1 nms176809 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1768 OF 2009 AND NOTICE OF MOTION NO. 1899 OF 2009 IN SUIT NO. 1198 OF 2009 WITH COURT RECEIVER'S REPORTS Dhansukh R. Rathod ...Plaintiff Versus Narayan Danabhai Parmar & Ors. ...Defendants Mr. Nitin Thakkar, Senior Advocate, with Ms. Alpana Ghone and Mr. G.C. Mohanty i/by M/s. Kirit N. Damania & Co. for the Plaintiff Mr. A.Y. Bookwala, Senior Advocate, with Mr. Simil Purohit and Ms. Lata Bachhani i/by M/s. I.R. Joshi & Co. for the Defendants Mr. R.S. Desai i/by Mr. Kunal Bhanage for the Intervenor Mr. G.G. Ketkar, 1st Assistant to the Court Receiver, present. CORAM: S.C. DHARMADHIKARI, J. DATE: 25TH OCTOBER, 2010. P.C.:- When these matters were placed before me at an ad-interim stage, I had, after hearing parties at length, passed an order on 24th July, 2 nms176809 2009 appointing the Court Receiver and giving certain directions. I had assigned reasons as to why, in the instant suit, it is just and convenient to appoint the Court Receiver, High Court, Bombay, as a receiver of the assets and properties. It is not necessary to repeat those reasons. Suffice it to state that there is no serious dispute that the orders appointing the Court Receiver should be confirmed, and must continue till the hearing and final disposal of the suit. 2. However, during the course of the arguments, my attention was also invited to the two Reports, which have been submitted by the Court Receiver, and it was contended by Mr. Thakkar, learned Senior Counsel appearing for the plaintiff, that the necessary assistance has not been given to the Court Receiver. My attention is invited to the correspondence with the Court Receiver. By letter dated 6th September, 2010 addressed to the Court Receiver, High Court, Bombay, it was stated by the plaintiff's Advocates that the defendants have not furnished all the documents, despite various attempts made by the Receiver. It was stated that the Court Receiver is yet to take custody of ledger, cash books, purchase registers, purchase bills files, expenses bills files and bank statement files of the banks, whose names are set out in the letter dated 3 nms176809 6th September, 2010 of M/s. Kirit N. Damania & Co., Advocates and Solicitors for the plaintiff. 3. Further, it is stated that the returns filed with the Income Tax Authorities along with the schedules as per the requirement of the Income Tax Act, 1961, have not been forwarded for the past 6 years. It is stated that the Chartered Accountant of the firm has to maintain records of last six years' returns filed by them along with the schedules annexed thereto. 4. Mr. Thakkar, after referring to the contents of this letter, submitted that the plaintiff had approached the Chartered Accountant of the firm, and tried to obtain from him relevant documents, but the defendants raised an objection to this course of action; and that is how the Court Receiver was requested by the plaintiff through his advocates to do the needful. 5. Mr. Thakkar submits that in pursuance of this letter, on some occasions, the Chartered Accountant did give an appointment, but it came to be cancelled. These are serious matters, and if all the records, as disclosed in this letter, are not obtained by the Receiver from the Chartered Accountant, then, it will not be possible for this Court to come 4 nms176809 to a definite conclusion with regard to the allegations of siphoning of funds. In such circumstances, Mr. Thakkar submitted that this Court should issue additional directions with a view to obtain the records from the Chartered Accountant expeditiously. 6. His next contention was that by the order dated 24th July, 2009, this Court had permitted the Court Receiver to take necessary steps so as to complete the incomplete construction; and the Court had also directed the Court Receiver to obtain reports from the Architect of the firm, who has undertaken the project till the stage of this litigation or by an independent Architect from his panel, so as to evaluate the work done, measure the quantities and submit a report, so as to enable the Receiver to take further steps. However, M/s. Nadkarni & Co., who have been appointed as an independent Architect from the panel of the Court Receiver, have submitted a report and given a tentative programme, so also the expenses required to complete the construction. It is their opinion that since the matter had been attended till this stage by the earlier Architect, it would be desirable if the same agency completes the incomplete works / construction at site. Mr. Thakkar submits that both reports are on record, but the Architects of the firm, despite repeated requests, have not come forward to assist the Court Receiver. 