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P.C. Gulati Vs. Lajya Ram Kapur and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberRegular First Appeal (O.S.) No. 1 of 1968
Judge
Reported inAIR1969Delhi275; ILR1969Delhi277
ActsCode of Civil Procedure (CPC), 1908 - Order 20, Rule 15 - Order 12, Rule 6 - Order 15, Rule 3; Arbitration Act - Sections 20; Delhi High Court Act, 1966 - Sections 5 and 7
AppellantP.C. Gulati
RespondentLajya Ram Kapur and anr.
Appellant Advocate Bawa Shiv Charan Singh, Adv
Respondent Advocate H.R. Sawhney and ; S.S. Chadha, Advs.
Cases ReferredKrishna Chandra Goldur v. Mohesh Chandra Saha
Excerpt:
.....them partners for purposes of one case and to be co-owners for purposes of the other suits .21. the use of the words 'without prejudice to the contentions of the parties in this suit' was, it seems to us, nto intended to make the admissions nto unequivocal. the statement of lajya ram kapur, which was adopted by diwan chand kapur, when read as a whole, clearly shows that the admissions so far as suit c. provisions of rule 3 of order 15, code of civil procedure, were as well noticed by him but in passing the preliminary decree he relied upon inherent power of the court. 26. some stress was as well laid on the fact that the appellant was deprived of costs......government of india, and was jointly purchased by partap chand gulati, lajya ram kapur and diwan chand kapur. after plans for construction of a cinema house on that plto were sanctioned by the municipal corporation, delhi the parties put into writing 'what had been verbally agreed upon, in the form of an agreement relating to the above co-ownership'. that agreement was executed on june 5, 1961.3. unfortunately differences cropped up between the parties when the cinema building was nearing completion. as the agreement entered into between the parties provided, by one of its clauses, for settlement of all disputes by arbitration, lajya ram kapur and his son diwan chand kapur filed an application, under section 20 of the arbitration act, 1940, for appointment of an arbitrator and.....
Judgment:

Jagjit Singh, J.

1. In order to appreciate the points involved in this appeal it is necessary to state certain facts.

2. On November 14, 1954 a lease-hold cinema plto measuring 5,043.33 square yards, in neighborhood Iii of Lajpat Nagar, New Delhi, was auctioned by the Ministry of Rehabilitation, Government of India, and was jointly purchased by Partap Chand Gulati, Lajya Ram Kapur and Diwan Chand Kapur. After plans for construction of a cinema house on that plto were sanctioned by the Municipal Corporation, Delhi the parties put into writing 'what had been verbally agreed upon, in the form of an Agreement relating to the above co-ownership'. That agreement was executed on June 5, 1961.

3. Unfortunately differences cropped up between the parties when the cinema building was nearing completion. As the agreement entered into between the parties provided, by one of its clauses, for settlement of all disputes by arbitration, Lajya Ram Kapur and his son Diwan Chand Kapur filed an application, under Section 20 of the Arbitration Act, 1940, for appointment of an arbitrator and reference of the disputes between the parties to that arbitrator. That was on 14-5-1962. A few days later on May 24, 1962, the suit out of which this appeal has arisen was instituted by Partap Chand Gulati for 'dissolving the partnership and for rendition of accounts'. According to the averments made in his plaint the agreement between the parties was of partnership for the purposes of constructing a cinema house on certain conditions and terms. His own share was stated to be 50 per cent, while Lajya Ram Kapur and Diwan Chand Kapur were mentioned to have 25 per cent, share each. At the end of the plaint a note was given that the suit had been 'laid' without prejudice to his right to take criminal action against the defendants as also to sue them for damages.

4. The application under Section 20 of the Arbitration Act and the suit instituted by Partap Chand Gulati were pending in the Court of a Subordinate Judge and had been consolidated. On an application the then Chief Justice of the Punjab High Court, by his order dated March 22, 1963, directed the said application and the suit to be withdrawn from the Court of the Subordinate Judge and to be tried in the High Court.

