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High Court Of Delhi
KIRAN ARORA - Appellant
Versus
RAM PRAKASH ARORA - Respondent
Interim Application 2563 of 1979
Decided On : 09/27/1979
COMPROMISE - PARTNERSHIP - DISSOLUTION - LAWFULNESS - COMPROMISE BETWEEN PLAINTIFFS AND SOME DEFENDANTS IN SUIT FOR DISSOLUTION OF PARTNERSHIP AND RENDITION OF ACCOUNTS - VALIDITY - COURT'S POWER TO PASS DECREE IN TERMS OF COMPROMISE - CONDITIONS - INDIAN CONTRACT ACT, 1872, SEC. 23 - CIVIL PROCEDURE CODE, 1908, ORDER 23, RULES 3, 3-A.
Fact of the Case:
In a suit for dissolution of partnership and rendition of accounts, an application was filed under Order 23, Rule 3, Civil Procedure Code, for passing a final decree for Rs. 1,95,000 against one of the defendants. The compromise included matters not only relating to the parties to the suit but also to others, including a property subject to a partition decree.
Finding of the Court:
The court held that the compromise was not lawful as it affected the rights of non-parties to the suit, namely, the wife of one of the defendants and a third party who had obtained a partition decree in respect of the property in question. The court further held that the compromise was hit by Section 23 of the Indian Contract Act, 1872, as it involved injury to the person or property of another.
Issues: 1. Whether the compromise between the plaintiffs and some of the defendants was lawful. 2. Whether the court could pass a decree in terms of the compromise.
Ratio Decidendi: 1. A compromise in a suit for dissolution of partnership and rendition of accounts is lawful only if it is between all the partners, including the heirs of a deceased partner. 2. A compromise that affects the rights of non-parties to the suit is not lawful and cannot be recorded by the court. 3. A compromise that involves injury to the person or property of another is hit by Section 23 of the Indian Contract Act, 1872, and is void.
Final Decision: The court dismissed the application for recording the compromise and passing a decree in terms thereof, and allowed the objections filed by the defendant who was not a party to the compromise.
( 2 ) THE question for decision is whether the compromise between the plaintiffs and some of the defendants is lawful. The relevant facts are as under: Ram Parkash, defendant No. 1 and his two sons Kanwal Kishore (defendant No. 3) and the deceased Chand Kiran Arora entered into partnership on 1st April, 1964 which firm is alleged to have been dissolved by a deed dated 31st March, 1971 and another firm is alleged to have been constituted between defendant No. 1 and his son Chand Kiran Arora vide deed dated 1st April, 1971. Chand Kiran Arora died on 3rd Jan. , 1974 and another new firm is alleged to have come into existence on 4th Jan. , 1974 in terms of a deed dated 19th March, 1974 between defendant No. l and his daughter defendant No. 2. In this firm minor plaintiff No. 2 is alleged to have been admitted to the benefits of the partnership firm. According to the plaintiffs the balance sheet of the partnership firms as on 31st March, 1974 showed a sum of Rs. 63,365. 88 due to Chand Kiran Arora and vide another balance sheet minor plaintiff No. 2 was shown entitled to Rs. 26,119. 81. The name of partnership business has been ram Prakash Kanwal Kishore with its branch styled as prakash Steel Industries at Loha Mandi, New Delhi. Subsequently the firm is alleged to have acquired considerable immovable and moveable properties, steel quotas, etc. and now the partnership firm carries on business at B-87, Mayapuri Industrial Area, New Delhi. Chand Kiran Arora who died on 3rd Jan. , l974 left behind plaintiff No 1 his widow, plaintiff No. 2 his minor son, plaintiff No. 3 his minor daughter and defendant No. 4 Smt. Phoolwati, his mother. There is also a property on leasehold plot BF-27, Najafgarh Road Residential Scheme known as Tagore Garden, New Delhi. This plot was initially owned by Chand Kiran Arora and Kanwal Kishore, defendant No. 3. After the death of Chand Kiran, the plaintiffs and defendant No. 4 being heirs inherited the share of the deceased in the said property. The share of defendant No. 3 in this property was transferred to his wife Mrs. Madhu Manchanda. The names of the plaintiffs, defendant No. 4 and Mrs. Madhu Manchanda are alleged to have been recorded as owners in the records of Delhi Development Authority. After the death of Chand Kiran Arora this house became the subject of a suit for partition filed by Mrs. Madhu Manchanda wife of defendant No. 3. The preliminary decree for partition was passed on 22nd May, 1976 in Suit No. 483 of 1975 in Madhu Manchanda v. Smt. Kiran Arora etc. by Shri S. M. Chopra, Sub-Judge, Delhi. The plaintiffs further allege that defendant No. I with a view to deny their share and rights in the estate left by Chand Kiran Arora, forged a Will dated 26-12-1973 of Chand Kiran. This Will was got attested by defendant No. l from his two daughters including defendant No. 2 and it was produced in proceedings under the Indian Succession Act where the same was held to be false and forged. An appeal filed in this court was dismissed by B. C. Misra, J. who also held the Will to be a forged one. A complaint was filed under Sec. 340 Criminal Procedure Code for prosecution of defendant No. 1 and a complaint has been filed by the Registrar of this court against defendant No. l forging the said Will etc. which is pending. The defendants failed to render accounts and therefore the plaintiffs by this suit claim dissolution and rendition of accounts.
( 3 ) DEFENDANT No. 3 in his written statement pleads that he continues to be a partner of the firm in suit under the deed dated 1st April, 1964, that there was no dissolution on 31st March 1971, that the alleged dissolution deed dated 31st March,
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