5 nms176809 The defendants and the plaintiff had earlier stated that the construction work should be completed. The only question is - Who should complete the work under the supervision of the Court Receiver? Mr. Thakkar, therefore, submits that directions in this behalf may also be issued in furtherance of the Reports submitted. 7. Lastly, Mr. Thakkar submits that there are certain flats, which are in possession of the defendants. He has invited my attention to the plaint, and particularly the annexures thereto. He submits that the plaintiff pointed out as to how defendant No.1, in his name and the name of his wife, purchased flats in Shri Damodar Building. Mr. Thakkar submits that Flat Nos. 601, 602 and 603 in the said building are purchased by defendant No. 2. Mr. Thakkar submits that the Court Receiver has allowed these defendants to retain the flats in pursuance of the earlier orders and directions. However, if the defendants are not using and occupying them, then, liberty may be granted to the Court Receiver to invite bids from interested parties, so that they can occupy them as Agents of the Court Receiver on terms, including payment of monthly compensation / royalty. That would generate income from the idle investment, and ultimately benefit the partners of the firm. Mr. Thakkar, therefore, submits that this Court should now give the directions in that behalf. 6 nms176809 8. Mr. Thakkar has taken me extensively through the affidavits on record, and contended that in some of the buildings, the flats have been allowed to be occupied in the garb of making furniture and doing internal works. There is no Occupation Certificate, and yet, the purchasers / occupants have been put in possession. These purchasers / occupants have misused this liberty, and made sweeping changes in the structure, so also permitted commercial user of the premises. In other words, Mr.Thakkar submits that these are residential premises, but some of them are converted into commercial, and the photographs displaying the boards would demonstrate this fact, according to him. He submits that the Receiver may be empowered to take suitable action against such erring occupants, and stop the illegal change of user. For all these reasons, according to Mr.Thakkar, it is necessary that this Court passes further orders and directions. 9. On the other hand, Mr. Purohit, learned counsel appearing for the defendants, submits that the order dated 24th July, 2009 is complete and comprehensive. It is not as if the defendants are refusing to render any assistance to the Court Receiver. The Chartered Accountant of the firm can always forward the records and documents, as desired by the 7 nms176809 Court Receiver, to him. However, this should be done without the intervention of the plaintiff, and the plaintiff directly should not be permitted to obtain any document from the Chartered Accountant. The defendants would have no objection if the Court Receiver calls upon the Chartered Accountant to furnish and submit documents and particulars, and they would render all assistance in that behalf. 10. It is contended that there is no question of the defendants allowing any illegal acts by the occupants, inasmuch as, after the purchase price was paid in terms of an Agreement for Sale of the flat, to which even the plaintiff has been a signatory in some cases, all that has been permitted is to carry out internal works and make furniture. Beyond that, these defendants have not done anything so as to facilitate any of the occupants to effect a change of user. All allegations in that behalf are baseless, and devoid of any merits. This Court can issue appropriate directions, but ultimately, this is a matter between the Receiver and the occupants. 11. It is contended that the further affidavits, which have been filed, would show that the allegations that are now made are an after-thought. It is contended that as far as the first Notice of Motion is concerned, affidavits have been filed from time to time. My attention has 8 nms176809 been invited to the affidavits filed by defendant Mo.1 to oppose the grant of relief in Notice of Motion No. 1768 of 2009 and in support of Notice of Motion No. 1899 of 2009 in the suit. Mr. Purohit submits that the basis of the suit is a proposed settlement between the parties, which has been reduced into writing. He submits that the suit is not maintainable, and, therefore, the Court Receiver ought not be continued. It is submitted that essentially, what the plaintiff is seeking is specific performance of this settlement, under which some assets and properties were to come to the plaintiff and the rest were to be retained or to be allotted to the share of the defendants. In other words, the division of the assets and properties, as agreed and reduced into writing, is the basis of the suit. If the foundation of the suit is of such a nature, then, the suit cannot be termed as one for dissolution of partnership and accounts and the Receiver cannot be appointed. 