Jharkhand High Court
Prabha Anthony Yadav Widow Of Late Samir … vs Ramashankar Rai on 22 July, 2025
Author: Anubha Rawat Choudhary
Bench: Anubha Rawat Choudhary
2025:JHHC:20764
IN THE HIGH COURT OF JHARKHAND AT RANCHI
F.A. No. 03 of 2023
1. Prabha Anthony Yadav widow of Late Samir Kumar Yadav, aged
about 60 years
2. Sinki @ Silki @ Shruti Gloria, daughter of Late Samir Kumar
Yadav, aged about 31 years
Sl. Nos. 1 and 2, both residents of Qr. No.7013, Sector-IV/F, P.O.
& P.S.- Sector IV, B.S. City, District- Bokaro (Jharkhand),
Presently residing at A-5, Tulsi Vihar, Vasundra Colony, Chira
Chas, P.O. & P.S.- Chira Chas, District- Bokaro (Jharkhand)
Permanent Address: Plot No.173, Navin Sahkari Griha Nirman
Samiti Ltd., Ambedkar Nagar, Gandhajor, Chira Chas, District-
Bokaro (Jharkhand) ... ... Defendants/Appellants
-Versus-
1. Ramashankar Rai, son of Late Ram Eqbal Rai, Resident of 3-249,
Sector-2/D, P.O. & P.S.- B.S. City, District- Bokaro (Jharkhand)
2. Dina Nath Roy son of Sri Ram Samujh Roy, Resident of Plot
No.125, Bari Cooperative, P.O. & P.S.- Sector-XII, B.S. City,
District- Bokaro ... ... Plaintiffs/Respondents
3. Ram Das Singh son of Late Girija Singh, resident of Qtr. No.1-
231, Sector- 2/A, P.O. & P.S.- B.S. City, District- Bokaro
... Proforma Defendant/Respondent
---
CORAM: HON’BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
—
For the Appellants : Mr. Rahul Kumar Gupta, Advocate
: Mr. Shashank Shekhar, Advocate
: Miss Swati Singh, Advocate
: Mr. Surya Prakash, Advocate
: Mr. Rakesh Kumar Singh, Advocate
For the Respondents : Mr. Bhaibhaw Gahlaut, Advocate
: Mr. Subhneet Jha, Advocate
—
C.A.V. on 05.03.2025 Pronounced on 22.07.2025
1. This First Appeal has been filed against the Judgment and
Decree dated 30.08.2022 (Decree sealed and signed on 09.09.2022)
passed by the learned Sub-Judge-IV, Bokaro in Money Suit No.62 of
2014 whereby and whereunder the money suit was decreed for
recovery of Rs.29,00,000/- (Twenty-Nine Lakhs) only alongwith
pendente-lite and future interest @ 8% per annum.
2. The appellants before this Court were Defendant Nos.1 and 2 in
Money Suit No.62 of 2014 filed on 15.12.2014 in which the plaintiffs/
Respondent Nos.1 and 2 had prayed for the following reliefs:
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(A) For a decree of recovery of an amount of Rs.29,00,000/-
(Rupees Twenty-Nine Lakhs) only as principal and
interest @ 18% per annum till realization, jointly and
severally from the defendants.
(B) For cost of the suit.
(C) For any other relief or reliefs as the plaintiffs may be
found entitled to.
Case of the Plaintiffs
3. As per the plaint of the plaintiffs, Samir Kumar Yadav (since
deceased) [husband of Defendant No.1 and father of Defendant No.2]
executed a deed of partnership with the plaintiffs on 29.11.2012 which
was registered before Sub-Registrar, Chas, Bokaro vide Registered
Deed of Partnership No.513 dated 29.11.2012.
4. Prior to execution of the Partnership Deed, Samir Kumar Yadav
had induced the plaintiffs to enter into a partnership for land
development business for one of the projects at Mouza- Bhawanipur
@ Solagidih and told the plaintiffs that he had already invested
Rs.25,00,000/- in the project and for further investment, they would
be added as partners in the project and would get immense profit.
Thereafter, Samir Kumar Yadav showed about 40 acres of vast tract
of land bearing Plot No.1327, Khata No.96 and other plots of the
same khata of Mouza Bhawanipur @ Solagidih and projected very
rosy picture regarding the land development business and upon his
insistence, the plaintiffs paid Rs.29,00,000/- only to Samir Kumar
Yadav on different dates for land development business.
5. Initially the plaintiffs paid Rs.5,00,000/- to Samir Kumar Yadav
and thereafter, due to financial crunch, they approached the Proforma
Defendant Sri Ram Das Singh to provide monetary help to them for
smooth running of the business. The proforma defendant Ram Das
Singh had given Cheque No.49130 dated 04.01.2013 for Rs.3,00,000/-
, Cheque No.49147 dated 01.02.2013 for Rs.5,00,000/-, Cheque
No.341403 dated 15.03.2013 for Rs.2,50,000/- and Cheque
No.341402 dated 16.03.2013 for Rs.2,50,000/-, all were of Allahabad
Bank, Sector-IV Branch, in the name of Samir Kumar Yadav to the
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plaintiffs and accordingly, the plaintiffs had taken a total amount of
Rs.13,00,000/- from the proforma defendant and had given the same
to Samir Kumar Yadav for development of the partnership business.
The plaintiffs had issued a money receipt dated 02.02.2013 to the
proforma defendant in which Samir Kumar Yadav was a witness. The
plaintiffs had given the rest amount of Rs.11,00,000/- in cash to Samir
Kumar Yadav and Samir Kumar Yadav had issued three money
receipts to the plaintiffs for a total of Rs.29 lakhs.
