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Vinod Kumar Saboo v. Sudarshan Vishwanath Malpani and Ors. - (High Court of Bombay) (03 Apr 2017)

Disputes and liabilities between parties need to be adjudicated, based upon partnership deed



Appellant-Original Defendant has filed Appeal and prayed to quash and set aside impugned Judgment passed by Single Judge. In facts of present case, Appellant and Respondents formed and signed a partnership deed and purchased a membership card of NSEI Limited in name of partnership firm i.e."Money Mint". During year 1998-1999, disputes and differences arose between them. On 2nd August, 2000, they signed an arrangement. Claim and counter-claim made through correspondences. On 1st August, 2004, Respondents filed Suit for recovery/claim of Rs. 40 lakhs and has taken out Summons for Judgment. On 16th August, 2005, Single Judge passed impugned order and thereby directed to deposit full amount of Rs. 40 lakhs. Being aggrieved, Appellant has filed present Appeal.

Apex Court in, State Bank of Hyderabad v. Rabo Bank  has held that, in cases where Defendant has raised a triable issue or a reasonable defence, defendant is entitled to unconditional leave to defend. Leave is granted to defend even in cases where Defendant upon disclosing a fact, though lacks defence but makes a positive impression that at trial the defence would be established to Plaintiff's claim. Only in cases where the defence set up is illusory or sham or practically moonshine, is Plaintiff entitled to leave to sign judgment. Regarding question of maintainability of suit in question under Order 37 of CPC, this Court has in Neebha Kapoori v. Jayantilal Khandwala observed that, where the applicability of Order 37 of CPC, itself is in question, grant of leave to defend may be permissible. Court before passing a decree is entitled to take into consideration the consequences therefor. Courts dealing with summary trials should act very carefully taking note of interests of both parties. Merely on ground that, Defendant may resort to prolonged litigation by putting forth untenable and frivolous defences, grant of leave to defend cannot be declined. At same time, Court must ensure that, Defendant raises a real issue and not a sham one. Court cannot reject defence on ground of implausibility or inconsistency.

While exercising jurisdiction and dealing with rival contentions in Summary Suits, Court is required to consider, apart from law so referred, facts and circumstances of case, as that should be the base for passing conditional or unconditional order. Admittedly, contract is based upon a stated agreement dated 2nd August, 2000. It was necessary to comply with certain reciprocal obligations with clear terms that "retirement is complete only after full payment is received". Payment needs to be made in two months from 2nd August, 2000. There was no clarification sought at any point of time. Appellant, on non-compliance, for whatever may be the reason, has not acquired 100% control/ownership over firm "Money Mint". Respondents, therefore, could not have retired as partners in partnership firm.

Triable issues have been raised and defence, in no way, can be stated to be sham and bogus, and therefore, no case is made out of passing conditional order of depositing Rs. 40 lakhs. There were no other liabilities and/or admitted claims, except and other than claims revolving around stated conditional document dated 2nd August, 2000.

There is a force in contention that, in Clause 22 of Deed of Reconstitution of Partnership agreement, there is a arbitration clause. Disputes and liabilities between parties need to be adjudicated, based upon the partnership deed. Therefore, arbitration clause in agreement dated 25th May, 1994, ought to have been invoked and/or taken note of, to resolve dispute between parties. Agreement dated 2nd August, 2000, makes the position very clear that subject to payment/compliances of respective obligations, the settlement would be given effect to. This was, admittedly, not done and recorded even by Division Bench of this Court on 19th November, 2005, while staying Judgment and order.

Willingness of one party after lapse of period so prescribed, that itself, cannot be reason to accept that settlement agreement dated 2nd August, 2000, is revived or still in existence. Summary Suit, therefore so filed, based upon agreement, cannot be stated to be document and/or acknowledgement to pass such conditional order. It is wrong to observe that, settlement agreement dated 2nd August, 2000, provides for liquidated sum, as due and payable by original-Defendant to original-Plaintiff. Appellant has raised triable issues and therefore, required to be granted full opportunity in accordance with law, before passing such order to deposit liquidated amount of Rs. 40 lakhs. Plaintiffs-Respondents are not entitled to obtain decree for non-deposit. Appellant has made out a case to interfere with impugned portion of order directing to deposit amount. Case is made out to grant unconditional leave to defend. Defence so raised by Appellant, cannot be stated to be sham, bogus and/or false and/or with intent to delay the payment and/or to avoid payment. Resultantly, Appellant is entitled for unconditional leave to defend Suit. Appellant-original Defendant is directed to file written statement within thirty days. Summons for Judgment disposed off.

Relevant : State Bank of Hyderabad v. Rabo Bank MANU/SC/1094/2015   Neebha Kapoori v. Jayantilal Khandwala MANU/SC/7090/2008


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