SRI V.S BALASUBRAMANAYAM v. L.K. TRUST

jointly in the name of the plaintiffs, but not in the name of the Firm. Therefore, suit schedule properties never became the properties of the Firm. It is contended that defendant No.2 prepared a retirement- -reconstitution Deed

22.05.2004 and in the said Deed there is no statement made about the total assets of the Firm and the total liability of the Firm and no balance was shown. It is contended that the said Deed of Reconstitution is cleverly drafted and nowhere in the said deed was it specifically mentioned as to whether these lands continued to be the assets of the Firm or not. Therefore, the lands continued to be the properties of the plaintiffs. H. They also contended that on the date of the Partnership Deed, Sri. K. L. Swamy, had taken a General Power of Attorney from the plaintiffs and by virtue of the power of attorney as an agent, Sri. K. L. Swamy, has the power to enter into the lands, but such power was withdrawn by the plaintiffs under the - 10 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 legal notice dated 07.02.2006. They also contended that the lands are only agricultural lands and it is only after the development plan which was approved by the BDA that it has become residential. I. It is also contended that the Retirement-cum- reconstitution of the partnership is liable for Stamp Duty under Article 20 of the Karnataka Stamp Act and no such stamp duty was paid on it. This also indicates that the alleged partners to the Partnership Firm had treated the suit schedule properties to be exclusive properties of the plaintiffs and it was never considered to be the properties of the Partnership Firm. J. It is contended that defendant No.2 entered into an agreement with defendant No.3- Company for the purpose of the development and the plaintiffs had objected and informed the revenue officers of the BBMP not to change the Khata of the lands in the name of defendant No.3 or defendant No.2. It was further alleged that the defendants had taken the - 11 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 signatures on number of documents without allowing them to read and the plaintiffs have continued to be the absolute owners of the suit schedule properties even today and they are in lawful possession of the same. It is contended that defendant No.1 has no right, title or interest to develop the suit schedule properties and the defendants attempted to do the same and therefore, plaintiffs had to file the present suit.

5. On the basis of the above contentions, the following prayers are made by the plaintiffs:- (a) Plaintiffs pray that this Hon’ble Court may be pleased to declare that they are not bound by any arrangements made or the documents entered into in between the defendants pertaining to the suit schedule properties; (b) This Court may pleased to pass a decree for mandatory injunction directing the defendants to demolish the construction put up on the suit scheduled properties; - 12 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 (c) This Court may pleased to pass a mandatory injunction restraining the defendants or anybody claiming under the defendants alienating the suit schedule properties; (d) A decree of permanent injunction may be passed restraining the defendants or anybody claiming under them from interfering with the possession of the suit schedule properties and for costs of the suit.

6. Defendants No.1 and 2 filed the written statement and contested the suit. In the written statement the defendants contended that in pursuance to the Deed of Partnership dated 23.12.1998, the plaintiffs have surrendered the vacant possession of the suit schedule properties to the defendants. They contended that the suit schedule properties which are described to be the agricultural properties are no longer the agricultural properties as they are falling within the jurisdiction of the BBMP and the BBMP has sanctioned the plan in favour of the defendant No.2 to put up the residential complex. - 13 - NC: 2024:KHC:12527 RFA No. 1495 of 2012

7. It is further contended that the plaintiffs have gone out of the Partnership Firm vide the Retirement Deed dated 22.05.2004 after collecting their monies due under the Partnership Firm. Therefore, plaintiffs are not in legal or in actual physical possession of the suit schedule properties. They further contended that the sum of Rs.50,75,229/- was paid by the Partnership Firm and as on the date of the payment of the said amount plaintiffs had absolutely no money.

8. They have also contended that the power of attorney could not have been withdrawn under a legal notice as the same is coupled with interest. The said notice dated 10.07.2006 was replied by the defendants by taking the above said contentions. It is contended that the plaintiffs have taken their share of money under the Retirement Deed without any whisper of protest and they have sworn to the affidavits on the same date i.e., on

22.05.2004. Therefore, they have contended that the suit - 14 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 schedule properties are remained to be the properties of the Partnership Firm.

9. They have further contended that the frame of the suit is not proper and the plaintiffs have not sought for any declaration that the documents which are executed by them in favour of defendants No.1 and 2 are illegal and void. Unless the plaintiffs seek the declaration that the documents executed by them in favour of defendants No.1 and 2 are void, they cannot claim reliefs sought in the plaint. Therefore, the plaint is cleverly drafted in order to avoid the Court fee and limitation.