6. When the plaintiffs enquired about the status of the financial
condition of the business, Samir Kumar Yadav did not give the actual
status of the financial position of the partnership business and later on,
they found that neither any land in Mauza Bhawanipur in Khata
No.96 for the land development business was ever purchased by
Samir Kumar Yadav nor partnership business was ever started and
nothing was invested by Samir Kumar Yadav in the business and he
had taken Rs.29,00,000/- from the plaintiffs by playing fraud upon
them. When the plaintiffs demanded to refund their amount, Samir
Kumar Yadav issued three post-dated cheques of IndusInd Bank being
Cheque No.335640 dated 10.04.2014 for Rs.5,00,000/-, Cheque
No.335641 dated 21.04.2014 for Rs.2,00,000/- and Cheque
No.335642 dated 05.05.2014 for Rs.3,00,000/-, but after some days,
Samir Kumar Yadav told the plaintiffs that he was suffering from
some disease and advised them not to deposit the cheques for
encashment. Thereafter, the Plaintiff No.1, in whose name the three
cheques were issued, did not deposit the cheques and in the meantime
Samir Kumar Yadav died on 14.05.2014.
7. The plaintiffs further stated that after death of Samir Kumar
Yadav, Defendant Nos.1 and 2 inherited all the properties of Samir
Kumar Yadav and they are enjoying the same. Samir Kumar Yadav
had constructed a multistoried building at Chira Chas and the
Defendant Nos.1 and 2 have inherited the same and are in possession
of the same and enjoying the property also.
8. The plaintiffs further stated that when the Plaintiff No.1 got a
legal notice issued on 14.10.2014 to the Defendant No.1 demanding
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payment of Rs.29,00,000/-, the Defendant No.1 got the legal notice
replied through her lawyer on flimsy grounds.
9. The plaintiffs stated that the cause of action for filing the suit
accrued on 29.11.2012, when a registered Deed of Partnership was
executed between Samir Kumar Yadav and the plaintiffs and on
different dates when money was paid by them to Samir Kumar Yadav
and also on 14.10.2014, when a legal notice was issued to Defendant
No.1 demanding repayment of Rs.29,00,000/- and the same continued
from day-to-day basis within the jurisdiction of the learned trial court.
Case of the Defendant Nos.1 and 2
10. Defendant Nos.1 and 2 filed written statement denying all the
contents including the statements, Schedule-A and the allegations
contained in the plaint, save and except to the extent, the contents
thereof were specifically admitted. They raised preliminary objections
to the suit, inter alia, on the ground that the suit was barred under
section 69 of the Indian Partnership Act, 1932 (hereinafter referred
to as the “Act of 1932”) as the partnership firm was not registered
with Registrar of Firms as required under Sections 58 and 59 of the
Act of 1932 and that partnership agreement contains a clause no-7
which provides for resolution of dispute by the arbitrator, as such in
view of Section 5 of the Arbitration and Conciliation Act, 1996 the
present suit was barred. It was also asserted that from a simple reading
of the plaint, it was apparent that the two plaintiffs Rama Shankar Rai
and Dina Nath Roy are the surviving partners of an unregistered firm
constituted on 29.11.2012, deed was registered under Indian
Registration Act and not under Section 59 of the Indian Partnership
Act and as such the status of the partnership firm is of an
“unregistered firm”. It was asserted that plaintiffs’ own pleadings
indicated that it was not a simple money lending transaction for
interest. It was some kind of business venture undertaken by the
plaintiffs with a view to do capital investment contribution by each
partner to 25% of the total capital and the same share in profit as well
as loss of the firm and it was an admitted fact that the defendant no. 1
and 2 were neither the partners of the firm nor is there any contract in
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the said deed of partnership to admit the legal representatives of a
dead partner as a partner to join the two surviving ones. Therefore, it
was asserted that the plaintiffs have no cause of action against the
defendants to seek any relief against them. The instant suit filed by the
plaintiffs was meant for settlement of accounts between the partners
but as the defendant no. 1 and 2 are not privy to the said partnership
and hence the suit was liable to be dismissed in limine. It was stated
that the plaint was fit to be rejected at threshold.
11. On merits it was stated that the partnership deed dated
29.11.2012 bears testimony of the terms and conditions of the
partnership and other details as alleged to have been agreed amongst
the partners were denied. They denied that there was any inducement
by Late Samir Kumar Yadav on the plaintiffs. They were not privy to
what transpired amongst the three partners in connection with or in
relation to the partnership business and denied to have any knowledge
as to what happened amongst the partners.
12. The Defendant Nos.1 & 2 denied the contents of paragraph 4 of
the plaint by referring to the legal notice dated 14.10.2014 served
upon the Defendant No.1 issued on behalf of the Plaintiff No.1, they
stated that there is no reference to the proforma defendant regarding
the payments made by him and the plaintiffs have claimed entire
amount as their own. Therefore, if the plaintiffs’ words are taken on
their face value, they are not entitled to claim any payment that has
been made by the proforma defendant, because proforma defendant
was neither a partner of the firm, nor in anyway concerned with the
said partnership business. They also denied the payments made in
cash and further stated that the plaintiffs have doctored money
receipts in order to further their ill will. They further stated that even
if the allegations are assumed correct for the sake of argument (which
does not include slightest of admission by the defendants), it shows
remittance of payment to the firm in which the Defendant Nos.1 & 2
had no role to play. Referring to Paragraph 1 of legal notice dated
14.10.2014, they stated that there is no hint or suggestion that such
payment was made by a stranger namely, Ram Das Singh and
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therefore, if Ram Das Singh made any contribution to the partnership
firm, as put forth by the plaintiffs, the firm alone shall be responsible
and otherwise also, the plaintiffs have no legal right or locus standi to
claim the amount.
13. The Defendant Nos.1 & 2 claimed that there appears a deep-
rooted conspiracy amongst the plaintiffs and the proforma defendant
who are hell bent to encroach upon the only dwelling house of the
defendant nos. 1 and 2, as reflected in para-11 of the plaint itself.
