Partition of properties cannot occur until exclusive title over the said properties has been ascertained: Calcutta High Court

IN THE HIGH COURT AT CALCUTTA Civil Appellate Jurisdiction Present: Hon’ble Justice I. P. Mukerji Hon’ble Justice Subhasis Dasgupta IA No. GA 1 2019under Order XII Rule 6 of the Code of Civil Procedure declaring the shares of the heirs of late Prabhat Kumar Mahapatra in respect of the immovable properties shown in the schedule appended to the amended plaint and further appointing a learned advocate Commissioner to effect partition to the extent of shares declared in the preliminary decree A suit for partition and administration of properties left by the late Prabhat Kumar Mahapatra came to be instituted in the year 2009 The appellant company defendant No. 6 along with the defendant No. 1 filed a written statement jointly in such suit. Besides filing the written statement the appellant filed an affidavit to challenge the application under Order XII Rule 6 C.P.C. was filed By reason of the amendment of the plaint the first respondent plaintiff restricted his claim to the threeimmovable properties left by his father late Prabhat Kumar Mahapatra which is more fully described in the schedule “M” of the plaint The learned trial court by its impugned judgment and order granted a preliminary decree on the alleged admission of the defendants in their respective written statement with respect to the title of immovable properties of late Prabhat Kumar Mahapatra as covered in the scheduled properties keeping in mind that though the defendant Nos. 2a and 2b had raised objection with regard to the representation of defendant No. 1 in the suit by her solicitor for her mental incapacity but no objection was ever raised with regard to the entitlement of share of defendant No. 1 Mr. Ratnanko Banerji learned senior advocate for the appellant defendant no. 6 company challenging the preliminary decree made the following That the said three properties shown in the schedule to the plaint though claimed by the first respondent plaintiff to be the properties belonging to his late father Prabhat Kumar Mahapatra but the said properties were not the properties of late Prabhat Kumar Mahapatra but belonged to the Company. Reference was drawn to the audited balance sheets submitted for the year 1993 1994 wherein Prabhat Kumar Mahapatra had signed the audited balance sheets being a director of appellant company for challenging the title of late Prabhat Kumar Mahapatra That there was no conspicuous and express categorical unequivocal and unqualified admission of appellant defendant company admitting the title of late Prabhat Kumar Mahapatra with respect to the three immovable properties shown in “M” schedule of the plaint thereby justifying the necessity of having held a trial for determination of title of the properties for which partition was sought for without which preliminary decree is not That the assets of appellant defendant company could no be made part of the subject matter of the partition for distribution amongst the heirs of late Prabhat Kumar Mahapatra. The shareholders were not the owners of the properties and assets belonging to the company at best the personal shares held by late Prabhat Kumar Mahapatra in the appellant’s company might be liable for distribution amongst the heirs of late Prabhat Kumar Mahapatra according to their entitlement Reliance was placed by Mr. Banerji on a decision reported in AIR 1955 SC 74 rendered in the case of Bacha F. Guzdar Bombay Vs. Commissioner of Income Tax Bombay that the concept of partners is not akin to shareholders in a company as the company is a separate juristic entity distinct from the shareholders. In Halsbury’s Laws of England Vol. 6 3rd Edn.) Page 234 the law regarding the attributes of shares is stated “A share is right to a specified amount of the share capital of a company carrying with it certain rights and liabilities while the company is a going concern and in its winding up. The shares or other interest of any member in a company are personal estate transferable in the manner provided by its articles and are not of the nature of real estate.” That the learned trial judge ought not to have granted the preliminary decree without enquiring into the title of the threeimmovable properties shown in the schedule as there was no categorical admission of title Mr. Banerji relied on a decision reported in20 SCC 425 delivered in the case of Hari Steel and General Industries Limited & Anr. Vs Daljit Singh & Ors. on the trite principle that no amount of evidence would be of any help in the absence of pleading and foundation in the That the alleged admission sought to be capitalised by the first respondent plaintiff must be conscious specific clear categorical and unequivocal in order to reveal the deliberate act of the party making such admission thereby revealing his intention to be bound by it. In the absence of a clear admission of title the learned trial judge was under an obligation to exercise his judicial discretion