Abhishek Bagaria vs Sushil Kumar Bagaria and Others

Indira Banerjee, J.—1. This appeal is against a judgment and order and decree dated 15th January, 2015 passed by the Hon''ble Single Judge dismissing the suit being C.S. No. 265 of 1992, filed by the appellant plaintiff for specific performance of Clause 27 of a Deed of Partnership dated 11th April, 1973.

Late Mohanlal Bagaria had, before his death, executed a Will dated 12th March, 1985, whereby he had appointed his wife, Smt. Bimla Bagaria, and failing her, his elder son Rajendra Bagaria, as sole executor. The said Will, inter alia provided that Mohanlal Bagaria''s 25% share in the partnership firm, N.K. Bagaria & Sons, with all its assets and liabilities would, upon his death, devolve on his wife Bimla Bagaria and his four sons in equal proportion and to execute this part of the said Will, his wife and major sons would enter into partnership with the remaining partners and his minor sons would be admitted to the benefits of the business of the partnership. By an order dated 19th July, 1990 this Court granted probate of the said Will of Late Mohanlal Bagaria.

Mohanlal Bagaria, since deceased, had been carrying on business in partnership with Sushil Kumar Bagaria, Indira Kumar Bagaria and Bijay Kumar Bagaria being the defendant respondent Nos. 1, 2 and 3 under the name and style of N.K. Bagaria & Sons.

The terms and conditions of the partnership were contained in a deed of partnership dated 11th April, 1973. Clause 27 of the said deed of partnership provided that in case of death of any of the partners, the partnership would not dissolve but the heirs and legal representatives of the dying partner would be entitled to nominate one or more amongst themselves as partner in the said partnership.

Mohanlal Bagaria died on 5th May, 1985. The plaintiff appellant, who is one of the sons of Mohanlal Bagaria, was a minor, less than 18 years of age, at the time of the death of Mohanlal Bagaria. The plaintiff appellant attained majority on 8th February, 1991.

After the death of Mohanlal Bagaria the defendant No. 4, Bimla Bagaria, widow of Mohanlal Bagaria, as sole executor of his will, nominated herself for being admitted as partner of the partnership firm, N.K. Bagaria and sons in place of Late Mohanlal Bagaria. According to the plaintiff appellant, the defendant respondent Nos. 1, 2 and 3 were required to take steps for re-constituting the partnership by execution of a deed.

However, by a letter dated 29th July, 1985, the defendant respondent Nos. 1, 2 and 3 alleged that the heirs of Mohanlal Bagaria had not expressed any desire to become partners in place of Late Mohanlal Bagaria, till 23rd July, 1985. The defendant respondent Nos. 1, 2 and 3 had, therefore, re-constituted the partnership firm and had agreed to share the profits and losses in equal share. They said they were ready and willing to pay the dues of the deceased partner, Mohanlal Bagaria to his legal heirs.

The plaintiff appellant contends that the re-constitution of the partnership firm N.K. Bagaria and Sons, excluding the heirs and legal representatives of the deceased partner Mohanlal Bagaria or their nominee, was prohibited under the deed of partnership.

The plaintiff/appellant filed the above mentioned suit in this Court, being CS 265 of 1992, claiming specific performance of Clause 27 of the Partnership Agreement dated 11th April, 1973, by inclusion of the heirs and legal representatives of Late Mohanlal Bagaria as partners of N.K. Bagaria & Sons in his place, reconstitution of the partnership firm and other consequential reliefs.

The defendant respondent Nos. 1 to 3 filed a written statement opposing the suit. Apart from denying the allegations in the plaint, the defendant respondent Nos. 1 to 3 contended that even though Mohanlal Bagaria had died on 5th May, 1985, his heirs did not nominate anyone for admission to the partnership, in terms of Clause 27 of the Partnership Deed till 11th July, 1985. In any case, at the time of Mohanlal''s death on 5th May, 1985, there could have been no question of nomination of the plaintiff appellant, who was a minor.