5. Both Lajya Ram Kapur and Diwan Chand Kapur made statements, on January 31, 1964, that if the suit to be filed by them for their claims against Partap Chand Gulati was also transferred to the High Court and tried along with the suit which had already been withdrawn from the Court of the Subordinate Judge, and which was registered as C. O. 29-D of 1963, they would nto press their application under Section 20 of the Arbitration Act. Chiet Justice D. Falshaw accordingly dismissed the application and ordered that the suit (C. O. 29D of 1963) will be tried in the High Court and any cases instituted by the parties in respect of their claims wilt be withdrawn to the High Court and consolidated with the pending suit.

6. Two other suits were instituted. C. O. 30-D of 1964 was instituted by Lajya Ram Kapur and Diwan Chand Kapur, on April, 7, 1964, for recovery of Rupees 4,01,500 from Partap Chand Gulati, on account of damages, besides claiming some other reliefs. The third suit (C. O. 43-D of 1964) was filed by Partap Chand Gulati and was for recovering Rs. 4,50,000 on account of damages suffered by him as a result of various acts of Lajya Ram Kapur and Diwan Chand Kapur. Some other reliefs were as well asked for, which are nto necessary to be mentioned here.

7. The three suits C. O. 29-D of 1963, C. O. 30-D of 1964 and C. O. 43-D of 1964 thus came to be tried in the High Court. S. B. Capoor, J. by his order, dated October 23, 1964, ordered the suits to be consolidated with a direction that evidence recorded in C. O. 29-D of 1963 will be read as evidence in the other two suits as well. On January 15, 1965, as many as twenty four issues were framed.

8. The evidence of Partap Chand Gulati had been very nearly completed and his own statement was being recorded when, on November, 28, 1967, Lajya Ram Kapur made a statement admitting that for purposes of suit C. O. 29-D of 1963 the parties be regarded as partners having the shares as specified in the plaint in the said suit. He also prayed for a preliminary decree being passed, in terms of Order 20, Rule 15, Code of Civil Procedure. It was, however, specifically stated by him that his admission will nto have any effect on suits C. O. 30-D and C. O. 43-D of 1964. Diwan Chand Kapur agreed to the statement made by his father and adopted it. The statement of Lajya Bam Kapur reads as under :--

'Without prejudice to the contentions of the parties in this suit I state that for the purposes of deciding this suit I admit that the relationship of plaintiff and defendants in Alankar Cinema is that of partners. I further say that this admission may be taken into account in this suit which may be decided in accordance therewith. I say that the admission made by me is only for the purposes of this suit and nto an admission to be used against me in any other suit or in any other occasion. I pray that decree as provided in Order 20, Rule 15 in Form No. 21, Appendix 'D', Civil P. C. be passed declaring the shares of the parties as under :--

Plaintiff = 50% Defendant No. 1 = 25% Defendant No. 2 = 25% The decision of this suit or the admission made by me will nto have any effect on the other two suits viz. C. O. No. 30-D of 1964 and C. O. 43-D of 1964 which will proceed unaffected by this statement and the decision in this suit. I state that the assumption of existence of relationship of partners between the parties is admission of a fact for the purposes of this suit only and nto for the purposes of the decision in other suits or for any other matter or in any other litigation that is pending between the parties at present or that may in future arise. I also agree that all the claims in this suit be decided and dealt with on the assumption of the existence of partnership.'

