1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Notice of Motion No.780 of 2007 IN Suit No.560 of 2007 Jitendra D. Domadia & ors. .. .. Plaintiffs v/s. Mr.Manhar P. Khadawala & ors. .. .. Defendants Mr.Sampat with Mr.Vinod B. Singh for Plaintiffs. Ms.K.C. Nichani with Mr.Amit Seth for Defendant No.1. Mr.Mehul Shah with Mr.A.G. Shah for Defendant No.2. Ms.Mamta Sadh i/by Haridas & Co. for Defendant No.3. Mr.M.L. Pallonji with Mr.G.G . Dave for Defendant Nos.4 & 5. ----- CORAM : SMT.ROSHAN DALVI, J. Dated : 18 th December 2008 P.C. : 1. This Suit is filed by 3 out of the 11 partners of the partnership firm M/s.Vishal Agro Developers, originally constituted on 1.1.1990 and later reconstituted under the Partnership Deed dated 12.3.1993, Exhibit- A to the Plaint. The execution of the Partnership Deed is admitted. The relationship between the parties is also admitted. The parties to the Suit are partners and the family members of the deceased partners. 2 2. It is the case of the Plaintiffs that the partnership firm purchased certain properties in Palghar and Nadode villages in the names of certain partners individually. However, these properties have been always considered and dealt with as properties of the firm. The Plaintiffs claim an interest therein. The Suit is filed for declaration that the suit properties described in prayer- (c) to the Plaint held individually and/or jointly by the Defendants in their personal name or otherwise with any other family members are the properties of the partnership firm under the Partnership Deed dated 12.3.1993 and for an injunction restraining the Defendants from creating third party interest in those properties by way of sale or otherwise. 3. The purchase of the properties is admitted. The fact of the purchase is made individually in the names of some of the Defendants is also admitted. In fact it is the case of the Defendants that the properties belong to the persons in whose names they are purchased. The Defendants have relied upon the documents of purchase as also the documents pertaining to the revenue records of those properties. 4. To see whether the properties purchased by or in the name 3 of any partner is a property of the firm, the Plaintiffs must show either that purchase was made from the funds of the firm or that the purchase made by individual partners were intended to be used as properties of the firm or were in fact thrown into a common hotchpotch so as to constitute the property of the firm and was used as such by the firm. 5. The first recital in the Partnership Deed dated 12.3.1993 shows that the said firm was constituted on 1.1.1990. Clause- 1 of the Partnership Deed shows that the parties will continue to carry on business in the name of M/s.Vishal Agro Developers. 6. Clause- 5 of the Partnership Deed shows that the firm shall deal with in agricultural land, develop farm plots, etc. Hence the intention of the parties was to purchase, develop and sell the agricultural land and farm plots. 7. The balance- sheet of the firm as on 31.3.1994 filed with Income Tax Authorities showing the returns of the firm, inter alia, shows two projects at Palghar and Nadode. They are reflected as work- in-progress of the firm. The balance- sheet also shows the various sundry creditors of the firm who are stated to be the farmers. These are sellers of the land to the respective individual Defendants. One such creditor is a 4 famer Radhabai D. Rawale, from whom the husband of Defendant No.3 has purchased the land. The others are the farmers from whom the Defendants, who are the partners in the above firm, have purchased the lands. 8. It appears that some of the partners who purchased properties in their individual names sought to sell out those properties. Public Notices were given in the newspaper, Exhibit- G to the Plaint. The Plaintiffs replied the notices stating their objections and setting out that those properties belong to the firm and that the partners who were shown as the owners are the only nominees of the firm and that the partners or their legal heirs cannot sell those properties. Such is the Plaintiffs' case in the Suit. 9. Upon such correspondence certain meetings were held between the partners with regard to the suit firm business as well as the business of some other firms of the partners. In a meeting held on 14.11.2006, the MOU executed between Defendant No.1 and Defendant No.2, who are the two partners in management of the firm, came to be shown. It was recited that 84 Acres of land was to be sold out of which 4 Acres were to be returned to the farmer Mr.Rawale. None of the partners had purchased as much as 84 Acres of land, but the partners put together would show the purchase of 5 such a large land. 10. Each of these purchases have been made in December 1990. The original firm was constituted on 1.1.1990. All of the plots of land are adjoining one another. Plots of land together constitute a large area to be developed under one layout plan. 11. It, therefore, stands to reason, as is the Plaintiffs' case, that instead of the firm purchasing the entire land from various farmers, the partners individually purchased separate small plots adjoining one another to develop, as per their Agreement under the Partnership Deed dated 12.3.1993 to deal in such an agricultural land. Since the agricultural land could not be sold except to farmers in the Bombay Tenancy and Agricultural Lands Act, the partners of the firm showed themselves as farmers. The firm itself could not purchase the land as it would require it for non- agricultural purposes. Hence the farmers/partners purchased the land and in the course of dealing with the land for developing the property, they would convert the land to NA use. Such land could be developed and sold by the firm. That was the sale of 84 Acres of land reflected in the MOU dated 14.11.2006, Exhibit- J to the Plaint. 6 12.The Minutes of the meeting also shows one MOU executed between Defendant Nos.1 and 2. The execution of the MOU is admitted. The MOU is dated 19 th October 2006. It relates to various partnership firms. It shows the Agreement arrived at between partners, associate members, family members, etc. for settlement of their disputes. One of the firms for which the settlement was arrived at is the suit firm. Under the MOU, Defendant Nos.1 and 2 agreed that various properties which are the stock- in-trade of the respective partnership firm would be sold off and the sale- proceeds would be distributed amongst the partners after payment of tax and the amount of capital. With regard to the suit firm, it was agreed that the firm claims to have taken conveyances of 84 Acres of land at Nadode. After reconveying 4 Acres of land, they had decided to sell the remaining 80 Acres. Defendant Nos.1 and 2 would inform the other partners and obtain their consent for the same. 13.Similarly it was agreed that the said firm was the holder of 30 non- agricultural bungalow plots Scheme at Palghar. 