12. Mr. Purohit has, in that behalf, invited my attention to the averments in the plaint, and particularly the reference to Annexure 'C' thereto. He submits that at more places than one in the plaint, there is a reference to the minutes. There is a reference extensively to the meeting in the office of Mr. Mahesh Jani, Solicitor. Mr. Purohit invites my attention to paragraphs 7 to 9 of the plaint, and submits that the basis of 9 nms176809 the suit is clear, because the plaintiff is aware that he was entrusted with the work of looking after construction of Shri Damodar Building and defendants No. 1 and 2 were looking after Badrinath Project. The plaintiff had agreed to take over the Badrinath Project, and look after the same after his work in Shri Damodar Building is complete. If this is the allegation, and the reference is made to meeting with the common solicitor of the parties, then, the relief clause would show that the plaintiff is seeking to enforce the minutes of the meeting. The plaintiff is seeking to recover monies, as agreed in that meeting. This is not a suit for dissolution of the firm and accounts, because prayer clause (c) in the plaint is for a direction, and the substantive reliefs are for seeking specific performance. In such circumstances, this Court should vacate the ad-interim order and dismiss the Notice of Motion. 13. It is also contended that all throughout, the stand of the plaintiff has been that he would not divulge any details or information with regard to the property and asset handled by him. He has been making allegations against defendants No. 1 and 2 of usurping the assets of the firm and siphoning off funds and monies; but without any basis. He is fully aware of the books of account and the entries made therein. There is nothing fishy about it, inasmuch as, in construction industry, for financing 10 nms176809 project loans are taken, and when such loans are shown in the books and have to be repaid from time to time, there are adjustments and agreements. The funds are utilised for completing the construction in phases. Therefore, the amounts are also returned in instalments, and at times, phase-wise. That is how they are reflected in the books. This is not a case where the partners, i.e., defendants No. 1 and 2 and their family members have taken over the assets and properties of the firm in a clandestine manner. They have accounted for their dealings, and, at this stage, this Court should not express any final opinion on the allegations because the plaintiff is yet to prove them. 14. Alternatively, this Court, while issuing appropriate directions to the Court Receiver, if so inclined, must also protect the defendants, and take care of their apprehensions as far as the conduct of the plaintiff is concerned. It is submitted that while issuing additional directions and passing further orders, the Court should not deprive the defendants and legitimate flat-purchasers of their rights to use and occupy the flats. At this stage, the transactions and dealings in their favour cannot be quashed and set aside. All that is required is that the Receiver must get complete records and documents in relation to the business of the firm. 11 nms176809 15. Mr. Purohit submits that ultimately, Section 47 of the Indian Partnership Act, 1932 would be the governing provision, and in aid and furtherance of the final dissolution and accounts, this Court should issue appropriate directions to the Court Receiver; but the plaintiff, in that garb, cannot oust the defendants totally from the affairs and assets of the firm. Therefore, in his submission, the Notices of Motion be disposed of with the ad-interim order on reserving the rights of the defendants and without prejudice to the same. 16. As far as these Notices of Motion are concerned, in Notice of Motion No. 1768 of 2009, the ad-interim order was passed. There, a further affidavit has been filed by the plaintiff on 30th April, 2010. It is alleged therein that as far as construction and sale of flats in 'A' to 'D' Wings of Badrinath Building are concerned, there are several manipulations in sale of the flats with the sole motive of siphoning off cash by under-stating the sale consideration. It is alleged that the defendants have collected substantial unaccounted portion of the consideration in cash; and thereby deprived the plaintiff from large amounts of funds and profits, to which he was entitled as a partner of the firm. It is stated that the market value at the relevant time has not been reflected in any of the transactions with regard to the flats sold in 12 nms176809 'C' and 'D' Wings of Badrinath Building from January, 2007 to April, 2009. A master chart has been referred to, and the instances are set out in this affidavit. 