1991 Supreme(Del) 503

High Court Of Delhi
SANJAY KAUSHISH - Appellant
Versus
D.C.KAUSHISH - Respondent
Suit 1176 of 1986
Decided On : 09/10/1991

Headnote:

PARTITION SUIT - [SUBJECT] - ACT SECTION LIST - [SUMMARY]

Fact of the Case:

Plaintiff, the grandson of Pt. Lakshmi Chandra, filed a suit for partition of the joint Hindu family properties. He alleged that his grandfather had died in 1934, leaving behind two sons, Pratap Chand and D.C. Kaushish (defendant No. 1). Pratap Chand died issueless, and D.C. Kaushish became the Karta of the joint Hindu family, consisting of himself, his wife (defendant No. 4), and his three sons, Ajay Kaushish (defendant No. 2), Uday Kaushish (defendant No. 3), and the plaintiff. The plaintiff claimed that defendant No. 1, as Karta, managed and possessed the HUF properties and businesses, and in 1958, a Cinema Building was constructed on the HUF plot. In 1962, certain other blocks known as "Warehouse Block" and other constructions were also raised on the said plot. The plaintiff alleged that in 1947, defendant No. 1, as Karta of HUF, had brought into existence a private limited company under the name and style of M/s. Asian Art Printers (P) Ltd. with the capital and funds of the HUF. In 1961, only defendant No. 4 and defendant No. 1 were the directors of the said company. The plaintiff claimed that the cinema business proved very successful, and huge profits were yielded from the said business due to the prudent management and intelligent control and guidance of defendant No. 1. However, to avoid and/or reduce the incidence of tax liabilities, wealth-tax, and other taxes, defendant No. 1 devised a scheme of effecting a colourable and sham partition of the assets and properties, including businesses. He got filed a collusive and sham suit for partition on December 22, 1962. The plaintiff was shown to be represented by next friend Shri Shiv Narain Vashisht, sister's husband of defendant No. 1, and the plaintiff and the other minor son of defendant No. 1 were shown represented through their mother-defendant No. 4. The plaintiff alleged that false averments were made in the said plaint that Karta of the HUF-defendant No. 1 had mismanaged the HUF properties and businesses and had committed numerous acts of waste and thus it was not in the interest of the minor plaintiff to remain joint. A relief of partition of the properties and businesses was sought. The plaintiff claimed that collusive written statements were filed by the defendants, and the movable properties and assets of HUF were shown by defendant No. 1 which were required to be partitioned. Thereafter, a petition under Section 21 of the Arbitration Act was filed, and an order for reference of the disputes was obtained from the Court for decision by an arbitrator. The arbitrator gave the award to which no objections were filed, and the award was made a rule of the Court. The plaintiff alleged that all the steps have been taken with the sole object of reducing the tax and other liabilities of the family, and as a matter of fact, all along the HUF properties and business continued to be joint, and no partition by metes and bounds or otherwise took place. The plaintiff further alleged that in or about the year 1984, defendant No. 2 wanted to grab the HUF properties, assets, and businesses to the exclusion of the plaintiff and ultimately to exclude the other members of the family, had started going in the direction of gaining complete control and management of the family company M/s. Asian Art Printers (P)Ltd. with a malafide intention to appropriate the earnings of Sheila Theatre, other assets, and businesses of the family to himself. With this malafide intention, defendant No. 2, being the eldest son having a great influence on defendant No. 1 and as plaintiff had contracted a love marriage contrary to the wishes of defendant No. 1, taking undue advantage of the feelings and sentiments of defendant No. 1 who had become unhappy with the plaintiff, instigated defendant No. 1 to exclude the plaintiff from the HUF assets and businesses. The plaintiff also claimed that defendant No. 2, with the object of taking full control of the business of M/s. Asian Art Printers (P) Ltd., increased the share capital of the said company without the knowledge of the plaintiff. The plaintiff sought a decree for partition of the said assets, properties, and businesses of the HUF for separating his share and for getting possession of his share and for rendition of accounts and for recovery of the amount which may be found due to him on rendition of accounts and by permanent injunction restraining the defendants from excluding and ousting the plaintiff from the use, occupation, and enjoyment of the HUF properties and from participation in the businesses of the HUF and also restraining the defendants from raising loans and advances from third parties or creating any encumbrances, charges, or liens on the said properties and restraining them from transferring, alienating, disposing, or parting with possession any of those properties and assets and from raising any construction on plot Nos. 8601 to 8630 situated on Deshbandhu Gupta Road, New Delhi or from making any booking of space in the proposed multi-storeyed building and receiving any advances from the prospective buyers or from transferring any portions of the said property to any other person.

Finding of the Court:

The Court held that the plaint disclosed a cause of action and the suit was not barred by limitation. The Court found that the averments made by the plaintiff were that defendant No. 1, his father, had collusively got filed the suit and had got the matter referred to an arbitrator who quickly gave the award showing partition of the properties which was got made a rule of the Court and it was all intended for obtaining the tax benefits and the plaintiff was not aware of those facts till 1984-85, as alleged by him. The Court held that it was not understandable as to how the plaint does not disclose cause of action and how the suit can be deemed to be barred on the basis of the decree already obtained which the plaintiff terms as sham, bogus one and mere paper transaction brought into existence to have the tax benefits only. The Court also held that the legal effect in both the cases (the present case and the case cited by the plaintiff) can be at variance. The Court further held that the continued management of the property by Karta since the alleged partition clearly supports the inference that the deed of partition was a nominal transaction which was never intended to be acted upon and was not given effect to.

Issues: 1. Whether the plaint discloses a cause of action? 2. Whether the suit is barred by limitation? 3. Whether the plaintiff was legally bound to obtain any declaration in respect of the award and the decree and if so, whether the plaintiff was legally bound to seek any consequential relief of cancellation of the said award and the decree? 4. Whether the suit is barred by the provisions of Sections 32 and 33 of the Arbitration Act, 1940?

Ratio Decidendi: 1. The Court held that the plaint discloses a cause of action as the averments made by the plaintiff make it clear that the alleged award and the decree and other transactions detailed out in the plaint were under a scheme envisaged by defendant No. 1 for consumption of the revenue authorities to bring down the incidence of tax and other levies and the said purpose was achieved but the real intention of the members of the Joint Hindu Family was to treat these documents as sham, bogus and nominal and to continue to be joint in businesses and keep the properties also joint as before and in fact, the properties continued to be joint properties, so also the businesses. 2. The Court held that the suit is not barred by limitation as the plaintiff could ignore the bogus and the sham award and the decree while seeking the substantive relief. So, the question of the suit being barred under the provisions of Sections 32 and 33 of the Arbitration Act does not arise. 3. The Court held that the plaintiff was not legally bound to obtain any declaration in respect of the award and the decree and if so, whether the plaintiff was legally bound to seek any consequential relief of cancellation of the said award and the decree. The Court held that the plaintiff could very well ignore the same and file a suit seeking substantive relief which may be available to him without seeking any declaration that the said decree or document is void or any consequential relief of cancellation of the same. 4. The Court held that the suit is not barred by the provisions of Sections 32 and 33 of the Arbitration Act, 1940 as the case of the plaintiff is that the award and the decree were bogus and sham documents and have been brought into existence only for the consumption of the revenue authorities to reduce the incidence of tax and were not intended to be in fact, acted upon by the parties.

Final Decision: The Court dismissed the applications filed by the defendants seeking rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure.