IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. R.F.A. No. 203 of 2000. Reserved on : 2.3.2010. Decided on: 29.4.2010. ___________________________________________________________ Shri Sat Pal. … Appellant. Versus Shri Kulwant Rai and another. … Respondents. ___________________________________________________________ Coram: Hon’ble Mr. Justice V.K. Sharma, Judge. Whether approved for reporting?1 Yes. For the appellant. : Mr. Neeraj Gupta, Advocate. For respondents No. 1 & 2. : Nemo. __________________________________________________________ V.K. Sharma, Judge. The present appeal arises out of the judgment and decree dated 5.4.2000 passed by the learned District Judge, Kangra at Dharamshala (HP) in Civil Suit No. 5- D/1/96, titled Shri Sat Pal versus Shri Kulwant Rai and another, whereby the suit for recovery of Rs. 4 lac being the balance amount of sale consideration filed by the appellant as plaintiff against the respondents being the defendants has been dismissed. 2. In brief, the case set up by the plaintiff is that he was the sole proprietor of the biscuit factory known as M/s Shiva Food Specialties, Damtal. It was established in 1 Whether reporters of the local papers may be allowed to see the judgment? Yes. 2 the year 1992. On 6.3.1995 at Damtal, he entered into a transaction of sale with the defendants, whereby he agreed to sell the aforesaid factory along with its machinery and goodwill etc. to the defendants for Rs. 6 lac. Possession of the factory along with machinery was given to the defendants. However, the agreement of sale along with its terms and conditions was reduced into writing on 7.3.1995 at Batala. The defendants also paid a sum of Rs. 2 lac as advance of the total sale consideration and agreed to pay the balance by 31.3.1995. Thereafter, the lease money in respect of the land was to be paid by the defendants. It was further agreed that the balance amount of Rs. 4 lac was to be paid at Damtal. Possession of the machinery etc. and premises was handed over to the defendants in pursuance of the agreement and the sale was complete. However, the defendants in spite of various demands and requests did not pay the balance sale consideration of Rs. 4 lac by 31.8.1995 compelling the plaintiff to file the suit. 3. The defendants contested the suit by filing separate written statements. Defendant No.1 raised various preliminary objections regarding maintainability, locus standi, cause of action, estoppel, limitation, valuation and non-joinder & mis-joinder of necessary parties. On merits, it was pleaded that the plaintiff was 3 not the sole proprietor of the biscuit factory known as Shiva Food Specialties, Damtal. Instead, the defendants and one Shri Padam Kumar were also the partners and ‘share holders’ of M/s Shiva Food Specialties, Damtal. It was further averred that the alleged agreement was never performed by the plaintiff himself and ultimately on 31.7.1995, a final settlement between the ‘share holders’ took place and a document was executed as per which the plaintiff was to pay a sum of Rs. 2 lac to defendant No.1. As per agreed mode of payment, whereas Rs. 1 lac was to be paid in cash, the remainder of Rs. 1 lac through cheque on 3.8.1995 towards his share in the aforesaid factory. However, since the plaintiff did not make the payment, defendant No.1 had to file a suit for recovery against the plaintiff before the learned trial Court being suit No. 2/98 and the same was pending at the time of filing of the written statement. It being so, neither the plaintiff was entitled to the suit amount nor were the defendants liable to pay the same. 4. Defendant No.2 raised numerous legal objections regarding locus-standi, maintainability, jurisdiction, non-joinder of necessary parties, the suit being mala fide, limitation, estoppel and valuation besides, claiming special costs under Section 35-A of the Code of Civil Procedure. On merits, the replying 4 defendant also pleaded that the plaintiff was not the sole proprietor of the factory and instead the defendants and the said Shri Padam Kumar were also the partners and ‘share holders’ therein. However, it was alleged that the factory was not working at all. The alleged agreement was never performed by the plaintiff himself. In fact, an agreement was executed between the parties on 7.3.1995 at Batala, District Gurdaspur (Punjab), wherein the plaintiff agreed to “sell his factory to the defendants” and received Rs. 1lac as advance/earnest money from the replying defendant as part payment of the sale consideration. However, the plaintiff failed to hand over actual physical possession of the plant, building, machinery and other accessories connected with the running of business of the factory. Hence, the factory could not be run due to the fault and negligence of the plaintiff. The plaintiff also failed to hand over complete papers regarding ownership of the factory, such as, change of lease deed, electricity connection, tax record, registration and license, dissolution and creation of new firm. It was denied that the sale was complete. It was further averred that the plaintiff failed to perform his part of the contract. It was in such circumstances that ultimately on 31.7.1`995 a final settlement between the parties took place which was reduced into writing by way 5 of a document vide which the replying defendant withdrew from the partnership and settled his accounts with the plaintiff, whereas, “the defendants continued to be share holders/partners” in the said concern along with the plaintiff as sleeping partner and invested the following amounts in good faith being relative of the plaintiff: i) Rs. One lakh paid as an advance of sale price on 7.3.95. ii) Rs. One lack paid subsequently to Sh. Krishan Kumar Prashar son of Kansi Ram, Misri Mohalla, BATALA, the loan taken by the plaintiff Satpal to install the factory. iii) Rs. 35,000/- was invested by the replying defendant No.2 towards working capital. iv) Rs. 28,000/- paid to Flour Mill at BATALA for purchase of Maida. v) Rs. 17,000/- paid towards outstanding electricity charges. vi) Rs. 32,000/- for purchase of sugar & Ghee from BATALA. vii) Rs. 35,000/- paid to the labourers as outstanding wages. 