They admitted that the said notice by Anand Vardhan was served on
14.10.2014, but before that the Advocate of Sri R.D. Singh conspired
with Allahabad Bank to cause a legal notice upon the Defendant No.1
demanding Rs.29,99,522.13. The said notice was replied to by the
Defendant No.1 through her lawyer wherein details of C.C. A/c
No.2098224324 was demanded, but the bank never replied to the said
notice. Further case of the Defendant Nos.1 & 2 was that the
Defendant No.1 filed an application under Section 17 of the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as
SARFAESI, Act,2002) and the Rules framed thereunder before the
Debt Recovery Tribunal, Ranchi praying therein for relief of setting
aside / quashing the notice dated 08.09.2014 and 07.10.2014 issued by
the bank upon the Defendant No.1. As per the defendant nos. 1 and 2,
it appeared that after receiving the notice from DRT, Ranchi, the
proforma defendant entered into conspiracy with the plaintiffs to set
forth a claim of Rs.29 Lakhs. The Defendant Nos.1 & 2 also stated
that they do not know about the assets or land owned by the
partnership firm and as such, the statement made in relation to Khata
No.96, Mouza-Bhawanipur was denied. The Defendant Nos.1 & 2
stated that they are not aware of issuance of any such cheques by Late
Samir Kumar Yadav and all the documents, cheques, etc. related to
the partnership business were kept at the partnership office situated at
E2, Centre Market (Laxmi Market), Sector-4, B.S. City, as provided
in Clause-1 & 2 of the deed of partnership dated 29.11.2012. They
claimed that the plaintiffs gathered all the documents, instruments and
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records kept in the partnership office after death of Late Samir Kumar
Yadav.
14. The Defendant Nos.1 & 2 stated that after death of Samir
Kumar Yadav on 14.05.2014, the plaintiffs did not inform them in
particular or public in general as to whether the plaintiffs as surviving
partners have reconstituted the partnership firm or not. They referred
to Section 42(c) of the Act of 1932 which provides that a partnership
firm dissolves on death of a partner and in case there are more than
two partners, the surviving partners are free to reconstitute the firm
and continue with the project.
Case of the Proforma Defendant No.3
15. Proforma Defendant No.3 filed written statement stating that
Samir Kumar Yadav (since deceased) had induced him to advance
loan as he was in dire need of money for business purposes. He
further stated that Samir Kumar Yadav alongwith the plaintiffs had
come at his residence and the plaintiffs had proposed that they would
execute money receipt in which Samir Kumar Yadav would be a
witness and the entire amount would be transferred to Samir Kumar
Yadav for the business of development of the land. The proforma
defendant further stated that the plaintiffs as well as Samir Kumar
Yadav had assured him that his money would be safe and the
plaintiffs would pay the amount from their share.
16. Thereafter, the proforma defendant submitted an application for
enhancement of his cash credit limit in Allahabad Bank which was
approved and his cash credit limit was enhanced from Rs.20,00,000/-
to Rs.30,00,000/-. Samir Kumar Yadav became a guarantor and the
proforma defendant deposited title deed of the landed property
measuring 06 decimals bearing Plot No.1606 (Navin Co-operative
Plot No.173), Khata No.01, which was purchased through Registered
Sale Deed No.385 dated 21.01.2006, in the name of Samir Kumar
Yadav as collateral security. Thereafter, the proforma defendant gave
altogether Rs.13,00,000/- to Samir Kumar Yadav vide Cheque
No.049147 dated 01.02.2013 for Rs.5,00,000/-, Cheque No.049130
dated 04.01.2013 for Rs.3,00,000/-, Cheque No.341403 dated
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15.03.2013 for Rs.2,50,000/- and Cheque No.341402 dated
16.03.2013 for Rs.2,50,000/- of Allahabad Bank for business purpose,
but Samir Kumar Yadav used the said amount for personal purposes
and there was no land development business of Samir Kumar Yadav.
He further stated that huge financial liability incurred upon him due to
payment of interest on the loan amount advanced to Samir Kumar
Yadav.
17. While giving para-wise reply to the plaint, the proforma
defendant stated that the contents of Para-1 of the plaint are not within
his knowledge. With regard to the statements made in Para-2 and 3 of
the plaint, he stated that Samir Kumar Yadav had induced the
plaintiffs and the proforma defendant that he had started land
development project at Mouza Bhawanipur @ Solagidih and taken
Rs.29,00,000/- from the plaintiffs and the proforma defendant. He
further stated that Samir Kumar Yadav had shown vast tract of land
bearing Plot No.1327 and other plots of Khata No.96, Mouza
Bhawanipur @ Solagidih and had projected very rosy picture about
the land development business.
18. The plaintiffs and Samir Kumar Yadav had approached him and
upon their insistence, he had paid a total amount of Rs.13,00,000/-
only to Samir Kumar Yadav, but Samir Kumar Yadav had kept the
plaintiffs and him in dark about the actual fact that Samir Kumar
Yadav had no right, title, interest and possession over the land of
Khata No.96, Mouza Bhawanipur @ Solagidih and had taken the
amount from them by playing fraud upon them. Out of the total
amount of Rs.29,00,000/- shown by the plaintiffs, he had paid
Rs.13,00,000/- to Samir Kumar Yadav at the insistence of the
plaintiffs. He further stated that Samir Kumar Yadav never divulged
the actual status of his business and on enquiry they found that Samir
Kumar Yadav had no land for land development business and no land
had ever been purchased by him for land development business and in
order to deceive them, Samir Kumar Yadav had taken a total amount
of Rs.29,00,000/- only by playing fraud upon them and in fact no
partnership business was started between the plaintiffs and Samir
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Kumar Yadav. The proforma defendant stated that Rs.5,00,000/- had
accrued as interest on the principal amount of Rs.13,00,000/- paid to
Samir Kumar Yadav and when the bank threatened him that his
account will be declared N.P.A., he had paid the interest on the
principal amount. The proforma defendant intended to file a counter
claim at a later stage against the plaintiffs and Defendant Nos.1 and 2
who being the legal heirs of Samir Kumar Yadav have inherited the
properties of Samir Kumar Yadav and are enjoying the same. With
respect to the reliefs sought for in the plaint, the proforma defendant
stated that the plaintiffs are entitled to decree of recovery of the
amount with interest. The proforma defendant prayed to allow the suit
of the plaintiffs.
