daya Singh (supra) are inapt in the circumstances of the
case. Likewise, the ratio in Alka Gupta (supra) too has no application,
because the court in the present case could decide whether the suit was time
barred, based on the pleadings in the suit itself; no more evidence was
required, having regard to the plaintiff’s averments in it. So far as N.
Khadervali Saheb (supra) and Malabar Fisheries Co (supra) are concerned,
RFA (OS) 44/2015 Page 22
this court has already noted that the plaintiff cannot on the one hand contend
that the partnership subsisted and without suing in the name of the firm, seek
a declaration that the agreements are void, nor can he without claiming
consequential relief of the kind required, i.e. declaration as to subsistence of
the partnership, or possession, maintain the suit.
19
30. Mayar (H.K.) Ltd. v Vessel M.V Fortune Express , Sopan Sukhdeo
20 21
Sable v. Asstt. Charity Commr and Saleem Bhai v State of Maharastra
are authorities for the proposition that only averments in the plaint are to be
looked into. At the same time, it has also been held that the list of documents
filed along with the suit is part of the pleadings (Ref Liverpool & London SP
22
& I Asson. Ltd v M.V. Sea Success) . The plaintiff, so the saying goes
cannot by the stratagem of clever drafting resuscitate a cause of action
which has long since died; the court is within its rights to look through
smokescreens created by clever drafting and invoke its powers under Order
VII Rule 11, CPC if the suit is indeed barred in law. That precisely is what
the learned Single judge did, in this case; this court whole-heartedly
approves that finding.
31. As far as lack of territorial jurisdiction goes, this Court is of opinion
that the relief of declaration sought against the defendants is in relation to
property outside the territorial jurisdiction of the court. Sections 15 to 20 of
19
(2006) 3 SCC 100
20
(2004) 3 SCC 137
21
(2003) 1 SCC 557
22
(2004) 9 SCC 512- it was held that for the purposes of rejecting a plaint under Order VII Rule
XI the Court should not only look at the averments in the plaint but also must look into
documents filed along with, in view of Order VII Rule XIV.
RFA (OS) 44/2015 Page 23
the CPC deal with the rules applicable for territorial jurisdiction. Sections 15
and 16 embody the rule that in cases involving rights relating to immovable
property, the suit should be instituted within jurisdiction of the court where
the property is located. Proviso to Section 16, which is relied on by the
plaintiff has limited application, as held by the Supreme Court in Harshad
23
Chimanlal Modi v DLF Universal Ltd :
“Section 16 thus recognizes a well established principle that
actions against res or property should be brought in the forum
where such res is situate. A court within whose territorial
jurisdiction the property is not situate has no power to deal with
and decide the rights or interests in such property. In other
words, a court has no jurisdiction over a dispute in which it
cannot give an effective judgment. Proviso to Section 16, no
doubt, states that though the court cannot, in case of immovable
property situate beyond jurisdiction, grant a relief in rem still it
can entertain a suit where relief sought can be obtained through
the personal obedience of the defendant. The proviso is based on
well known maxim "equity acts in personam, recognized by
Chancery Courts in England. Equity Courts had jurisdiction to
entertain certain suits respecting immovable properties situated
abroad through personal obedience of the defendant. The
principle on which the maxim was based was that courts could
grant relief in suits respecting immovable property situate
abroad by enforcing their judgments by process in personam, i.e.
by arrest of defendant or by attachment of his property.
In Ewing v. Ewing, (1883) 9 AC 34 : 53 LJ Ch 435, Lord
Selborne observed :
"The Courts of Equity in England are, and always have been,
courts of conscience operating in personam and not in rem; and
in the exercise of this personal jurisdiction they have always
been accustomed to compel the performance of contracts in
trusts as to subjects which were not either locally or ratione
23
(2005) 7 SCC 791
RFA (OS) 44/2015 Page 24
domicilli within their jurisdiction. They have done so, as to
land, in Scotland, in Ireland, in the Colonies, in foreign
countries."
The proviso is thus an exception to the main part of the section
which in our considered opinion, cannot be interpreted or
construed to enlarge the scope of the principal provision. It
would apply only if the suit falls within one of the categories
specified in the main part of the section and the relief sought
could entirely be obtained by personal obedience of the
defendant.”
Were the plaintiff’s interpretation of the rule (embodied in Section 16) to be
accepted, the proviso would become all-important, rendering the main
provision itself ineffective and redundant. This court is therefore of the
opinion that the cause of action, if it ever existed at the time of filing the
suit, did not arise within the jurisdiction of the court. For this reason too, the
learned Single Judge’s impugned judgment does not disclose any error
requiring interference.
32. For the foregoing reasons, this Court is of the opinion that there is no
merit in the present appeal. It is therefore dismissed. Having regard to the
circumstances, the appellants are directed to pay costs quantified at
` 75,000/- to the respondents within four weeks from today.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
JANUARY 29, 2016
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