The defendant respondent Nos. 1, 2 and 3 further contended that by nominating Smt. Bimla Bagaria, the heirs of Mohanlal Bagaria had exhausted their right to nominate under Clause 27 of the Deed of Partnership. The right of nomination could not again be exercised.

The defendant respondents stated that the Originating Summons Suit No. 582 of 1985 filed by Smt. Bimla Bagaria had been dismissed for default on 30th March, 2005. The said suit was not restored. The defendants had, thereafter filed an application in the Originating Summons Suit No. GA 439 of 2008 for discharge of the Receiver.

In the written statement, the defendant respondents also stated that Bimla Bagaria could be inducted as a partner, provided the heirs of Mohanlal Bagaria disclosed accounts in respect of the property of the partnership at 2, Chowringhee Approach, Kolkata, which is referred to hereinafter, as the Chowringhee property.

In the written statement, the defendant respondents contended that the Chowringhee property had been given to Mohanlal Bagaria for his personal use and business. This right was purely personal to Mohanlal Bagaria and could not have devolved on his heirs after his death.

The plaintiff as also his elder brother, Rajendra Bagaria led evidence in the suit. The defendants did not lead any evidence. Counsel appearing on behalf of the plaintiff appellant submitted that in course of hearing of the suit, the learned Single Judge had asked the plaintiff appellant if he was ready and willing to bring back the Chowringhee property into the stock of the partnership assets. The answer to the aforesaid question being in the negative, the learned Single Judge dismissed the suit.

In support of the appeal, it was argued on behalf of the plaintiff appellant, that the learned Judge had erroneously recorded the submission made on behalf of the plaintiff appellant. The learned Judge recorded that the Counsel for the plaintiff appellant had pointed out that initially the nomination had been in favour of the plaintiff appellant''s mother, but after she withdrew such nomination, she permitted the plaintiff appellant to be nominated in place of the deceased partner. Counsel argued that such recording was patently erroneous. Counsel for the plaintiff appellant did not submit that the nomination in favour of the plaintiff appellant''s mother had been withdrawn. The plaintiff appellant was fighting for inclusion of the nominated heir of Late Mohanlal Bagaria to the partnership be it his widow Bimla Bagaria, or anyone else.

Opposing the appeal, Counsel appearing on behalf of the defendant respondents submitted that Clause 27 of the Partnership Deed required the heirs of the deceased partner to nominate one person among themselves. The heirs had nominated Smt. Bimla Bagaria. The nomination was never withdrawn. The plaintiff appellant cannot, therefore, claim admission to the partnership.

It was next argued that after the death of Mohanlal Bagaria, no partner could be inducted in his place as the partners had not intimated their desire to be inducted into the partnership. Thirdly, it was contended that Mohanlal Bagaria had, during his life time not been transparent in his dealings. There was no mutual trust between the partners and Mohanlal Bagaria or his heirs.

Referring to Sections 4 and 9 of the Partnership Act, 1932, Counsel argued that an agreement which is dependent on the volition of the parties and mutual faith in each other, cannot be specifically enforced so as to compel other partners to maintain personal and confidential relationship against their will.

It was argued that Mohanlal Bagaria, since deceased was in breach of the terms of the partnership deed. Under Clause 20, Mohanlal Bagaria, since deceased was allowed use and occupation of a portion of the Chowringhee property for himself and the members of his family and was permitted to use the said premises for his own business. The plaintiff appellant however dealt with a portion of the Chowringhee property.

By reason of such breach and want of faith, the defendant respondents were unwilling to induct the heirs of the deceased partner as partners in the partnership business.

In his evidence the second witness of the plaintiff appellant said that the heirs of Late Mohanlal Bagaria were not residing at the Chowringhee property. The rent of the Chowringhee property was being paid to the Landlord by Mora Laboratories Pvt. Ltd. of which the plaintiff appellant was director.