19. On the basis of the pleadings of the parties, the learned trial
court framed altogether six issues for consideration, which are as
under:
1. Whether the suit is maintainable in its present form?
2. Whether the plaintiff has got any cause of action for
the present suit?
3. Whether the suit is barred by Section 69(2) of Indian
Partnership Act, 1932?
4. Whether the suit is barred by Section 5 of
Arbitration and Conciliation Act, 1996?
5. Whether the plaintiffs are entitled for an amount of
Rs.29,00,000/- only as principal and interest @ 18%
per annum till realization, jointly and severally from
the defendants?
6. Whether the plaintiffs are entitled to get any other
relief/reliefs to which he is entitled to in law and
equity?
20. Plaintiffs and proforma defendant no. 3 adduced both oral and
documentary evidences but Defendant nos. 1 and 2 did not adduce any
evidence in spite of repeated opportunities.
21. The learned trial court considered the materials available on
record and recorded its findings in Paragraphs 9 to 15 of the
Judgment. Issue nos. 1 and 2 were taken up together, and it was held
that there was specific assertion of the plaintiffs that by playing fraud
upon the plaintiffs, Rs.29,00,000/- was taken by Samir Kumar Yadav,
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husband of Defendant No.01 and father of Defendant No.02 and in
order to make part payment of Rs.10,00,000/-, Samir Kumar Yadav
during his lifetime issued three cheques in favour of the plaintiffs and
thus, it was crystal clear that a case of civil liability was made out
against the defendant nos.01 & 02, who were enjoying the movable
and immovable properties left by Samir Kumar Yadav and the instant
suit was filed within the period of limitation, as such the suit was
maintainable. It was also held that the plaintiffs have proved all the
facts which they have averred in the plaint and have made out cause
of action for filing the suit. The Issue No.01 & 02 were decided in
favour of the plaintiffs and against the defendants.
Issue no. 3 was decided vide paragraph 10 of the judgement and it
was ultimately held that the bar of Section 69(2) of the Act of 1932
doesn’t apply to the present case and the Issue No. 03 was decided in
favour of the plaintiffs and against the Defendant Nos. 1 & 2 by
observing that actually no partnership business had initiated, rather by
playing fraud and deception, Samir Kumar Yadav took Rs.29,00,000/-
from the plaintiffs including Rs.13,00,000/- from proforma
defendant/Defendant No.03 and in order to repay the amount, he
issued three cheques and in the meantime he died. It has been held
that the transaction in question was clearly between the parties for the
purpose of business and Samir Kumar Yadav by playing fraud upon
the plaintiffs and the Defendant No.03 took Rs. 29,00,000/- from them
and no evidence was adduced by the Defendants that actually the
partnership business had started and vast tract of land was in the name
of Samir Kumar Yadav and the same was incorporated for the
partnership business. It has been held that the bar of Section 69(2) of
the Act of 1932 does not apply to the present case, and the Issue No.
03 was decided in favour of the plaintiffs and against the Defendant
No.01 & 02.
Issue no. 4 was decided vide paragraph 11 of the judgment and it was
held that it was clear that the judicial authority can decide the matter
in respect of disputes even if there is arbitration clause unless and
until a party to the arbitration agreement before filing his first
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statement submits before the Judicial authority to refer the matter to
the arbitrator. It was observed that in the instant case, no such petition
has been filed by the Defendant No.01 & 02 to refer the matter to the
arbitrator by invoking the arbitration clause. Apart from that the
Defendant No.01 & 02 are not the parties of the arbitration agreement
(i.e. deed of partnership) having arbitration clause. It was held that the
submission of the Defendant No.01 & 02 that the suit was barred by
Section 5 of the Arbitration and Conciliation Act, 1996 was misplaced
one and does not find any support from Arbitration and Conciliation
Act, 1996 and as such the Issue No. 04 was decided in favour of the
plaintiffs and against the defendant nos. 01 & 02.
The issue no. 5 was decided vide paragraph 12 of the judgment in
favour of the plaintiffs and the suit was decreed with interest @8%
per annum instead of 18% per annum as claimed. The findings with
regards to the issue no. 5 are quoted as under: –
12. Issue No. 5 – “Whether the plaintiffs are entitled for an
amount of Rs.29,00,000/- only as a principal and interest @
18% per annum till realization jointly and severally from the
defendants?”
As discussed above, it is apparently clear that the
plaintiffs had paid Rs.29,00,000/- including the amount of
Rs.13,00,000/- by taking amount from proforma Defendant
No.03, which he took from bank by enhancing his cash credit
limit on the assurance given by Samir Kumar Yadav (husband
of the Defendant No.01 and the father of the defendant no. 02)
and Samir Kumar Yadav (since deceased) had acknowledged
the receipt of Rs.29,00,000/- by issuing three money receipts
(vide Exhibit No. 2, 2/1 and 2/2) in favour of the plaintiffs.
Furthermore, it is uncontroverted evidence on record that there
was no partnership business and the amount was taken by
Samir Kumar Yadav by projecting very rosy picture of land
development business, though actually there was not land in
Bahwanipur Mouza in the name of Samir Kumar Yadav and
when the plaintiffs and Defendant No.03 got information that
the amount was taken by Samir Kumar Yadav by playing fraud
upon them, they started to making demand of their due amount
and in order to make payment Samir Kumar Yadav issued three
cheques having total amount of Rs.10,00,000/- vide Exhibit- 3,
3/1 and 3/2 but the said cheques could not be encashed as
owing to deteriorating health conditions of Samir Kumar Yadav
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the amount was required for his treatment. After death, it is
admitted that Defendant No.01 & 02 are enjoying the property
left by Samir Kumar Yadav. Moreover, the Defendant No.03 is
paying interest on the loan amount of Rs.13,00,000/- which he
had given to Samir Kumar Yadav on the undertaking/guarantee
given by the plaintiffs. The Defendant No.03 has also proved
the money receipt vide Exhibit-A and the bank statement vide
Exhibit ‘B’ which clearly reflect that Rs.13,00,000/- was given
to Samir Kumar Yadav and Samir Kumar Yadav mortgaged his
sale deed of land in the bank. From the oral and documentary
evidence, it clearly emerges that Rs.29,00,000/- was paid to
Samir Kumar Yadav and the legal heirs of Samir Kumar Yadav
are enjoying the immovable and movable properties of Samir
Kumar Yadav and Samir Kumar Yadav was legally bound to
pay/refund the said sum to the plaintiffs during his lifetime and
in order to make payment, he had already issued three cheques
having total amount of Rs. 10,00,000/- and the Defendant
No.01 & 02 have not rebutted any evidence in respect of
payment of Rs.29,00,000/- to Samir Kumar Yadav nor adduced
any evidence that they have not come in possession of any
movable and/or immovable property of Samir Kumar Yadav.