10. They contended the plaintiffs have executed a registered Joint Development Agreement (‘JDA’ for short) dated 23.09.2005, as consenting witnesses and said JDA has been executed by defendants No.1 and 2 in favour of defendant No.3. Therefore, the plaintiffs knew about the JDA and they had consented for it. - 15 - NC: 2024:KHC:12527 RFA No. 1495 of 2012

11. They have contended that by the Partnership Deed dated 23.12.1988, the plaintiffs have in unequivocal terms admitted that the suit schedule properties are the properties of the Partnership Firm and not their individual properties. It is contended that by cleverly drafting the plaint, the plaintiffs are seeking to assail the Partnership Deed dated 23.12.1988 after 20 years; and in order to avoid the limitation, the prayer in the present form has been sought by them. Therefore, they contended that the suit is hopelessly time barred and is liable to dismissed with the exemplary costs.

12. It is contended that the Deed of Retirement came to be executed on 22.05.2004 and in case the plaintiffs claim that they have been cheated while entering into such Retirement Deed and their valuable rights have been lost, the remedy would be to file suit within 03 years from the date of execution of the Retirement Deed. Therefore, on this count also the suit is bad. - 16 - NC: 2024:KHC:12527 RFA No. 1495 of 2012

13. Nowhere in the plaint, have the plaintiffs contended that they are illiterate and their signatures were taken out of fraud and coercion. The plaintiffs have failed to disclose that they had jointly received a sum of Rs.5,75,00,000/- from the defendants at the time of retirement from the Partnership Firm. It is contended that the plaintiffs had also filed the frivolous litigation in the form of CMP.No.34/2007 seeking an appointment of Arbitrator and it was dismissed by this Court at the stage of admission. It is contended that the plaintiffs had also issued notices to V.S. Gopalswamy and V.S.Nataraj and as per the terms of the notice, the plaintiffs have sought to claim an amount due from the said V.S. Nataraj and V.S.Gopalswamy and as such, by their own admission, the validity of the Partnership Deed was confirmed. The amounts were also paid to the said V.S. Gopalswamy and V.S. Nataraj while re-constituting the Partnership Firm. Therefore, the defendants contended that the suit of the plaintiffs is speculative and only to harass the defendants by making reckless allegations and therefore, the suit is - 17 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 liable to be dismissed. They further contended that the plaintiffs while assailing the Partnership Deed dated

23.12.1988 and Retirement Deed dated 22.05.2004, they have to pay the necessary Court fee on the value of the suit schedule properties and also the money received by them and a suit without seeking for the accounts of the Firm, in the present form is not maintainable.

14. Defendant No.3, who was impleaded later has filed a separate written statement raising similar contentions. It further contended that the suit is not maintainable and that the plaintiffs are not in possession of the suit schedule properties. The very prayer of the plaintiffs in the suit shows that the plaintiffs are not in possession of the suit schedule properties and it is an admitted fact that the defendants are in possession of the suit schedule properties. It is contended that the construction in the suit schedule properties is in progress where several high rise towers have been put up and if - 18 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 the prayers are allowed, defendants No.2 and 3 will be put untold hardship.

15. On the basis of the above pleadings, the Trial Court framed the following issues: «ªÁzÁA±ÀUÀ¼ÀÄ

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10. K£ÀÄ rQæ CxÀªÁ DeÉÕ?

16. In order to prove their case, plaintiff No.1 was examined himself as PW1 and Exhibits P1 to P40 were marked in evidence. On behalf of defendants, Trustee of the defendant No.1 and the partner of defendant No.2 was examined as DW1 and the authorized signatory of defendant No.3 was examined as DW2 and Exhibits D1 to D20 were marked in evidence. - 20 - NC: 2024:KHC:12527 RFA No. 1495 of 2012

17. After hearing both the sides, the Trial Court answered issue No.1 in the affirmative and issue Nos.2 to 9 in the negative and by the impugned judgment, dismissed the suit of the plaintiffs.

18. Being aggrieved by the impugned judgment and decree, plaintiffs have approached this Court in appeal.

19. In the appeal memo, the plaintiffs/appellants contended that the alleged Partnership itself is null and void, as it is hit by Section 23 of the Indian Contract Act, and also when there is a specific Bar under Section 79B of the Karnataka Land Reforms Act, the Firm could not have possessed immovable properties of agricultural in nature. Moreover, the share of the profit which was entitled by the plaintiffs was hardly about 3%, which could not have been entered into and which was illegal.

20. On issuance of notice, the respondents have appeared before this Court through their respective - 21 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 counsels and on admitting the appeal; the Trial Court records have been secured.

