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2012 Supreme(Del) 2027

HIGH COURT OF DELHI
MANMOHAN SINGH, J.
Shiv Sahni
Versus
Isherdas Sahni & Brothers & Others
I.A. NO. 4724, 20117, 16439, 5787 OF 2011 IN CS (OS) NO.713 OF 2011
Decided On : 31-10-2012

Advocates Appeared:
For the Plaintiff:Amit Sibal with Nikhil Rohatgi & Vinay Tripathi, Advocates.
For the Defendants:Dinesh Garg with D1 to D8 -Ms. Payal Jain, Harish Malhotra, Sr. Adv with Ms. Sujata Kashyap & D9 & D10 -A.K. Singh, Ms. Anuradha Mukherjee, Adv. with D11 -Ms. Jyoti Dastidar, Advocates.

Headnote:

PARTNERSHIP - STATUS OF PARTNER - CHANGE IN STATUS OF PARTNER IN HUF - EFFECT ON PARTNERSHIP STATUS - LEGAL PRINCIPLES.

Fact of the Case:

Plaintiff, a partner in defendant partnership firm, filed suit seeking declaration that letters terminating his partnership were null and void, injunction restraining defendants from interfering with his partnership rights, and rendition of accounts. Defendants contended that plaintiff was not a partner in his individual capacity but represented HUF, and that due to family disputes and partition suit, his status as partner had come to an end.

Finding of the Court:

1. HUF cannot become a partner with other individuals to form a partnership firm. 2. A nominee of HUF admitted as partner enters into agreement with other partners in individual capacity. 3. Rights and obligations of such partner governed by Partnership Act, not Hindu law. 4. Change in constitution of HUF or status of nominee does not affect partnership status. 5. Expulsion of partner governed by Partnership Act, not by consent of family members.

Issues: 1. Whether the status of a partner who was inducted in the partnership as a nominee of HUF can be altered by the subsequent change of his status in HUF. 2. Whether the partition of HUF affects the status of a partner in the partnership firm.

Ratio Decidendi: 1. HUF is an association of individuals and cannot join a partnership with other individuals. 2. Nominee of HUF admitted as partner enters into partnership agreement in individual capacity. 3. Rights and obligations of such partner governed by Partnership Act, not Hindu law. 4. Change in constitution of HUF or status of nominee does not affect partnership status. 5. Expulsion of partner governed by Partnership Act, not by consent of family members.

Final Decision: Court held that plaintiff's status as partner continued despite changes in HUF's constitution and family disputes. Letters terminating partnership and subsequent actions of defendants were declared illegal. Injunction granted restraining defendants from interfering with plaintiff's partnership rights. Plaintiff directed to share profits with HUF members as per undertaking given in court.

JUDGMENT

MANMOHAN SINGH, J.

1. The present suit has been filed by the plaintiff, inter alia, seeking a decree declaring the letters dated 31st December, 2010 and 1st March, 2011 as null and void. A decree of permanent injunction restraining the defendants jointly and severally through themselves or their legal heirs, servant, agents or employees from interfering with the partnership rights of plaintiff in defendant No.1 in accordance with partnership deed dated 1st November, 2002 and 5th January, 2004 and also a decree of rendition of accounts. The plaintiff is one of the partners of the defendant No.1 Partnership Firm having a business of running cinema theaters. The plaintiff became the partner of the said firm after the death of his father with consent of all the legal heirs of Sh.Krishan Lal Sahni vide Partnership Deed dated 1st November, 2002. Along with the suit, the plaintiff has also filed an I.A. No.4724/2011 wherein the plaintiff has sought the injunction against the defendants.

2. The defendants No.2 to 7 are the other partners of defendant No.1-firm. Defendant No.8 had expired. Mrs.Gita Talwar has been partner in her place. Defendants No.9 to 11, i.e. Mr.Jayant Sahni, Mrs.Neena Sahni and Mrs.Renee Khanna are the brother, mother and sister of the plaintiff and they were impleaded as defendants vide order dated 23rd March, 2011.

3. Brief factual matrix of the matter leading up to filing of the instant suit and the present applications can be enunciated as under:

a) Plaintiff states that the defendant No.1 is partnership firm carrying on the business mainly to run the cinema theatres and distribute the rents arising out the said running of the theatres between the partners.

b) It is averred in the plaint that the plaintiff became the partner of the defendant No.1 firm upon the death of his father Late Sh.Krishan Lal Sahni with the consent of the legal heirs of Sh.Krishan Lal Sahni.

c) The plaintiff has stated in the plaint that the defendant No.1 firm was formed by four brothers namely Sh.Isherdas Sahni, Late Sh.Karam Chand Sahni, Late Sh.Roshan Lal Sahni and Late Sh.Amrit Lal Sahni. The main business of the said firm was to run cinema theaters. It is submitted that one of the major properties of the firm is a building and cinema theater at Connaught Place, New Delhi known as “Odeon Complex”. There were other theaters also all across the country, however, slowly the majority of the other properties have been liquidated though Odeon continues to be in the business of the partnership.

d) The plaintiff has averred in the plaint that the business of the defendant-firm carried on for some time. On 4th September, 1977, one of the then partners namely Smt.Damyanti Sahni expired. On her death an effort was made by the other partners to somehow exclude the plaintiff’s branch from the partnership by the denying the right of being a partner to the plaintiff’s father Sh.K.L.Sahni. It is submitted that at that time, an illegal partnership deed dated 16th April, 1978 was executed without the plaintiff’s father as a partner. Feeling aggrieved by the said illegal act, the plaintiff’s father filed the suit being CS(OS) No.391/1978 before this Court which was eventually settled wherein the plaintiff’s father Sh.K.L.Sahni was retained as a partner. Pursuant to the said event, the partnership deed dated 22nd May, 1978 was entered into wherein Sh.K.L.Sahni was a partner in the firm.

e) Thereafter, on 29th April, 1987, another partner namely Sh.Ramesh Chander Sahni died. This event again led to the entering of fresh partnership deed dated 6th May, 1987 by virtue of which, Smt.Renu Sahni was admitted as a partner and representing HUF of Late Sh.Ramesh Chander Sahni as a manager. As per the plaintiff, the said partnership deed dated 6th May, 1987 contained the following clauses which are relevant for the purposes of the present proceedings:

“20. That the death of any partner shall not dissolve the partnership and the lawful heirs of the dece

























































































































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