9. On December 7, 1967, S. K. Kapur, J., in the light of the statements made by Lajya Ram Kapur and Diwan Chand Kapur, passed a preliminary decree but left the parties to bear their own costs. The preliminary decree specified the share of Partap Chand Gulati to be 50% in the partnership and that of the defendants to be 25% each. The partnership was ordered to stand dissolved from the date of the preliminary decree. The dissolution of partnership was to be advertised in the Delhi Gazette and the Indian Express, Delhi. The period of accounting was to be from November 14, 1954, the date of the auction of the cinema plot, to the date of the preliminary decree. Shri Mohinder Paul Pun, a Chartered Accountant, whose name was acceptable to the opposite parties, was appointed a Receiver of the partnership estate and effects in the suit and he was also appointed local Commissioner for taking the accounts. The assets of the partnership were to be sold by the Receiver and each of the parties was given the right to bid at the sale. The receiver and the local Commissioner was required to take accounts and do the other necessary acts by the end of October 1968 and to submit his report within fifteen days of that date, Lastly the suit was adjourned for making a final decree to November 4, 1968.

10. Against the preliminary decree the present appeal was filed by Partap Chand Gulati. The appeal purported to have been filed under Clause 10 of the Letters Patent read with Sections 5 and 7 of the Delhi High Court Act, 1966.

11. It was urged by Shri Shiv Charan Singh Bawa, learned counsel for the appellant, that the three suits which came to be consolidated in the High Court had been withdrawn from the Court of the Subordinate Judge under Clause 9 of the Letters Patent and, thereforee, the appeal was competent under Clause 10 of the Letters Patent.

12. On behalf of Lajya Ram Kapur and Diwan Chand Kapur their learned counsel, Shri H. H. Sawhney, did nto object that Clause 10 of the Letters Patent was nto applicable. He, however, raised a preliminary objection that as the reliefs claimed by the appellant had been granted through the preliminary decree no appeal was competent. It was submitted that the preliminary decree being entirely in favor of the appellant the appeal filed by him was nto competent. Secretary of State v. Swaminatha Koundan Air 1915 Mad 294, Nand Lal v. Naresh Chandra Deb Goswami Air 1917 Pat 585 and Commr. for Port of Calcutta v. Bhairadinram Durga Prosad, : AIR1961Cal39 , were cited.

13. In the Full Bench case of the Commissioners for Port of Calcutta, : AIR1961Cal39 (FB), it was held that the appeal filed by the appellant was nto maintainable because the decree of the lower appellate Court, as it stood, was entirely in favor of the appellant and the appellant could nto have any right of appeal against a finding when that finding did nto affect the decree which was wholly in his favor. The view taken in the case of Swaminatha Koundan Air 1915 Mad 294, was that a party in whose favor a decree has been passed has no right of appeal against it merely on the ground that he is aggrieved by a finding of one of the issues and the right exists only when the decree itself or some finding necessarily implied in the decree is prejudicial to the party wishing to appeal. Mullick, J., in the case of Nand Lal Air 1917 Pat 585, observed that the test is whether the party desiring the appeal was adversely affected by the decree. A reference was as well made by the learned Judge to 'Krishna Chandra Goldur v. Mohesh Chandra Saha (1905) 9 CWn 584. In that case Woodroffe, J., laid down the proposition that the question where a party is aggrieved by a decree is a question of fact to be determined in each case accordingly to its peculiar circumstances.

14. Shri Shiv Charan Singh Bawa did nto dispute the correctness of the view taken in the above cited cases. According to him the decree was prejudicial to the appellant and the appeal was, thereforee, competent. The learned counsel contended that pleadings had to be seen in order to determine whether or nto on the facts of this particular case the decree can be considered to have prejudicially affected the appellant. It was further submitted that the appellant's case was that the respondents were the accounting party and issue No. 4 was for determining as to which of the parties was liable to render accounts and for what period. As no finding was given on that issue in so far as the party liable to render accounts was nto named and further as the terms of the partnership were stated to have been left undetermined, the preliminary decree was alleged to have prejudicially affected the appellant. The fact that the appellant was deprived of the costs incurred by him in connection with the suit proceedings was also stated to be indicative of prejudice caused by the decree.