5. It was further averred that the above amounts were paid by the replying defendant to the plaintiff in good faith being a sleeping partner in the aforesaid concern as the plaintiff is closely related to him being brother-in-law (wife’s brother of one Shri Subhash Chander), who is cousin of the replying defendant. The plaintiff had not 6 settled the accounts of the said concern till the date of filing of written statement on 22.4.1999 nor had paid the aforesaid amounts to the replying defendant till the said date. The suit filed by the plaintiff is based on concocted facts besides concealment of material facts. In fact, the plaintiff has to pay huge amounts to the replying defendant on settlement of accounts. It was lastly stated that the replying defendant reserved his right to file a separate suit against the plaintiff for rendition of accounts of the said concern. The plaintiff has filed the present suit to avoid settlement of accounts of the firm and the consequent liability. 6. The plaintiff by filing replications to the above written statements refuted the respective stands taken by the defendants and instead re-iterated the averments set up in the plaint. 7. On the above pleadings, the parties went to trial on the following issues: 1. Whether the plaintiff is entitled to a sum of Rs. 3,08,000/-, as alleged? OPP 2. Whether the plaintiff is a partner of the firm, as alleged? OPP 3. Whether there is enforceable cause of action? OPD 4. Whether the suit is not maintainable, as alleged? OPD 7 5. Whether the plaintiff has no locus standi to file the suit? OPD 6. Whether the plaintiff is estopped by his act and conduct to file the present suit? OPD 7. Whether this Court has got no jurisdiction to try the suit? OPD 8. Whether the suit is just a counter blast to the already pending suit of the defendant? OPD 9. Whether the suit is mala fide and the defendant is entitled to special costs? OPD 10. Relief. 8. After the parties led evidence and were heard by the learned trial Court, the suit was dismissed, as noticed above. Whereas, issues No. 2 and 10 were held in affirmative, the remaining issues were decided in negative. 9. I have heard the learned counsel for the appellant (plaintiff) and perused the record. However, none appeared for the respondents though duly represented/served. 10. It was submitted by the learned counsel for the appellant (plaintiff) that the agreement was not in dispute. The cross suit for recovery filed by respondent/ defendant No.1 was dismissed, vide judgment dated 12.9.2000, a copy of which is on the appeal file. As the defendants did not enter the witness box, adverse inference is bound to be drawn against them. In view of 8 the materials on record, the suit, out of which the present appeal has arisen, could not have been dismissed. Suit for specific performance, if any, was not required to be filed by the appellant/ plaintiff and if at all such suit was to be filed, it was to be filed by the respondents/defendants. 11. The case set up by the plaintiff is based on ‘Ikrarnama’ (agreement Ext. PA), dated 7.3.1995. This document is in Punjabi. The Hindi translation has also been brought on record. The document has been proved by the plaintiff, who has appeared as PW-4 and PW-3, Mr. Prem Masih who is its scribe. 12. According to the plaintiff (PW-4), the oral transaction between the parties had taken place on 6.3.1995 at Damtal. The factory was agreed to be sold for Rs. 6 lac. However, agreement Ext. PA was executed on the next day, that is, 7.3.1995 at Batala. Whereas, a sum of Rs. 2 lac was received by him vide agreement Ext. PA, the remainder of Rs. 4 lac was payable on 31.8.1995. Though he had handed over the keys and possession of the factory to the defendants, they did not pay the balance sale consideration of Rs. 4 lac. 13. The defendants have also not disputed execution of agreement Ext. PA and payment of a part of the sale consideration thereunder. Rather, they have pleaded that it was never performed by the plaintiff 9 himself and ultimately some settlement took place between the parties on 31.7.1995. It is admitted case of the parties that the balance amount was never paid by the defendants to the plaintiff. 14. Now, arises the question whether the plaintiff had failed to perform his part of the agreement Ext. PA as alleged by the defendants. 15. The learned trial Court has rightly observed that the parties had not been fair in pleading the respective cases set up by them before it. The reasons to arrive at this conclusion are enumerated hereinafter. 16. Agreement Ext. PA has been brought on record by the plaintiff, whose scribe, PW-3, Prem Masih, has also been examined by him. The recital contained on the left hand margin of agreement Ext. PA regarding handing over possession of the factory along with machinery etc. etc. is not duly authenticated and the possibility that the same might have been incorporated later on can also not be ruled out. Similarly, there is another recital on the reverse of agreement Ext. PA regarding cancellation thereof on 31.7.1995 which is also without any authentication. Normally, custody of documents, such as, agreement Ext. PA is delivered to the purchasers, the defendants in the present case and a copy thereof is retained by the seller, such as, the 10 plaintiff. However, since it has come on record at the instance of the plaintiff the aforesaid aspects assume significance and cannot be likely over looked. 17. A bare perusal of agreement Ext. PA would go to show that the transaction entered into thereunder between the parties was not complete and a part of the sale consideration amounting to Rs. 4 lac was to be paid on 31.8.1995 upon which the plaintiff was to handover complete papers of the factory to the defendants. Admittedly, the balance sale consideration of Rs. 4 lac was not paid. Though the plaintiff has stated that he had handed over possession of the factory including the machinery to the defendants at the time of execution of agreement Ext. PA, yet the evidence on record would go to show that he had neither informed the concerned departments about the sale of the factory by him in favour of the defendants nor had completed other formalities for transfer of the factory in their favour in letter and spirit. To this effect is the testimony of PW-1, Shri Nek Chand Gupta, Junior Assistant, DIC, Dharamshala, who has stated during cross-examination that no information about transfer of the aforesaid factory by the plaintiff to the defendants was received in the office of the District Industries Centre. To the similar effect is the testimony of PW-2, Shri Madan Singh, Camp Clerk, ETO Office, 11 Damtal at Kandrori, who has stated that the aforesaid factory was registered with the Excise & Taxation Department on 21.9.1992 under the sole proprietorship of the plaintiff who had been filing quarterly returns in their office from 1992 onwards till 31.3.1997. All such returns were filed by the plaintiff. He has also stated that no intimation about transfer of the factory by the plaintiff to the defendants was received in his office. Thus, it is manifest that even after execution of agreement Ext. PA, the plaintiff had all through been filing returns in respect of the factory in question with the Excise & Taxation Department. Thus, it cannot be said with certainty as to who remained in possession and was running the factory after execution of agreement Ext. PA. 18. In view of the above, the learned trial Court was further correct in deriving the inference that in the given facts and circumstances of the case, the proper remedy for either of the parties to agreement Ext. PA was by way of filing a suit for specific performance thereof. 19. None for the defendants entered the witness box to depose about the respective defences set up in the written statements and instead the aforesaid Shri Padam Kumar was examined by them as DW-1. According to him, he knew the parties. Writing mark ‘A’ was written in his presence which bears his signatures Ext. DW-1/A. 12 The plaintiff had also signed this document in his presence. He has further deposed that he had not become ‘share holder’ vide this document. It is lastly stated by him that writing mark ‘A’ was executed by the parties after settlement of their accounts. However, from his further deposition during cross-examination, which is extracted below in extenso, writing mark ‘A’ which otherwise has also not been proved in accordance with law and has been simply marked and thus, cannot be looked into, is rendered without any legal value: “I do not remember who was scribe of the document mark A. Document was written at Damtal, the time I do not remember. At that time Dilbag Rai, Satpal and Krishan Kumar were also present there. I have no concern with the partnership and though the parties were willing to join me as partner but I refused to become partner. I now do not remember the contents of this document. The compromise was regarding some factory, the details I cannot say. I know English. The word partner under my name has been written afterwards. There is difference in ink also. The word Ex. Partner after the name of Kulwant Rai has also been written similarly with different pen and afterwards. I do not know about the terms vide which date 31.7.1995 was mentioned in the document. 13 I have come today with defendants. I do not recognize the signature of Satpal on mark A. It is incorrect that Satpal was not present at that time. I cannot say if Satpal signed at that time, on this document. It is incorrect that I have deposed falsely in favour of defendants. xxx xxx xxx For other defendant. (Nil. Opportunity given).” 20. Another aspect of the matter which cannot be lost sight of is that it is evident from agreement Ext. PA, dated 7.3.1995 that the biscuit factory (M/s Shiva Food Specialties, Damtal) was being run by the plaintiff in a rented premises. As stated by him during cross-examination while appearing as PW-4, the factory building and the site on which it is situate belonged to one Maharaj, who was not a party to agreement Ext. PA. In such situation, the recital in agreement that the defendants being the purchasers would be liable to pay the rent of the factory building is in the nature of one sided covenant to which the said Maharaj was not a party. It being so, the factory along with its machinery, which was immovable property, could also not have been transferred as such by the 14 plaintiff to the defendants without the consent of the said Maharaj. 21. For the reasons stated hereinabove, I do not find any merit in the present appeal and the same is dismissed with no order as to costs. (V.K. Sharma) Judge. April 29, 2010. (cr)