keeping in mind that the judgment on admission is a judgment without trial therefore unless the admission is clear unambiguous and unconditional the discretion vested to the learned trial judge ought not to have been exercised so as to deny the valuable right of the appellant defendant no.6 to contest the claim for obtaining a judgment on admission under Order XII Rule 6 C.P.C. Mere giving a look to a solitary statement in the written statement would not be itself sufficient to infer even the admission of the appellant defendant no.6 with respect to the title of the properties shown in schedule allegedly claimed to be belonging to late Prabhat Kumar Mahapatra That the title to the properties shown in the schedule of the plaint whether the properties belonged to the erstwhile owner namely late Prabhat Kumar Mahapatra or not ought to have been determined before granting preliminary decree which should not have been left to be determined by the learned Commissioner Reliance was placed by Mr. Banerji on a decision reported in 1909 15 CWN 375 delivered in the case of Upendra Nath Banerjee & Anr. Vs. Umesh Chandra Banerjee that the determination of the question whether certain properties are the joint properties of the parties or the exclusive properties of any of them cannot be delegated by the Judge to the Commissioner for partition and thus the necessity of conducting a trial was focused That the learned trial judge neither considered the written statement filed by the appellant company jointly with the defendant no. 1 nor advanced any reasons for consideration of the written statement filed by the appellant company as an admission. The impugned judgment and order is thus without any application of mind for not offering any reasons so as to obtain hallmark of a judicial order granting a preliminary decree on admission That in the supplementary affidavit submitted by the appellant company there was a disclosure of tenancy agreement being executed by appellant defendant company in favour of Indian Oil Corporation dated 1st April 2006 wherein the appellant defendant company represented itself to be the owner of the properties let out to Indian Oil Corporation which is of course one of the threeimmovable properties mentioned in the schedule to the plaint and it could not be taken into account by the learned trial court while granting preliminary decree Upon raising such submissions the appellant defendant company proposed for setting aside the impugned judgment and order Per contra Mr. Sakya Sen learned advocate representing the first respondent plaintiff challenged the appeal advancing the That the written statement filed by the appellant would by itself reveal that there was no dispute with regard to the title of late Prabhat Kumar Mahapatra in respect of threeimmovable properties shown in schedule “M” to the plaint and no controversy was there with regard to the shares of heirs of late Prabhat Kumar Mahapatra The claim of the appellant company as to its entitlement to the assets of the company being irrelevant would not require any adjudication when there was categorical and unequivocal admission of appellant defendant as regards title of the Prabhat Kumar Mahapatra Incidentally reliance was drawn from Sub Paragraphof Paragraph 2(n of written statement of appellant defendant company wherein the appellant company itself admitted taking a specific averment that the inherited properties apart all other properties acquired by late Prabhat Kumar Mahapatra were his self acquired properties which according to respondent would be appellant defendant company from challenging the title of late Prabhat Kumar Mahapatra with respect to the three properties shown in the The case of the first respondent plaintiff claiming partition found its basis from the disclosure made in the Paragraph 3 of the amended plaint wherein it was averred that Prabhat Kumar Mahapatra during his lifetime purchased threeproperties mentioned in the schedule of the plaint out of his own income being a businessman who established and promoted several companies and one of such company is “City Centre Properties Private Limited appellant company ” which was promoted as family company and incorporated as such on 15th July 1966 That properties mentioned in 54 Forest Park Bhubaneshwar Odisha was let out to Indian Oil Corporation by the appellant company with the knowledge of 1st respondent. Such letting out would not itself deprive the respondent no.1 plaintiff from having his share to the extent of his entitlement in respect of properties left by his late father for the apparent admission of appellant defendant no.6 in its written statement as regards the title of his late father to the properties as tenancy could be created without being owner of property and appellant company had nothing to do with the ownership and title of such property. Late Prabhat Kumar executed a of property appellant defendant company and the appellant being a lessee of the demised property could not be allowed to dispute the title of Prabhat