15. The appellant, in his plaint, in connection with C. O. 29-D of 1963, relied upon the agreement dated June 5, 1961 for the terms and conditions on which the parties had entered into a partnership for the purpose of constructing a cinema house. The execution of the agreement was nto denied by either side. The recitals in the agreement, however, used the expression 'Co-ownership' and nto partnership. In it the parties were described as having 'jointly purchased on Co-ownership basis a Cinema Lease Hold Plto N. H. Iii Lajpat Nagar, New Delhi.' Clause 19 of the agreement further provided that on 'the dissolution of the Co-ownership' the net proceeds shall be divided amongst the parties in the proportion of their shares but if the proceeds were less than the liabilities the loss was to be made good by the parties in the same proportion. In their written statement the respondents referred to the shares of the parties 'in the Co-ownership property'. The parties were, thereforee, at issue as to whether the relationship between them was that of partners or that of co-owners as mentioned in the agreement between them. The first issue was accordingly to the effect as to whether the agreement created a relationship of partners or co-owners.

16. The appellant's suit being for dissolution of what was alleged by him to be a 'Partnership' and for rendition of accounts it is nto possible to accept the argument that even after the respondents had admitted for purposes of deciding that suit that the relationship of the parties be assumed to be that of partners, the preliminary decree, as passed by the learned Single Judge, prejudicially affected the appellant. The other terms contained in the agreement were nto disputed by the respondents and evidently the terms of the partnership are as contained in the agreement on which the parties rely. The liability of the partnership to be dissolved was conceded by the respondents. Of course, no finding was given on the issue as to who was the accounting party, but that was hardly necessary. A preliminary decree in a suit for dissolution of partnership has to provide for accounts being taken and thus all the partners have to render accounts. The form of a preliminary decree in such a suit is given in Appendix 'D' to the Code of Civil Procedure and that too does nto show that normally it is necessary to say as to who is the accounting party. The preliminary decree being in favor of the appellant and as it allowed all the reliefs which were asked for by him, merely nto giving a finding as to which of the parties was liable to render accounts did nto result in any prejudice. The period for which accounts were to be taken was duly specified in that decree.

17. So far as costs are concerned, two facts need to be taken note of. The present appeal is nto directed against the costs in the sense that the appellant may have claimed a particular amount to which he considered himself entitled to. Secondly a final decree is still to be passed in the suit and for the costs that may be incurred after the passing of the preliminary decree appropriate orders will have to be passed at the time of its final disposal. Moreover so far as costs were concerned that was a matter of discretion for the learned Single Judge.

18. There is considerable force in the preliminary objection that the preliminary decree being entirely in favor of the appellant the appeal filed by him was nto competent. We hold accordingly. But even if the appeal is somehow regarded to be competent, there is hardly anything which may be said on merits against the decision of the learned Single Judge.

19. In the agreement between the parties, dated June 5, 1961, the purchase of a cinema plto was stated to be on co-ownership basis. The appellant, however, averred that the relationship created was that of partners. The respondent's original plea was that the relationship between the parties was that of co-owners. The admissions made by the respondents, on November 28, 1967, were, however, clear and unequivocal. For purposes of suit C. O. 29-D Or 1963 their relationship with the appellant was admitted to be that of partners.

20. The learned counsel for the appellant did nto contend that admission could nto be made for purposes of one suit only. His contentions were two-fold. It was urged that the statement of Lajya Ram Kapur started with the words 'without prejudice to the contentions of the parties in this suit' and this showed that the admissions were nto unqualified or unequivocal and no decree could be passed on the basis of admissions which were hedged with reservations. The second submission was that in the other suits as well the question about the relationship between the parties being that of partners or co-owners may have to be gone into and it would be anomalous to hold them partners for purposes of one case and to be co-owners for purposes of the other suits .