21. The arguments of learned counsel Sri S. Shaker Shetty along with Sri A. Anil Kumar Shetty, for appellants, learned counsel Sri Abhinav R, for respondent Nos.1 and 2 and learned Senior Counsel Sri Ganapathi Hegde, for M/s Dua Associates for respondent No.3 were heard and perused the materials available on record.

22. During the pendency of this appeal, the appellants have filed two applications under Order 41 Rule 27 of CPC. I.A.No.1/2012 dated 03.09.2012 was filed seeking to produce the copy of the agreement dated

18.07.1996 and the endorsement issued by Corporation City of Bengaluru stating that the Khata has not been changed in the name of the defendants.

23. The affidavit filed in support of the application contends that during the pendency of the suit, the appellants could not produce the documents as they could - 22 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 not trace the said agreement, which in fact is very important document. It is stated that the endorsement issued by the Corporation City of Bengaluru is necessary to show that the Khata has not been changed in the name of the defendants, inspite there being alleged partnership including the plaintiffs. Therefore, in order to establish that Partnership Deed was never acted upon, these documents are essential.

24. I.A.No.1/2020 dated 16-3-2020 was filed by the appellants seeking to produce about 10 documents. These documents include the order of the BDA dated

09.11.2017 and 05.09.2017, copy of the relinquishment deed dated 28.07.2000 in favour of BDA, encumbrance certificates, copy of the Tippani dated 04.07.2017 and the notice dated 04.07.2017 and also the proceedings before the Land Grabbing Court, the report and FIR thereof. - 23 - NC: 2024:KHC:12527 RFA No. 1495 of 2012

25. It is contended in the affidavit filed in support of the application that the plaintiff No.1 and his wife are the owners of the properties in question; after holding the enquiry the Town Planning Authority found that plan is illegally given to the defendants, but the plaintiffs are owners of the properties and they had given a plan for the purpose of construction of the row houses and they had relinquished the portion of the property to the BDA under a registered document. The BDA had complained to the Corporation for granting licence illegally and BDA has passed the appropriate orders holding that the appellants are the only owners of the properties. Thereafter, the respondents were found to be grabbing the land belonging to the BDA as they had constructed a structure over the property which was relinquished in favour of the BDA by the plaintiffs. Therefore, the Land Grabbing Court found that the respondents No.1 and 2 are guilty and had registered a case. These documents are necessary to show that subsequent developments that had taken place. Therefore, the application filed by the plaintiffs be allowed. - 24 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 ARGUMENTS :-