So, the Defendant No.01 & 02 are bound to pay Rs.29,00,000/-
with interest to the plaintiffs and Issue No. 5 is also decided
partially in favour of the plaintiffs and against the Defendant
No.01 & 02.
13. There is nothing on record to rebut aforesaid oral as well
as documentary evidence of the plaintiff by the defendant no.1
and 2. This has also strengthened the claim of the plaintiff. In
these circumstances and from the aforesaid oral as well as
documentary evidence placed on record by the plaintiff, this
court is of the view that the plaintiff have succeeded in proving
this case.
14. At this point, it would be judicious to highlight the law laid
down by the Hon’ble Apex court in Central Bank of India
Versus Ravindra……………………………………………..
15. As the sequitur to the foregoing analysis this court is of
considered view that plaintiffs have succeeded in proving its
case. Hence, the suit of plaintiff is decreed for recovery of
Rs.29,00,000/- (Twenty-Nine Lakhs) only alongwith pendente-
lite and future interest at the rate of 8% per annum, decree-
sheet shall be prepared accordingly file to be consigned to the
record-room after due compliance.”
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22. Thus, the learned trial court decreed the suit in favour of the
plaintiffs for recovery of Rs.29,00,000/- (Twenty-Nine Lakhs) only
alongwith pendente-lite and future interest at the rate of 8% per
annum against the defendant nos. 1 and 2.
23. Arguments of the appellants ( defendant no. 1 and 2) .
I. The partnership was not registered with the Registrar of the Firms
in terms of Section 58 and 59 of the Act of 1932 and the suit was
barred under section 69 of the Act of 1932 and the plaintiffs
cannot file a suit to enforce a right arising from a contract i.e.
partnership agreement particularly against Samir Kumar Yadav or
his legal heirs.
II. The plaintiffs have tried to make out a case that because Samir
Kumar Yadav had defrauded them by taking the suit amount by
projecting a very rosy picture before them, said bar under Section
69 of the Act of 1932 would not be applicable. Thus, for the
purpose of getting over the bar under Section 69 of the Act of
1932, the plaintiffs are required to prove that Samir Kumar Yadav
had committed fraud upon them, and it is only if they are able to
establish that Samir Kumar Yadav had committed fraud, their suit
would be maintainable. Therefore, it is essential to see as to
whether the plaintiffs had actually been able to prove as to
whether Samir Kumar Yadav committed fraud upon them or not.
III. From perusal of the statement made in the plaint, it appears that
before entering into the deed of partnership, Samir Kumar Yadav
had told the plaintiffs about the land development business and
had also showed them vast tract of land pertaining to Khata
No.96, Plot No. 1327 and other plots of same Khata of mauza
Bhawanipur. According to the statement made in the plaint as
well as evidences adduced on behalf of the plaintiffs, no date
whatsoever was mentioned as to when the plaintiffs came to know
about the alleged fraud. The partnership agreement was entered
into in the year 2012 on 29.11.2012 and Samir Kumar Yadav died
on 14.05.2014. According to the plaintiffs’ own case, the
plaintiffs came to know about the fraud and they found that
actually no land for development business was ever purchased by
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Samir Kumar Yadav; actually, no partnership business was started
as nothing was invested by Samir Kumar Yadav in the business
and he had taken Rs. 29 lakhs from the plaintiffs by playing fraud
upon them, and the plaintiffs have further stated that the plaintiffs
started making demand of refund of the amount whereafter Samir
Kumar Yadav issued three cheques which were not encashed on
the request of Samir Kumar Yadav.
IV. Rama Shankar Rai, the plaintiff no.1 was examined as PW-1 who
in Paragraphs 42 and 53 of his cross-examination has stated that
he did not give any written notice to Samir Kumar Yadav and he
further stated that he had verbally told to Samir Kumar Yadav, but
he did not give any written notice to him.
V. Order VI Rule 4 of CPC very clearly stipulates that any person
who is alleging fraud has to give particulars of fraud. In the
instant case, the plaintiffs only made general allegation of fraud
and were not able to prove or furnish particulars of fraud as
required under the said provision. The plaintiffs have failed to
furnish particulars of fraud, but on the other hand, the facts of the
instant case would go to show that even according to the plaintiffs’
case, they all were acting in furtherance of the partnership deed as
partners.
VI. The following would go to show that they all along with Samir
Kumar Yadav were acting in furtherance of the partnership deed
executed by and between them: –
(i) According to their own statement made in the
plaint when they (plaintiffs) had financial crunch, they
(plaintiffs) approached the proforma defendant Sri Ram
Das Singh to provide monetary help to them for the
development of business and said proforma defendant
had agreed to pay the said amount to the plaintiffs, so
that the plaintiffs may give the said amount to Samir
Kumar Yadav for smooth running of the business. It is at
their request, Mr. Ram Das Singh (the proforma
respondent) paid a sum of Rs. 13 lakhs to the plaintiffs
for investment in the partnership business and all the14
2025:JHHC:20764investment of Rs. 13 lakhs of Mr. Ram Das Singh was
shown as invested by the plaintiffs in the partnership
business.
(ii) Thus, at best any amount which was paid by Mr.
Ram Das Singh or the plaintiffs, was according to the
plaintiffs own case invested in the partnership business,
and according to the plaintiffs’ own case, Mr. Ram Das
Singh i.e. the proforma defendant, after making payment
of Rs. 8 lakhs, had demanded proof of his payment to the
plaintiffs and it is the plaintiffs who executed money
receipt dated 02.02.2013 showing that the suit amount
was being given in the partnership business of the
plaintiffs, and in the said money receipt Samir Kumar
Yadav only signed as witness. Thus, the money receipt
dated 02.02.2013 was given by the plaintiffs to Mr. Ram
Das Singh and Samir Kumar Yadav had only signed as
witness.
(iii) If the law laid down by Hon’ble Supreme Court is
applied, it can be very clearly seen that the plaintiffs have
failed to plead as well as prove forgery on the part of
Samir Kumar Yadav and no details of fraud were ever
disclosed or even evidence regarding the said fraud was
ever given. Therefore, the plaintiffs have thoroughly
failed to prove the alleged fraud committed by Samir
Kumar Yadav. Once, it is held that the plaintiffs had
failed to prove the fraud committed by Samir Kumar
Yadav, only logical consequence would be that the
plaintiffs according to their own case had entered into the
partnership business with Samir Kumar Yadav and they
had invested in the partnership business as partners of the
firm and therefore whatsoever transaction took place
between three partners, the other partners could not have
diverted the fact of investment made in the partnership
business as personal liability of Samir Kumar Yadav.
Therefore, the instant suit was clearly barred in terms of
15
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Section 69(1) of the Act of 1932 as the plaintiffs were
partners of unregistered partnership firm and they could
not have sued another partner of the same unregistered
firm. The only exception was that the plaintiffs being
partners of unregistered firm could have sought for
dissolution of firm or for accounts of the dissolved firm,
or could have exercised any right or power to realize the
property of the dissolved firm. The plaintiffs in fact have
not filed any suit for dissolution of accounts of the firm
and, therefore, they are not covered by the exception
carved out in Section 69 of the Act of 1932. Thus, the
suit is barred in terms of Section 69 (1) of the Act of
1932.
(iv) From the statement made in the plaint itself, it
transpires that it is the plaintiffs who were facing
financial crunch and therefore they had approached the
proforma respondent Sri Ram Das Singh to provide
monetary help to them for the development of business,
and that proforma defendant had agreed to pay the said
amount to the plaintiffs so that the plaintiffs may give the
required amount to Samir Kumar Yadav for smooth
running of the business.
It is the plaintiffs who had taken Rs.13 lakhs from the
proforma defendant namely Sri Ram Das Singh and it is
the plaintiffs who executed money receipt dated
02.02.2013 and Samir Kumar Yadav had only signed as
witness. On the contrary, the defendant no.3 namely Sri
Ram Das Singh has stated that he paid total sum of Rs.
13 lakhs to the plaintiffs as well as defendant no. 1 & 2,
and therefore Sri Ram Das Singh had reserved the right
to file a counter claim against the plaintiffs as well as the
defendant nos. 1 and 2 but did not file any such counter
claim.
VII. The learned counsel for the appellants relied upon the following
judgments:
16
2025:JHHC:20764
(i) (1994) 1 SCC 502 (Svenska Handelsbanken Vs. M/s
Indian Charge Chrome) Paragraph- 40
(ii) (2022) 2 SCC 573 (Electrosteel Castings Limited Vs. UV
Asset Reconstruction Company Limited) Paragraph- 9 to
12
(iii) (2024) 8 SCC 700 (Annapurna B. Uppin Vs.
Malsiddappa) Paragraph- 16
(iv) 2025 SCC Online SC 125 (Sunkari Tirumala Rao Vs.
Penki Aruna Kumari) Paragraph- 15 and 16
(v) (2009) 10 SCC 103 (Branch Manager, Magma Leasing
and Finance Limited Vs. Potluri Madhavilata)
Paragraph-17 and 18
(vi) (2015) 14 SCC 444 (Sundaram Finance Limited Vs. T.
Thankam) Paragraph- 8 and 13
24. Arguments on behalf of Respondent Nos.1 & 2/Plaintiffs
A. The Respondent Nos.1 & 2 in their written submissions stated
that they had instituted the money suit for recovery of
Rs.29,00,000 (along with interest @18%) which was given to
Samir Kumar Yadav (deceased husband of Defendant No.1 &
father of Defendant No.2), who had fraudulently induced them
into investing Rs.29,00,000/- by falsely claiming to start a land
development project at Mouza Bhawanipur, that never existed.
B. When the plaintiffs came to know that there existed no land in
Mouza Bhawanipur, they demanded their money back from
Samir Kumar Yadav and though Samir Kumar Yadav issued
three post-dated cheques (Exhibit-3, 3/1, 3/2), but died
subsequently.
C. The plaintiffs in order to prove their case, provided money
receipts (Exhibits- 2, 2/1, 2/2) and cheques (Exhibits- 3, 3/1,
3/2) signed by Samir Kumar Yadav proving receipt of
Rs.29,00,000/-.
D. After death of Samir Kumar Yadav, the plaintiffs sent a legal
notice to the Defendant No.1 on 14.10.2014 (Exhibit-4)
demanding Rs.29,00,000/-. However, instead of making
17
2025:JHHC:20764
payment, Defendant No.1 replied vaguely through her lawyer
and denied making payment.
E. The Respondent Nos.1 & 2 further stated that the instant suit is
a case of civil liability against the appellants and the claim of
the plaintiffs is a common law right.
F. The Respondent Nos.1 & 2 relied upon the Judgment passed by
the Hon’ble Patna High Court in the case of Ram Narayan
Renu v. The State of Bihar & Ors., (L.P.A. No. 66 of 2006),
wherein it was observed that right to recover money lost to the
plaintiff by reason of an action or inaction on the part of the
defendant is a common law right unless there is an express bar for
exercise of such common law right or withdrawal of such right by
an expressed provision of law, or unless the same can be gathered
by necessary implication.