21. The use of the words 'without prejudice to the contentions of the parties in this suit' was, it seems to us, nto intended to make the admissions nto unequivocal. The statement of Lajya Ram Kapur, which was adopted by Diwan Chand Kapur, when read as a whole, clearly shows that the admissions so far as suit C. O. 29-D of 1963 was concerned were meant to be without any reservations and were, thereforee, clear and unequivocal. He was at pains, however, to stress and made it clear that the admissions were nto for the purposes of the decision 'in other suits or for any other matter or in any other litigation that is pending between the parties at present or that may in future arise'. Obviously the 'contentions of the parties' which were nto to be affected by the admissions made were those which had connection with the other two suits. So far as C. O. 29-D of 1963 was concerned, the main controversy was regarding the relationship between the parties being that of partners or co-owners, the liability for dissolution of the alleged partnership and the rendition of accounts. On all those matters the admissions were altogether unequivocal. It is, thereforee, nto correct to say that the admissions were nto clear and unequivocal or were subject to certain reservations. The reservations had nothing to do with the suit in which preliminary decree has been passed.

22. When there are three suits and one of the suits can be disposed of on the admissions of the defendants, keeping that case pending would be unjustified merely because admissions have nto been made in the other cases. In the other suits, damages and some other reliefs have been claimed by the appellant and the respondents against each other. Even if the relationship of the parties as partners or co-owners has to be gone into in those suits that will nto result in any anomaly and at least is no justification for nto disposing of the case which can otherwise be disposed of.

23. Before the learned Single Judge it was urged that under Order 12, Rule 6, of the Code of Civil Procedure the right to move for judgment inhered in the party other than the one which made the admissions. In other words the submission made was that the appellant, who was the plaintiff in C. O. 29-D of 1963, alone could have requested for a judgment in his favor. The learned Judge seems to have accepted that contention. Provisions of Rule 3 of Order 15, Code of Civil Procedure, were as well noticed by him but in passing the preliminary decree he relied upon inherent power of the Court.

24. When the partnership of the parties, their respective shares in the partnership and the liability of the partnership to be dissolved were all admitted, continuing with the trial of the suit, as was desired by the appellant, would have been unnecessary and nto served any purpose. Under the particular circumstances of the case exercise of the inherent power in passing the preliminary decree was both justified and appropriate.

25. Shri Shiv Charan Singh Bawa raised another contention that the respondents are liable to compensate the appellant for their culpable acts and without going into that aspect of the matter passing of the preliminary decree was improper. Suits for damages claimed by the appellant and the respondents from each other are still pending and their liability for the alleged culpable or other acts will have to be determined in those cases. The suit in which the preliminary decree was passed was only for dissolution of the partnership and rendition of accounts and these reliefs have been given to the appellant by the preliminary decree.

26. Some stress was as well laid on the fact that the appellant was deprived of costs. The order of the learned Single Judge directing the parties to bear their own costs, in our opinion, is nto unjustified. In an order, dated April 10, 1965 Mehar Singh, J. (now Chief Justice Punjab and Haryana High Court) observed that frivolous applications were being moved by the plaintiff (Partap Chand Gulati) and this conduct will have material bearing at the time of awarding costs in the litigation between the parties. In the circumstances of the case leaving the parties to bear their own costs was proper.

27. We are thus in agreement with the finding that the admissions made by the respondents, so far as they related to suit C. O. 29-D of 1963, were unequivocal and after those admissions the learned Single Judge had power to pass the preliminary decree allowing the reliefs claimed by the appellant.

28. For the reasons given above the appeal is dismissed. As pending disposal of the appeal proceedings before the Receiver and the local Commissioner had been stayed it is obvious that accounts cannto be taken and all other acts required to be done by him cannto be completed before the end of October 1963. The Receiver and the local Commissioner will, thereforee, take the accounts and complete the other acts required to be done by him by the end of July, 1969. Suit C. O. 29-D of 1963 is also adjourned for making a final decree to August 1, 1969 instead of November 4, 1968. In the circumstances of the case the parties have been left to bear their own costs of this appeal.

Om Parkash, J.

29. I agree.

30. Appeal dismissed.


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