26. The learned counsel appearing for the plaintiffs/ appellants Sri Shaker Shetty, in his elaborate arguments, has taken this Court through the entire evidence on record. His argument is multipronged and is basically concerning the fact that defendants No.1 and 2 were not entitled to acquire the properties. The contentions of the learned counsel appearing for the appellants are as below: a) That the suit scheduled properties are agricultural land and therefore, under Section 79B of the Karnataka Land Reforms Act, neither the Trust nor the Partnership Firm can acquire any agricultural land. Such acquisition is void under Section 23 of the Indian Contract Act. Therefore, there is no valid partnership. Besides, the plaintiffs have taken a specific plea that the Partnership is executed between the appellants and respondent No.1 – Trust and under Section 48 of the Indian Trust Act, all the Trustees must join in execution of the Partnership. - 25 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 Therefore, the Court ought to have followed the principles laid by the Hon’ble Supreme Court in the case of Satheedevi vs. Prasanna and another1. (This judgment do not pertain to the Trusts) b) He further contended that the Partnership Deed entered into between the appellants and the respondent No.1 is void under Section 79B of the Karnataka Land Reforms Act, and at the same time, the document is also void, as all the Trustees did not join as contemplated under Section 48 of the Indian Trust Act. Once there is a prohibition to have a transaction with respect to the agricultural lands and the Partnership itself is formed without validity under law, all transactions subsequent Partnership Agreement and documents executed in pursuance to the same are void under law. To contend that the transaction in violation of Section 79B of the Karnataka Land Reforms Act is void, he 1 AIR 2010 SC 2777 - 26 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 relies on the judgment of the Hon’ble Supreme Court in the case of Sri Chandrashekar and others vs. The Tuheed Co-operative Housing Society (Regd.,) and others2, in the case of Smt. Narayanamma and another vs. Sri. Govindappa and others3, in the case of The State of Karnataka and others vs. The Karnataka Appellate Tribunal and others4. c) Adverting to the oral testimony, he contends that defendant No.1 who entered into the Partnership with the plaintiffs, but it was represented by only one Trustee. Under the Indian Trust Act, as per Section 48, all the Trustees must join, failing which, the documents are invalid. In this regard, he relies on the judgment in the case of L. Janakirama Iyer and others vs. P. M. Nilakanta Iyer and others5. He further contended that defendant No.1 has no 2 ILR 2008 KAR 4003 3 Civil Appeal Nos.7630-7631 of 2019 4 AIR 1996 KAR 143 5 AIR 1962 SCC 633 - 27 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 right to represent through one of the Trustees. Therefore, the Partnership executed by one of the Trustees is invalid, void and cannot be enforced. Any further documents executed in furtherance of such illegal and void partnership are also void. d) The learned counsel further submitted that the Retirement- cum- Reconstitution Deed amounts to dissolution of the earlier Partnership and necessary stamp duty should have been paid under Article 20 of the Karnataka Stamp Act. The market value of the suit properties being 132 crores as per Ex.D.8, the stamp duty at 8% should have been paid and therefore, on this Count also the Reconstitution Deed is invalid. e) He further submitted that the plaintiffs are the owners of the suit properties and at no point of time, the properties were transferred in the name of the Partnership. The oral testimony of DW.1 is clear in this regard. He submitted that the admission by - 28 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 DW.1 is clear and he admitted that he is not aware of the Partnership Deed and about the contribution of the defendant No.1. f) He also submits that by the evidence of DW.1 as well as the admission of DW.2, the Khata is continuing in the name of the plaintiffs even till today and there is no mutation which had been mutated by way of transfer of the properties in favour of defendant No.1 -Partnership Firm. It is also submitted that as the Relinquishment Deed executed by the plaintiffs in favour of the BDA, the BDA has acquired the portion of the property and thus, it is also an indication that the Partnership is not acted upon. Therefore, he contends that the alleged Partnership Deed was not acted upon and it was a document to get over the acquisition of the properties under Section 10 of the ULC Act and the proposed acquisition by the BDA. He contended that the defendants had never disputed the facts narrated by the plaintiffs in plaint Paras - 29 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 No.5, 7, 8 and 9 and there was no cross-examination on this aspect also. g) After the alleged Partnership Deed, the plaintiffs have applied to the BDA for approval of the Group Housing plan and the same was granted as per the order of the Government and the BDA. All the necessary charges were received by the BDA from the plaintiffs and therefore, several transactions have taken place after the alleged Partnership Deed demonstrating the fact that the properties were never vested with defendant No.1. h) The learned counsel further submits that on perusal of the Retirement Deed at Ex D5, it is clear that the suit schedule properties were not treated as Partnership properties nor are these properties are given to the partnership. When there is absolutely no mention about the suit schedule properties in Ex D5, it is clear indication that the properties remained with the plaintiffs. He also submitted that there was - 30 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 no transaction by the Partnership Firm and no bank account was also opened. Therefore, when the appellants had retired from the partnership, it amounts to dissolution and as per Section 48 of the Partnership Act the accounts should have been settled amongst the partners. When alleged entire capital of the partnership had been contributed by the plaintiffs, such capital should have been returned to the plaintiffs. i) The learned counsel also submitted Partnership Firm had no bank account and therefore, the payment