Kumar Mahapatra over the said property. The appellant company being a lessee of the demised properties there left no hurdle to pass a preliminary decree declaring the shares of late Prabhat Kumar Mahapatra on apparent title the written That though appellant defendant company might be in possession in respect of one of the properties mentioned in the schedule to the plaint but the partibility of such property being a subject of decision could be well taken in a proceeding before the learned Commissioner of partition appointed for the purpose. Paragraph 5 of the written statement of appellant company having dealt with the admission of title individually with the description of immovable properties shown in the schedule of the plaint there left nothing to dispute with the admission of title of properties and thus such paragraph of written statement was much stressed upon to infer even the admission of title That by reasons of such admission of title found in the relevant paragraphs of written statement the balance sheet relied upon by the appellant not being document of title would be without any significance The mere entries in the balance sheet signed by late Prabhat Kumar Mahapatra could not be allowed to be relied upon to contradict the title of late Prabhat Kumar Mahapatra with respect to the three immovable properties mentioned in the plaint The judgments referred by the appellant though being on established proposition of law but the same would not be applied in the facts and circumstances of this case That since the learned trial court simply declared the shares of the heirs of late Prabhat Kumar Mahapatra to the extent of 1 4th share each pursuant to the averment made in Paragraph 42 of the plaint claiming distribution of shares amongst the heirs of late Prabhat Kumar Mahapatra upon sensing the apparent categorical and unqualified admission of title of defendants in their respective written statement and that being the position any exercise for relegating this appeal to trial as proposed to be held by appellant in this case would be unnecessary and prolong the Learned advocate representing respondent no. 2 3a 3b 4 and 5 supported the stand taken by respondent no. 1 plaintiff that no illegality was committed by learned trial court in granting a preliminary decree for the apparent admission of title found in the written statement of defendants Attempt was made by respondent nos. 3a 3b and 5 to distinguish the judgment rendered in the case of Upendra Nath Banerjee immovable properties shown in the schedule to the plaint. The appellant company by filing a written statement jointly with the defendant no. 1 proceeded to answer the claim of the respondent no. 1 plaintiff The learned trial court granted the preliminary decree having found admission of title mentioned in the respective written statement of defendants. Though the respondent plaintiff referred to some of the paragraphs in the written statement of appellant defendant company to reveal the admission of title but for ascertainment of categorical unambiguous and unconditional admission the learned trial court was under an obligation to consider each and every averments contained in the written statement of the appellant defendant company even to infer admission of title of the properties if it was a deliberate conscious act of appellant defendant company making such admission It is so necessary that the learned trial court should reveal in its judgment that it duly exercised its discretion judicially to find out clear unambiguous and unconditional admission There is nothing reflected in the order under appeal that the learned trial court had even taken into account the points raised in the written statement filed by appellant company When the appellant defendant company responding to the summons being issued by the court furnished its written statement jointly with defendant no. 1 the learned trial court ought to have returned a decision in terms of the averments contained in the relevant paragraphs of the written statement of appellant defendant company disputing with the title of the No reasons whatsoever were assigned by learned trial court for not making consideration of the written statement and the affidavit furnished by the Merely giving an isolated look at some of the paragraphs of written statement filed by the appellant defendant company would not be sufficient enough in the given facts of this case to reveal the admission of title of the properties allegedly owned by late Prabhat Kumar Mahapatra The learned trial court is supposed to give a decision after accepting the written statement of the appellant defendant company for reaching its logical conclusion so as to grant a preliminary decree Assigning of reasons being a hallmark of an order passed in exercise of judicial authority it would always be desirable to offer reasons while coming to a conclusion In the impugned judgment and preliminary decree dated 16th July 2018 since there has been non consideration of the written statement filed by the