17. As far as this Notice of Motion is concerned, defendant No.1 has filed an affidavit, and my attention is, once again, invited to statements therein. It is stated that the defendants had agreed to several suggestions, which came forward during the course of the negotiations and settlement talks; but the demand of the plaintiff has been exorbitant and unreasonable. It is stated that the plaintiff has accepted the writing dated 19th November, 2008. It is stated that the plaintiff himself had allotted Flat No.501 in the building known as "Shri Damodar" to one Mrs. Anjuben Narayan Parmar as early as in 2004 by Letter of Allotment dated 10th April, 2004 at the agreed price mentioned therein, which price had already been paid and was reflected in the books of account of the firm, which was audited, and on the basis of which, the Income Tax Returns were filed and all facts were to the knowledge of the parties from 2004. Similarly, there is an explanation offered with regard to Flat Nos. 601, 602 and 603 in Shri Damodar Building. It is stated that it is the plaintiff who has allotted and signed Letter of Allotment in favour of defendant No. 2 and Mrs. Veena K. Rathod in the price mentioned therein, and this was 13 nms176809 done in 2004. Copies of the Allotment Letters are also annexed to this affidavit. It is stated that the plaintiff maintains convenient silence with regard to the assets and properties of the firm which were managed by him. 18. Therefore, there is an affidavit-in-rejoinder and there is a further affidavit of the defendants. They have stated that the Court Receiver has been extended all co-operation and the details of the same are set out in the affidavit of 12th November, 2009. 19. The reference to these affidavits need not be made because it is apparent from the Report of the Court Receiver No. 336 of 2009 that the Court Receiver has, in pursuance of the orders of this Court, taken several steps to implement it. This Report is dated 26th November, 2009. The Court Receiver had, in the Report, pointed out as to in what manner, he had proceeded and taken possession of the assets and properties of the firm. He has sought directions with regard to Flat Nos. A/101, A/301, A/303, A/503 and such other flats as set out on page 10 in prayer (a) of the Report. It is stated that only Allotment Letters of these flats have been produced. Further, he has sought directions with regard to certain other flats as set out in the Report, and importantly, he has, by annexing the bill 14 nms176809 of M/s. Gadre Subnis & Associates, Architects of the firm, sought directions as to what steps should be taken to complete the balance work of Badrinath Building, Dahisar (East). He has sought direction as to whether the estimated cost of these works, as computed in the Report, be accepted, and the work be allotted to the said Architects or not. 20. As far as this Report is concerned, the plaintiff has filed an affidavit, and stated that the books of account, balance sheets and profit and loss accounts for the last 6 years have not been furnished by the Chartered Accountant. The Court Receiver must take immediate steps and obtain them. Further, as far as the Architect's report is concerned, it is stated that the Architect appointed earlier visited the site, and informed the plaintiff as well as the Court Receiver and the defendants that he desired to visit the site again; but the plaintiff has not received any intimation from the Architect or the Court Receiver with regard to such visit. Now, the report indicates that the Architect already visited the site, and submitted his report, so also given an estimate of the works required to be carried out. The plaintiff states that the copy of such report of the Architect was available with the defendants before it was submitted to the Receiver; but surprisingly, said copy was never made available to the plaintiff. 15 nms176809 21. It is stated that Flat Nos. 101, 301, 303, 503, 603, 701, 702, 801 and 803 in 'A' Wing and Flat No. 305 in 'B' Wing of Badrinath Building ought to be sealed by the Court Receiver. It is requested that the further flats, as set out in paragraph 10 of the affidavit filed on 15th June, 2010, be also sealed. 