of money to plaintiffs No.1 and 2 under various cheques is also not true and correct. In fact, the alleged cheques issued in favour of the plaintiffs were dishonored. j) He further submitted that the defendants without allowing the plaintiffs to read any of the documents took their signatures on the documents, which has been pleaded in Para No.13 of the plaint. There is a - 31 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 evidence also by PW.1 in this regard. The defendants never disputed the same in their written statement and cross-examined the plaintiffs’ witness on that point. Therefore, the defendants taking several signatures of the plaintiffs without allowing the plaintiffs to read the documents has to be accepted. To augment this contention, he relies on Exs.P.34 and 35, wherein plaintiffs had made it clear by way of those letters that they were not allowed to read the documents though they have signed it. k) The learned counsel further argued that once they had issued the notices to defendant No.1, it cannot be believed that the plaintiffs had signed the JDA as per Ex.D.7 as consenting parties. Even otherwise, when the plaintiffs are the owners of the properties and when the properties are not transferred in the name of the Partnership Firm, the properties had not vested with the Partnership Firm at any point of time. It is contended that when there is dissolution, - 32 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 it must be under a registered Deed, otherwise, the properties will not be transferred. In this regard, he relies on the judgment in the case of Addanki Narayanappa and another vs. Bhaskara Krishnappa (dead) and others6. l) The learned counsel further contended that when the plaintiffs have cancelled Ex.D.5 by means of letters Exs.P.34 and 35, defendants No.1 and 2 have no right to enter into the JDA. In fact, under Sections 86 and 88 of the Indian Trust Act, they are holding the properties on behalf of the plaintiffs and therefore, they cannot deal with the properties adverse to the interest of the plaintiffs. Therefore, Ex.D.7 is against the provisions of Sections 86 and 87 of the Indian Trust Act. As such, the said document is not binding on the plaintiffs. m) The learned counsel further submitted that the lands were never converted into Non-Agricultural 6 AIR 1966 KAR 1300 - 33 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 Land as required under Section 95(2) of the Karnataka Land Reforms Act, 1961 nor defendants have filed any application under Section 14 of the Town and Country Planning Act seeking permission to change the land use. Therefore, the construction by the defendant No.3 illegal, unlawful and such construction is liable to be demolished. In this regard, he relies on the judgment of the Hon’ble Supreme Court in the case of Narasimhasetty (Deceased) By L.Rs vs Padmasetty7 and Chinnamma and Others vs N. Nagaraj And Others8. n) It is further contended that the licence given by the Municipal Corporation in favour of the defendants, without adopting the provisions of Section 14 of the Town and Country Planning Act, was illegal and therefore, BDA had issued a notice to the Municipal 7 ILR 1998 KAR 348 8 ILR 1995 KAR 1542 - 34 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 Corporation which was not answered by it. Even the Corporation proceeded to grant the permission for occupancy of portion of the construction, but not the entire construction as per Ex.P.32. It is submitted that such occupancy is subject to the dispute arising between the parties. o) It is further submitted that the order in the writ petition as per Ex.D.1 is not of much relevance since the amendment has been made in the plaint. Insofar as CMP is concerned, since there was no arbitration clause in the Partnership Deed or Reconstruction Deed, the said CMP came to be dismissed holding that the arbitration is not permissible. p) Regarding the frame of the suit, the learned counsel appearing of the appellants submits that Ex.D.5- Reconstitution Deed is entered between the parties and when the defendants did not perform their part of the contract, the plaintiffs have every right to cancel the same. Therefore, when the plaintiffs have - 35 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 cancelled the said Reconstitution Deed by issuing letters as per Ex.P.34 and 35, there was no necessity for the plaintiffs to seek for a declaration of cancellation of Ex.D.5. He also submitted that the Ex.D.7 is without any jurisdiction since it is against the interest of the plaintiffs. In this regard, he relied on the judgment of the Hon’ble Supreme Court in the case of I. S. Sikandar (D) By Lrs and others vs. K. Subramani and others9. q) It is contended that when the plaintiffs had taken their specific contentions that the Partnership is void and it is hit by Section 79B of the Karnataka Land Reforms Act and under Section 48 of the Indian Trust Act, it was necessary for the Trial Court to frame an appropriate issue. No such issues were framed by the Trial Court. Therefore, this Court has to frame an issue as required under Order 41 Rule 25 of CPC and 9 2013 (15) SCC 27 - 36 - NC: 2024:KHC:12527 RFA No. 1495 of 2012 the matter has to be sent back to the Trial Court for a finding in that regard.

27. In support of his contentions the learned counsel for the appellants has placed reliance on the following decisions :- i. Annatulla Sudhakar vs. P. Buchireddy10, – regarding scope of appeal under Section 96 of CPC. ii. Sri. Chandrashekhar and others vs. Tuhid Cooperative Housing Society11, – regarding Section 79 (B) of the Karnataka Land Reforms Act. iii. Union of India vs. K.V. Laxman and others12, - regarding scope of appeal under Section 96 of CPC and Order 41 Rule 27 of CPC. iv. Arm Group Enterprise Ltd., vs. Valdorf Restaurant and others13, – concerning Section 14 of the Partnership Act. v. L. Janakiram Iyer vs. P. M. Nilakanta Iyer14, – concerning need of all trustees joining conveyance by the trust. 10 (2008) 4 SCC 594 O R D E R i. The appeal is dismissed with cost of Rs.50,000/- payable by the appellants to the respondents. ii. The judgment and decree passed by the I Additional City Civil and Sessions Judge, Bangalore, in O.S.No.4030/2009

30.07.2012, is hereby confirmed. iii. I.A.No.1/2012 and I.A.No.1/2020 are also hereby dismissed. Sd/- JUDGE KJJ List No.: 19 Sl No.: 1