CHAMAN LAL JAIN Vs. ARUN KUMAR JAIN

JUDGEMENT

(1.) The applicant Mr.Jagdish Parsad Gupta has by this application challenged the compromise decree passed vide order dated 20th December, 1988. In order to appreciate the challenge made against the said decree, the relevant and material facts of the case have to be understood.

(2.) Mr.Chaman Lal Jain filed a suit for dissolution of partnership and rendition of account which was listed as Suit No.924/86. The present applicant, Jagdish Parsad Gupta, was defendant No.4 therein. He filed written statement and contested that suit by taking the pleas that the suit was barred by time. Suit was not maintainable because the said partnership of which dissolution and rendition of account was sought came to an end on account of variation in the term of the said partnership deed. Hence no relief could be sought on the basis of the partnership deed which got frustrated. On merits also he denied the claim of the plaintiffs therein. During the pendency of that suit, in December,1988 parties entered into a compromise. They filed joint application under Order 23 Rule 3 Civil Procedure Code which was listed as IA.No.9396/88 in Suit No.924/86. Statement of parties were recorded by the Court on 20th December, 1988. Present applicant made statement in support of the compromise in the Court. Not only he was signatory to the 'compromise application bearing I.A. No.9396/88 his counsel Shri Satish Chandra also signed the said compromise application. Pursuance to that compromise, this Court passed a compromise decree on 20th December,1988 which was exhibited as Ex.PW.1/1. It contained the terms settled between the parties.

(3.) By the present application, applicant Shri Jagdish Prasad Gupta (defendant No.4 in suit No.924/86) wants the cancellation/ setting aside of the said consent decree exhibit PW.1/1 passed on 20th December,1988, inter alia, on the grounds that the agreement/compromise contained in Ex.PW.1/1 is void. The basis of Ex.PW.1/1 was the alleged partnership which had already become frustrated. Hence that partnership being non-est in the eyes of law no compromise decree on the basis of noo-est document could be passed. There was no question of dissolution of non-est partnership nor the question of rendition of account could arise. The alleged partnership deed dated 29th November,1978 was executed between the applicant and the respondents herein together with applicant's father late Shri Dal Chand Gupta. The terms of the partnership were that the property of the applicant and his father comprising of 514 sq.yards and 407 sq.yards respectively bearing No.4378/4, situated at Ansari Road, Darya Ganj valued at Rs.5,00,000.00 and Rs.3,25,000.00 would be invested by the applicant and his father for the purpose of constructing a building with the sole object to commercialise the same and share profits amongst the partners. The profit of the applicant and his father was 28% and 12% respectively. While that of the respondents known as Jain Group in the ratio of 30% of Shri Naveen Kumar Jain and rest in the ratio of 10% each. Money was to be invested by Jain group for raising construction on the land provided by the applicant. The father of the applicant, late Shri Dal Chand Gupta, when fpund that that Jain Group was incapable of performing their part of the agreement and had failed in obtaining the sanctioned plan from M.C.D., he sought permission from the partners to get out of the partnership and be permitted to sell his land. His request was allowed. He sold his land on 30th May,1980. He totally extricated himself from the partnership. On this account alone, according to the applicant the partnership came to an end. In the sale deed executed by his late father, a citation appeares which shows that no construction at all was carried out by the Jain Group i.e. present respondents. There was no likelihood of any construction of the building which was the main object of entering into this partnership. Thus, the sole purpose for which the partnership was entered into got frustrated. Thus that partnership became non-estin the eyes of law. Therefore, the suit filed by the defendants i.e. Jain group on 30th April,1986 bearing No.924/86 was ex facie barred by the principles of frustration under action 56 of the Contract Act (in short the Act). The alleged partnership never came into operation. The plans for the construction of the building was never sanctioned by the authority concerned. Hence the question of starting construction within three months from the date of sanction never arose. Para No.8 of the partnership deed envisaged that the partnership, would be deemed to be cancelled in case construction did not start within three months of the sanction of the plans. Since the plans were never sanctioned, therefore, the question of construction never arose. Hence, the partnership deemed to have come to an end and thus stood frustrated. Therefore, compromise decree based on frustrated partnership is a nullity.