appellant defendant company without offering any justified reasons the same is not sustainable Having considered the controversy raised over the properties mentioned in the schedule of the plaint to its title and bearing in mind the nature and peculiarity of averments contained the written statement of appellant defendant company disputing the title of late Prabhat Kumar Mahapatra from whom the heirs claimed their 1 4th share each all questions raised by appellant defendant company involving the title of the parties and the proposed reliefs sought ought to have determined by the learned trial court before granting any preliminary decree under Order XII Rule 6 C.P.C We thus found strong force in the argument advanced by Mr. Banerji appearing for the appellant There arises the necessity of ascertaining title of properties with respect to which partition has been sought for before granting a preliminary decree Since the appellant defendant company claimed its exclusive title over the scheduled properties the determination of the question whether the properties actually are the exclusive properties of the parties proposing partition or of some other person as claimed by appellant defendant company in our considered view is obligatory Ascertainment of the title of properties appears to be pre requisite prior to effecting a preliminary decree while rendering a judgment on admission under Order XII Rule 6 of C.P.C The impugned judgment and the preliminary decree dated 16th July 2018 for the reasons as aforesaid cannot be allowed to stand and the same is accordingly set aside The application for judgment on admission is The properties and extent to which they belonged to late Prabhat Kumar Mahapatra and the share of the parties in them are to be determined on trial leading to a preliminary decree. This appeal is allowed to the above The connected application is accordingly disposed of Properties shown in the Schedule to the plaint are claimed by the plaintiff petitioner to be the properties belonging to late Prabhat Kumar Mahapatra. However the said properties are the assets of the defendant no 6 as duly reflected in its balance sheets including the balance sheets which are signed by late Prabhat Kumar Mahapatra himself while acting as a director of the defendant no. 6 company.” 2. It is pertinent to note that at the time of his death Prabhat Kumar Mahapatra did not possess any shares in the City Centre Properties Pvt. Ltd being Defendant no. 6 herein Defendant no.7 Defendant no.8 and Carfax Investments Pvt. Ltd. and as such the plaintiff cannot seek any inheritance in such respect. Thus under no circumstances can the shares in these Companies be said to belong to Late Prabhat Kumar Mahapatra or the Companies themselves be described as a proprietorship concern of the said Prabhat Kumar Mahapatra.” “(xi) Without prejudice …... It is denied that the properties of the companies can be said to be joint family property. No documents have been disclosed to show that the properties in question or any of them at any stage was regarded or treated by anyone as joint family property. Nor have those been so treated for tax purposes at any stage.” 5. With reference to paragraphs 2 to 4 of the plaint it is stated state that there is no premises at 27 Free School Street Kolkata 700 087. In any event a leasehold property cannot be a subject matter of partition as there is no partiable interest in the property. The property situated at 10A Lee Road Kolkata 700 020 is a two storied building and the first floor together with common passage and common amenities belongs to the said father during his lifetime and after his death it is being exclusively and illegally controlled by the defendant no.2. It is stated that Prabhat Mahapatra was never the owner of the ground floor flat at 10A Lee Road Kolkata 700 020. The premises mentioned in 54 Forest Park Bhubaneshwar 751009 has been let out to Indian Oil Corporation by the City Centre Properties Pvt. Ltd. and contrary allegations are denied and disputed.” “7. With reference The allegation of the family Companies and that the rights of the Companies are subject to equitable consideration as specifically alleged in paragraph 15 is incorrect and untenable. The Companies are not in the nature of partnership and the rights of the shareholders are not subject to equitable consideration as alleged by the plaintiff. A Company does not recognize any concept of their being a trust in respect of the share of a living person. The shareholdings of the family members are to be found in the Register of members of each of such members.” 