SURYA FURNACES AND REFRACTORIES PVT. LTD. Vs. SUDHEER

JUDGEMENT

(1.) The plaintiff in OS No. 841 of 2011 on the file of the Sub Court, Ernakulam, is the appellant. (For the purpose of convenience, the parties are hereafter referred to as per their rank before the trial Court.)

(2.) The plaintiff is a company incorporated under the provisions of the Companies Act, 1956 on 25. 04.1990. The plaintiff filed this suit for declaration and injunction. The plaintiff company was incorporated for carrying on business of designing, fabricating, manufacturing, producing, selling etc. and dealing in furnaces, refractories, steel storage tanks, heat equipments and steel structures. The company's aim was to take over the business of the partnership firm 'Surya Furnaces and Refractories', originally constituted on 1/12/1978 and registered before the Registrar of firms as 28/1979. The above firm was originally constituted with six partners, namely A.P. Sathyaprakash; the first defendant, A.K. Varkey, R. C. Varma, N. L. Venguswami, N. P. Ram and S. Ganapathy. In the year 1978, the firm purchased the plaint schedule property consisting of 17 cents of land as per Sale Deed No. 3513 of 1978 of Thrippuruthra Sub Registrar Office, in the name of the first defendant being the partner of the firm. On 26/7/1979, the partnership was reconstituted and thereby N.P. Ram and S. Ganapathy retired. On 15/11/1983, the partnership was again reconstituted and thereby A.K. Varkey and N.L. Venguswamy retired and thereafter the remaining partners were A.P. Sathyaprakash, namely the first defendant and R.C. Varma. On 11/8/1989 the partnership was again reconstituted and thereby K.K. Neelambar, was added as a partner. On 17/8/1989, the partnership was again reconstituted and thereby the first defendant A.P.Satyaprakash and R.C. Varma retired and 4 new partners namely Peethambar K.V, Vasu.K.V, Kunjan.P.P and Abhishek.K.Nilambar were included as partners. In the year 1990, the plaintiff company was incorporated to take over the assets and liabilities of the partnership firm. Upon incorporation of the plaintiff company, all the assets and liabilities of the partnership including the plaint schedule property were taken over by the plaintiff, Surya Furnaces and Refractories Pvt. Ltd. Accordingly, the plaint schedule property is in the exclusive possession and enjoyment of the plaintiff company. Subsequently, due to competition in the field and financial stringency, the company was stopped and thereafter, there is no business dealings for the plaintiff. In the meantime, since 1996 the land tax for the plaint schedule property was not remitted. During 2010 when the Director of the plaintiff company approached the Village Officer for remitting the land tax, the same was not received. Therefore, the plaintiff company approached the High Court by filing WP(C) No. 29774/2010 seeking a direction to the revenue officials to accept the land tax in respect of the plaint schedule property. As per Order dtd. 11/3/2011, the High Court directed the revenue officials to accept the tax. Thereafter, it was found that the 1st defendant has executed settlement deed No. 2409 of 2011 in respect to the plaint schedule property in favour of his son, namely, the second defendant. Since the plaint schedule property exclusively belongs to the plaintiff company, the first defendant had no authority to execute such a settlement deed in favour of his son. Therefore, the plaintiff prayed for a decree declaring that Document No. 2409 of 2011 of Tripunithura Sub Registry is null and void and that the first defendant has no title or right in the said property to execute such a document and for a permanent prohibitory injunction restraining the defendants, their men and agents from trespassing into the plaint schedule property or from taking away any usufructs from the plaint schedule property and obstructing the peaceful enjoyment and possession of the plaint schedule property by the plaintiff or from committing waste therein.

(3.) Defendants 1 and 2 filed written statement contending that there is no company by name Surya Furnaces and Refractories Pvt. Ltd. The plaint schedule property was purchased by the first defendant using his own funds, in the name of the partnership firm. The plaint schedule property was detached from the partnership, prior to the alleged reconstitution in 1989. The reconstitutions of 11/8/1999 and 17/8/1999 did not happen. They also contended that there was no retirement of partners or induction of new partners after 15/11/1983, when A.K. Varkey and N.L. Venguswamy retired. According to the defendants, after the death of R.C. Varma, the only surviving partner was the first defendant and thereby the partnership ceased to exist. Mr. Neelambar was brought into the firm as a consultant to make profits in the firm. However, he sold the entire machinery of the firm and absconded with the records and sale proceeds. He also obtained signed blank papers from the first defendant and R.C. Varma, saying that they are required for submitting before authorities. Mr. Neelambar forged documents claiming to be a partner. His induction to the partnership was not informed to the Registrar of firms. The first defendant filed a suit as O.S. No. 413 of 2008 against Mr. Neelambar before the Munsiff's court, Ernakulam, for fabricating power of attorney to sell the plaint schedule property and the said suit was decreed on 29/6/2009 in favour of the first defendant. The defendants further contended that the suit is barred under Sec. 69 of the Partnership Act. They also contended that the balance sheet of the partnership firm does not contain the plaint schedule property as its asserts. According to the defendants, till 2010 the first defendant was paying land tax for the plaint schedule property as a partner of the firm. Since all the other partners died and the first defendant became the sole surviving partner, he had every right to assign the plaint schedule property and after the execution of settlement deed No. 2409 of 2011, the second defendant is the absolute owner in possession of the plaint schedule property. Further, according to the defendants, the first defendant had taken over the entire liabilities of the firm including sales tax liability and the liability with the State Bank of Travancore. Therefore, defendants 1 and 2 prayed for dismissing the suit. During the pendency of the suit, the first defendant died and his legal representatives were impleaded as additional defendants 3 and 4.