G. The Respondent Nos.1 & 2 further stated that Section 9 of Code
of Civil Procedure (in short ‘CPC‘) only deals with the
jurisdiction of the Court to try suit. However, for instituting a
suit two pre-requisites must be fulfilled. The first requirement
which is fundamental to the maintainability of a Civil Suit is the
existence of a cause of action and the other pre-requisite for
instituting a suit is that the plaintiff must have right to sue and
right to sue is a common law or inherent right.
H. The Respondent Nos.1 & 2 referred to the judgment passed in
the case of Ganga Bai v. Vijai Kumar, AIR 1974 SC 1126
Para-15, wherein it has been held that there is an inherent right
in every person to bring a suit of a civil nature unless the suit is
barred by statute.
I. The Respondent Nos.1 & 2 also referred to the judgment passed
in the case of Shiv Kumar Chadha v. Municipal Corpn. of
Delhi, 1993 (3) SCC 161, wherein it was held that under
classical law, the position is that where there is a right there is a
remedy. The position regarding special Acts creating rights and
liabilities was also clarified in paragraph 11 of the aforesaid
judgment, which is quoted below:
18
2025:JHHC:20764
“11. In the olden days the source of most of the rights
and liabilities could be traced to the common law. Then
statutory enactments were few. Even such enactments
only created rights or liabilities but seldom provided
forums for remedies. The result was that any person
having a grievance that he had been wronged or his
right was being affected, could approach the ordinary
Civil Court on the principle of law that where there is a
right there is a remedy-ubi jus ibi remedium. As no
internal remedy had been provided in the different
statutes creating rights or liabilities, the ordinary Civil
Courts had to examine the grievances in the light of
different statutes. With the concept of the Welfare State,
it was realised that enactments creating liabilities in
respect of payment of taxes obligations after vesting of
estates and conferring rights on a class of citizens,
should be complete codes by themselves. With that object
in view, forums were created under the Acts themselves
where grievances could be entertained on behalf of the
persons aggrieved. Provisions were also made for
appeals and revision to higher authorities.”
J. Reference may also be made to the second principle mentioned
in Paragraph 23 of the judgment passed in the case of “Premier
Automobiles v. K.S. Wadke” AIR 1975 SC 2238 [which has
also been quoted in “Rajasthan SRTC v. B.M. Bairwa” 2009 (4)
SCC 299] where in the context of industrial dispute it has been
held that arising out of a right or liability under the general or
common law and not under the Act, the jurisdiction of the civil
court is alternative, leaving it to the election of the suitor
concerned to choose his remedy for the relief which is competent
to be granted in a particular remedy.
K. In the present suit, a perusal of Exhibit- 2, 2/1 & 2/2 would
make it apparent that Samir Kumar Yadav (in his individual
capacity) took money from the Plaintiffs for investing in a land
development project. However, as per para 7 of the plaint, the
Plaintiffs came to know on enquiry that no land for land
development business was ever purchased by Samir Kumar
Yadav and in order to deceive the Plaintiffs, Samir Kumar
Yadav executed a deed of partnership dated 29.11.2012
19
2025:JHHC:20764
(Exhibit 1). But after receiving money from the Plaintiffs (both
directly and through the Proforma Defendant No. 3), Samir
Kumar Yadav played fraud upon the Plaintiffs and diverted the
funds for his personal use. It is pertinent to mention that
although as per clause 6 of the deed of partnership dated
29.11.2012, it was mandatory to open a bank account in the
name of the firm in question, no such account was opened by
Samir Kumar Yadav. Thus, the entire money was taken by
Samir Kumar Yadav in his personal capacity [as evident from
para 43 of the cross-examination of Plaintiff No. 1, para 2(d) of
the written-statement filed by Defendant No. 3]. The said fact is
also evident from the perusal of Exhibit 3, 3/1 & 3/2, by which
Samir Kumar Yadav, in his personal capacity, had issued three
post-dated cheques (as part payment) in the name of Plaintiff
No. 1 when the Plaintiffs after discovery of fraud by Samir
Kumar Yadav demanded the amount of Rs. 29,00,000/- paid to
him. As such, the plaintiffs have a common law right to recover
their lost money from Samir Kumar Yadav in his personal
capacity.
L. The bar under Section 69(2) of the Act of 1932 does not apply
while enforcing a common law right. They further stated that
the appellants argued that the instant suit is barred under
Section 69(2) of the Act of 1932, as the partnership firm was
unregistered, but as per them, the learned court below has
rightly held that since no actual business was conducted and the
suit was based on allegation of fraud, the bar under Section
69(2) does not apply.
M. It is to be noted that Section 69(2) of the Act of 1932 bars only
enforcement of those rights that arise from (1) contract and (2)
partnership act. In the instant case, the plaintiffs have not filed
the suit in the capacity of partner, nor have they made the firm
as a defendant in the Suit. In fact, the suit was filed for recovery
of money that was fraudulently taken by Samir Kumar Yadav,
in his personal capacity.
20
2025:JHHC:20764
N. They further stated that Section 69(1) of the Act bars
enforcement of right by or on behalf of a person suing as a
partner and against the person who has been a partner. Thus, the
very object of Section 69(1) of the Act is that if a person
intends to take the benefit of partnership act, then he has to
comply with the mandatory requirement of registration under
Section 59 of the Act of 1932. It has been submitted that the
Plaintiffs have not filed the Suit in the capacity of partner nor
have they sued Samir Kumar Yadav as a partner of the
partnership firm. Thus, the common law right of the plaintiffs
to recover money fraudulently taken by Samir Kumar Yadav
cannot be taken away by virtue of Section 69 of the Act of
1932.