22. The request of the defendants in this behalf is that when they moved a Notice of Motion, which is heard along with Notice of Motion No. 1768 of 2009, there, the defendants sought leave of the Court to complete the construction which is left incomplete at site. The attention of the Court is invited to several interventions, and it is contended that the defendants deserve an opportunity to do so, because the plaintiff is delaying the matter, and after more than two months of the appointment of the Architect, and after participating in the process of measurement, the plaintiff is now objecting to the appointment of M/s. Gadre Subnis & Associates. When the Court Receiver appointed M/s. Nadkarni & Co., all that they have done is to follow the report of the earlier Architect with minor variations. Therefore, in accordance with the reports, this Court should pass appropriate orders for completion of incomplete works of 'C' 16 nms176809 and 'D' Wings of Badrinath Building, so that the possession of the flats could be handed over to the respective flat-purchasers. 23. My attention is also invited to the affidavit dated 7th June, 2010 of Narayan Danabhai Parmar. It is stated that all documents and records with the Court Receiver have been submitted to the Court Receiver, and the plaintiff is free to obtain the relevant information. As far as the letters to the Chartered Accountants are concerned, it is stated that all books of account of the firm have been submitted by the defendants to the Court Receiver. It is stated that the plaintiff is responsible for delaying the matters with regard to the completion of construction. It is stated that the fees of M/s. Gadre Subnis & Associates are reasonable and even their Project Report deserves to be accepted. It is stated that the plaintiff has objected to the appointment of the said Architects. The defendants have not stated anything, and there is no question of any collusion. It is in such circumstances that it is prayed that the Court must issue expeditious directions with regard to completion of the incomplete works. It is stated that there are funds available with the Court Receiver, and from the said funds, balance construction can be completed. 17 nms176809 24. As far as these Motions are concerned, after having heard the learned counsel at some length, I am of the opinion that the objection to the maintainability of the suit has been raised rather belatedly, and after several steps have been taken by the Court Receiver in pursuance of the ad-interim order. That apart, a proper and complete reading of the plaint would demonstrate that this is not a case where the plaintiff is seeking specific performance of the agreement or settlement proposed during the course of several meetings. The suit, essentially and principally, is a suit for dissolution of the partnership firm and rendering of accounts. The partnership firm is at will. It is a registered firm. The plaintiff is a partner, and having alleged that he has lost faith in the other partners, and there is complete lack of understanding and coordination, that he has filed the instant suit. Ultimately, settlement talks were proposed, and drafts were exchanged, but nothing materialised, and, therefore, the notice dissolving the firm has been issued, and thereafter, the suit has been filed. To my mind, how such a suit can be termed as a suit for specific performance simpliciter is not clear at all. That would be ignoring the pleadings. 25. The decision that has been relied upon by Mr. Purohit, Prem Raj v. The D.L.F. Housing and Construction (Private) Ltd. & Anr., 18 nms176809 reported in AIR 1968 SC 1355, was a case where the plaintiff's suit was for a declaration that the contract is void and inoperative, having been obtained by undue influence. In such a suit, in the alternative, he sought relief of specific performance of the same contract. Mr. Purohit relied upon this decision to urge that ultimately, the doctrine of election would apply, and the plaintiff must select whether he wants specific performance of the minutes of settlement or dissolution of the firm and accounts. In the instant suit, he cannot claim both reliefs. To my mind, this decision of the Supreme Court is distinguishable. Relying upon the provisions of the Specific Relief Act, then prevailing, 1877, and particularly Sections 35 to 37 thereof, the Supreme Court held that there is no provision that a plaintiff suing for rescission of the agreement may sue, in the alternative, for specific performance. Therefore, it was not open for a plaintiff to sue for the rescission of the agreement and, in the alternative, sue for specific performance. The application