15 had been sold. The remaining 15 were the stock of the firm. The firm would give delivery of the 15 plots to the purchasers. The sale would be by auction amongst the partners inter se if no buyer was found. The MOU, therefore, unmistakably shows the admission of the partners that the 7 properties were the properties of the firm and the intention of the parties to treat the properties standing in their names as the assets of the firm and to deal with the assets as agreed between the partners. 14.In a further meeting held on 21.11.2006 to discuss the disposal of the land of the partnership firm M/s.Vishal Agro Developers (Nadode project) the partners agreed that Defendant No.1, (who had certain prospective buyers), Plaintiff No.1 and the son of Plaintiff No.2 would negotiate with the buyers. The price expected by the partners who attended the meeting was set out to be Rs.3 Lakhs to Rs.3.5 Lakhs per acre. It was agreed that the deal would be finalized by 30.11.2006. The Minutes of that meeting shows that some partners objected to Defendant Nos.1 and 2 dealing with the properties of the firm as their consent was not taken. Hence they decided that in future no individual partner shall enter into MOU or transact any business for and on behalf of the firm's property and assets of the firm with any other partners or other persons. A list of the properties of the firm and property documents was to be compiled and circulated amongst the partners. Proposal for sale of the land would be brought up for consideration of all the partners and the properties of the firm M/s.Vishal Agro Developers may be sold for the price exceeding Rs.3 Lakhs 8 per acre. Some of the partners have signed the Minutes. Some others have not. That does not matter. The Plaintiffs have not sought to enforce the agreement arrived at. The Plaintiffs have only sought to show this aspect as evidence of the fact that the suit properties are the properties of the firm. 15. The Plaintiffs have made a grievance that several partners have sought to deal with and dispose of the property standing in their names on the ground that it belongs exclusively to them though it was treated as partnership property and purchased out of the funds of the partnership business. One such transaction is a Deed of Gift executed by Defendant No.1 in favour of his son. 16. It is seen that the various partners in the firm represented various families. Accordingly, there were Mehta family, Patel family, Sanghvi family, Khadawala family, Kothari family etc. Since there are many firms in which members of those families are interchangeably the partners of the firm, they have dealt with various assets of several firms with some or the other of the family members. This is reflected in the MOU executed between Defendant Nos.1 and 2 dealing with various properties which they were managing. The Sanghvi family in this Suit is represented by Defendant Nos.3, 6 and 9 7. The husband of Defendant No.3 had purchased certain properties which formed a part of the layout at Palghar and Nadode villages. Defendant No.3 is made a partner in the firm consisting of properties, inter alia, of her husband, used as the property of the firm and as shown in the balance- sheet of the firm filed with the Income Tax Authorities, inter alia, as a part of the Palghar project and Nadode project. 17. It is clear that the properties were purchased by the partners of the firm to be used and dealt with as the asset and property of the firm. Each partner is, therefore, entitled to such property to the extent of his share in the total properties of the firm, no matter what is reflected in the documents and revenue records in the names of individual partners. The entire property was purchased albeit by all the partners at about one time in December 1990. Adjacent plots have been purchased. They form a part of the layout. They are shown in the balance- sheet of the firm as the firm's property. Various meetings have been held to sell out the plots as per the consent of the partners and to distribute the proceeds upon setting out the minimum price per acre agreed between the partners. 18. Under Section 14 of the Partnership Act, the suit properties being the plots purchased individually in the names of the 10 partners of the firm and/or their family at Palghar and Nadode villages are properties of the firm as brought into stock of the firm in the course of the business of the firm. They cannot be dealt with individually by the partners. 19. Aside from showing that the properties are in the names of the partners and the partners are paying taxes in respect thereof, the Defendants have not shown how the properties have not been used or agreed to be used in the course of business of the firm or how they have not been brought into the stock of the firm though they are distinctly shown as the stock- in-trade in the balance- sheet. 20. The Defendants have instead produced as many as 5 purported Notices of dissolution of the firm stated to have been issued by Plaintiff No.2. Plaintiff No.2 has denied the fact. Out of the Notices of dissolution, 5 original Notices have been produced before the Court. They are on identical stationery containing identical matter, showing them to be signed by Plaintiff No.2 as Karta and addressed to “The partners M/s.Vishal Agro Developers”. The Notices have been similarly filed showing similar punch marks and appear to have been removed from one file or one source. These Notices also appear to be similarly pinned showing similar pin marks on the top left hand corner. 11 21. They prima facie appear to be got up and back- dated to scuttle the Plaintiffs' claim. Though the Notices are dated 24 th September 1996, much water has flown since those Notices, as can be seen from the Minutes of meetings signed by some of the partners from time to time 22. The fact that the suit properties are seen to be purchased for the business of the partnership firm albeit in the name of the individual partners, they must be protected pending the Suit from any transfer, alienation or encumbrance by any of the partners or by their family members. 23. Consequently, the Notice of Motion is made absolute in terms of prayer (a). No order as to costs. 24. Five original letters purporting to be the Notices of dissolution, all dated 24 th September 1996 shall be kept in a sealed covered by the Prothonotary and Senior Master. (SMT.ROSHAN DALVI, J.)