13. With reference ..that the plaintiff is not entitled to 1 4th share in any of the properties mentioned in paragraph 42 of the plaint. Inasmuch as the Plaintiff did not have any right title and interest as a coparcener in any of the properties accordingly.” In paragraph 3(d) of the affidavit in opposition of these defendants to the judgment of admission application it has been categorically stated that all the three immovable properties belonged to the company. A copy of the balance sheet for the year 31st March 1993 has been annexed. A schedule to it describing the Company’s fixed assets specifies that those three properties were included in them. The same is also true as regards the balance sheet of the year ending 31st March 1994 With regard to 27 Mirza Galib Street the affidavit in opposition asserted that the land was leased out to the respondent no. 6 by late Prabhat Kumar Mahapatra on 1st January 1967 for 25 years. The company constructed a building on it. The lease was further extended by 25 years on 10th August There are no reasons in the impugned judgment dated 16th July 2018 as to why his lordship thought that there was an admission on the part of the answering defendants that the said properties belonged to late Prabhat Before pronouncing a preliminary decree the court has the power to even investigate the title of the properties to ascertain whether it at all belonged to the person from whom the title is claimed. Thereafter comes the question of determination of the shares of the parties to the partition suit The court might adopt any course of action permissible in law to ascertain such title. In this kind of a case the title could not have been declared on the basis of alleged admissions. It could only have been determined and declared on the basis of a trial leading to a preliminary decree The operative part of my order is identical to the one made by my learned Urgent certified copy of this judgment if applied for be given to the appearing parties as expeditiously as possible upon compliance with the all (I. P. MUKERJI J

Summary: If any judgment or decree is passed pertaining to the partition of properties, then the exclusive right over such said property should be ascertained prior. The present appeal arose from the judgment and preliminary decree dated 16th July, 2018, in an application (GA 4050 of 2017) under Order XII Rule 6 of the Code of Civil Procedure. The quorum of Subhasis Dasgupta J. and I.P. Mukerji J. were faced with trial court’s decree declaring the shares of the heirs of late Prabhat Kumar Mahapatra, in respect of the immovable properties and further appointment of an advocate Commissioner to effect partition to the extent of shares declared in the preliminary decree in the matter of City Centre Properties Pvt. Ltd. v Prasanta Kumar Mahapatra &amp; Ors. [APO No. 232 of 2018]. The case of the first respondent/plaintiff claiming partition, found its basis from the disclosure made, wherein it was averred that Prabhat Kumar Mahapatra during his lifetime purchased three (3) properties, mentioned in the schedule of the plaint, out of his own income, being a businessman, who established and promoted several companies, and one of such company is “City Centre Properties Private Limited/appellant company,” which was promoted as family company, and incorporated as such on 15th July, 1966 It was narrowed down by the bench that the fight between the parties claiming partition was with respect to three (3) immovable properties, shown in the schedule to the plaint. The appellant/company by filing a written statement, jointly with the defendant no. 1, proceeded to answer the claim of the respondent no. 1/plaintiff.  Further while observing the lowers court’s approach to the matter, it was revealed that learned trial court granted the preliminary decree having found admission of title, mentioned in the respective written statement of defendants. Though the respondent/plaintiff referred to some of the paragraphs in the written statement of appellant/defendant company to reveal the admission of title, but for ascertainment of categorical, unambiguous and unconditional admission, the learned trial court was under an obligation to consider each and every averment contained in the written statement of the appellant/defendant company, even to infer admission of title of the properties, if it was a deliberate, conscious act of appellant/defendant company making such admission. It was contended before the court that the determination of the question of whether certain properties are the joint properties of the parties or the exclusive properties of any of them, cannot be delegated by the Judge to the Commissioner for partition, and thus the necessity of conducting a trial was focused, and further reliance was placed on Upendra Nath Banerjee &amp; Anr. Vs. Umesh Chandra Banerjee (1910-11) 15 CWN 375. The bench however opined otherwise and stated that it was necessary that the learned trial court should reveal in its judgment that it duly exercised its discretion judicially to find out clear, unambiguous and unconditional admission.  The court passed the judgment that “Since, the appellant/defendant company claimed its exclusive title over the scheduled properties, the determination of the question, whether the properties actually are the exclusive properties of the parties proposing partition, or of some other person, as claimed by appellant/defendant company, in our considered view, is obligatory.”