From the evidence of the plaintiff''s Witness No. 2, there does not appear to be any admission of alienation or parting of possession of the Chowringhee property. Mohanlal Bagaria, since deceased was apparently entitled to use the premises for his own residence and the residence of the members of his family, and also for his business purposes. Mora Laboratories is apparently a family concern of which the plaintiff appellant is a Director. Mohanlal''s heirs may not be residing at the Chowringhee property, but they appear to be carrying on business thereat.

Finally, it was argued that the suit is obviously barred by limitation. The cause of action for specific performance of Clause 27 arose upon the refusal of the partners of the firm to induct Bimla Bagaria in 1985. The suit was filed in 1992. Counsel argued that Article 54 of the Limitation Act, 1963 prescribes the period of limitation for a suit for specific performance of contract, which is three years from the date fixed for performance, or if no such date is fixed, three years from the time of refusal to perform. Counsel argued, and rightly, that the date of the plaintiff appellant attaining majority has no bearing to the cause of action in a suit for specific performance. The will of Late Mohanlal Bagaria on which reliance has been placed, also provided that the minor sons would be entitled only to the benefits of the partnership. His other heirs would be admitted to the partnership in his place. The suit became barred by limitation way back in 1988.

Counsel for the defendant respondents further argued that Bimla Bagaria had initiated an Originating Summons Suit. That suit having been abandoned, a fresh suit could not be maintained.

The period of limitation for a suit for specific performance is three years from the date on which specific performance was refused. The date of attainment of majority of the plaintiff appellant is of no relevance considering the nature of the reliefs sought. The suit was thus barred by limitation.

Moreover, as rightly argued on behalf of the defendant respondents, the right of nomination had been exercised by the sole executor of the will of Mohanlal Bagaria way back in 1988 when she nominated herself. There can be no question of any re-nomination after so many years.

May be, as contended on behalf of the plaintiff appellant, prayer (a) of the plaint is for admission of the nominee of the heirs and legal representatives which could be Smt. Bimla Bagaria.

However, if Smt. Bimla Bagaria did not prosecute her Originating Summons Suit and allowed the suit to be dismissed, the same relief cannot be obtained by filing a fresh suit through another member of the family.

A partnership being a relationship of mutual trust and confidence, a clause in a deed of partnership for inclusion of the heirs of a deceased partner cannot be specifically enforced when the other partners are unwilling in such a case, the partnership would dissolve and the heirs of the deceased partner would be entitled to the share of the deceased partner to the profits and/or assets if any of the partnership.

Foreign decision are not binding on the Court. The decision in Byrne v. Reid reported in 1902 (2) Law Reports 735 is of persuasive value. We approve the observation of Romer L.J. in Byrne v. Reid (supra) extracted hereinbelow:--

"A mere nomination by one partner does not entitle the nominee to specific performance as against the other partners: it is impossible to compel a man to enter into a covenant to carry on business with another, just as it is impossible to enforce specific performance of a promise to marry.

A clause in partnership articles empowering a partner to nominate a successor does not prevent the other partners, even though a successor has been nominated, from dissolving the partnership as against the original partner: Ehrmanna v. Ehrmann. (2)"

Section 14(3)(b) of the Specific Relief Act, 1963 referred to on behalf of the plaintiff appellant has no manner of application since the plaintiff appellant and/or the heirs of Late Mohanlal Bagaria never carried on business with the defendant respondents as partner/partners of the partnership firm.

The learned Single Bench has rightly dismissed the suit. The judgment and order/decree in the impugned judgment and/or order/decree does not call for interference in the appeal.

The appeal is dismissed.

Urgent Photostat certified copy, if applied for, be delivered to the learned counsel for the parties, upon compliance of all usual formalities.

Sahidullah Munshi, J.

I Agree.

LATER

There will be stay of the operative part of the judgment for a period of three weeks from date.

Indira Banerjee, J.

I Agree.