O. The Respondent Nos.1 & 2 further stated that for further
clarification, the judgement of the Hon’ble High Court of
Madras in the case of “S. Prakashchand Vs. Sha Harakchand
Misrimull & Ors.” reported in 2003 (2) LW 740, paragraph 9
can be relied upon. They further stated that the very object and
purpose of disability imposed on an unregistered firm would
become clear from the judgment of the Hon’ble Supreme Court
of India in “Shiv Developers, through its Partner Sunilbhai
Somabhai Ajmeri v. Aksharay Developers & Ors” reported in
2022 SCC Online SC 114, wherein the Hon’ble Court in Para-
20, clarified the nature of suits filed by an unregistered
partnership firm which will not be barred under Section 69(2)
of the Partnership Act, 1932. The instant Suit cannot be said to
be the one for enforcement of right arising from a contract,
rather the Suit is clearly the one where the Plaintiffs have
sought common law remedies with the allegations of fraud.
P. The Respondent Nos.1 & 2 further stated that the bar under
Section 5 of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as the “Act of 1996”) is not applicable.
It is settled law that an application under Section 8 of the Act of
1996 has to be filed by a party to a Suit who is seeking
21
2025:JHHC:20764
reference of the dispute to arbitration under Section 5 of the Act
of 1996. Reliance has been placed on the judgment passed by
the Hon’ble Bombay High Court in the case of “Garden
Finance Ltd. v. Prakash Inds. Ltd. & Anr.” reported in AIR
2002 BOM 8, para 9 and the judgment passed by the Hon’ble
High Court of Karnataka in the case of “Y. Harish & Anr. V.
Y. Satish & Ors.” [W.P. No. 10716 of 2022 (GM-CPC)], para
11. In the present suit, as no application under Section 8 of the
Act of 1996 was filed by the appellants to refer the matter to
arbitrator by invoking the arbitration clause, the learned trial
court had jurisdiction to decide the instant suit by virtue of
Section 9 of CPC.
Q. The suit is not barred under Order VI Rule 4 CPC which reads
as under:
“4. Particulars to be given where necessary. In all
cases in which the party pleading relies on any
misrepresentation, fraud, breach of trust, wilful default,
or undue influence, and in all other cases in which
particulars may be necessary beyond such as are
exemplified in the forms aforesaid, particulars (with
dates and items if necessary) shall be stated in the
pleading.”
R. They further stated that it is evident from the aforesaid
provision that only those particulars are to be mentioned in the
plaint which are necessary for the proper adjudication of the
Suit. In the instant case, the Plaintiffs in paragraphs 7 & 8 of the
plaint, have made specific averments on fraud. Further, the
allegation of fraud has also been clearly stated in paragraphs 8
and 27 of statement on affidavit of Plaintiff No.1 Furthermore,
the averment of fraud has also been stated in paragraph 8 of the
statement on affidavit of Plaintiff No. 2, and also in Para-2(d) &
6 of the written-statement filed by the proforma defendant no.3.
They further stated that the date of discovery of fraud is not
necessary in this suit, for the following reasons:
22
2025:JHHC:20764
a. Section 17 of the Limitation Act provides that the
period of limitation shall not begin to run until the
Plaintiff has discovered fraud.
b. The Plaintiffs have filed the instant Suit on
15.12.2014, and the entire sum of Rs. 29 lakhs
was paid by the Plaintiffs after the deed of
partnership dated 29.11.2012.
S. The suit was filed within the limitation period and the Plaintiffs
were not seeking any benefit on limitation on the ground of date
of discovery of fraud and hence, the suit was not hit by Order
VI Rule 4 of CPC.
T. The Respondent Nos.1 & 2 further stated that the plaintiffs have
also a right to recover Rs.13,00,000/- paid through the
Proforma Defendant No.3 on the following basis:
(i) Samir Kumar Yadav, by way of money receipts (Exhibits
2, 2/1 and 2/2) had admitted that he had received the entire
amount of Rs. 29,00,000 from the plaintiffs.
(ii) The Proforma Defendant No.3 in Para 2(b) of his written-
statement has stated that the liability to repay the amount
paid by him to Samir Kumar Yadav lies with the plaintiffs.
(iii) By way of Exhibit A (exhibited by proforma defendant
No.3), the plaintiffs had taken upon themselves the liability
to repay the amount paid to Samir Kumar Yadav by
Proforma Defendant No. 3.
U. Accordingly, it was stated by the Respondent Nos.1 & 2 that
Rs. 29 lakhs were paid to Samir Kumar Yadav and the
appellants – the legal heirs of Samir Kumar Yadav are enjoying
his immovable and movable properties. Further, Samir Kumar
Yadav was legally bound to pay/refund the said sum to the
plaintiffs during his lifetime and in order to make payment, he
had already issued three cheques having total amount of Rs. 10
lakhs. The appellants have not rebutted any evidence in respect
of the payment of Rs. 29 lakhs to Samir Kumar Yadav, nor
adduced any evidence that they have not come in possession of
23
2025:JHHC:20764
any movable and/or immovable property of Samir Kumar
Yadav. As such, the plaintiffs are entitled for the recovery of
Rs. 29 lakhs.
V. Thus, in light of the aforesaid submissions, it was prayed that
the instant First Appeal be dismissed and the Judgment dated
30.08.2022 passed in Money Suit No. 62 of 2014 by the trial
court be upheld.
25. The learned counsel for the Respondent Nos.1 and 2 relied
upon the following judgments:
(i) LPA No. 66 of 2006 (Ram Narayan Renu v. The State
of Bihar and Others), Paragraph-8
(ii) (1993) 3 SCC 161- (Shiv Kumar Chadha v. Municipal
Corporation of Delhi & Others), Paragraphs 11, 12, 23
and 24
(iii) CRL O.P. No. 13147 of 2015 & Crl. M.P. Nos. 1 and 2
of 2015, Paragrphs 13 and 14
(iv) 2022 SCC Online SC 114-(Shiv Developers through its
Partner Sunilbhai Somabhai Ajmeri v. Aksharay
Developers and others, Paragraph 20
(v) AIR 2002 Bom 8 (Garden Finance Ltd. V. Prakash
Inds. Ltd. And Another), Paragraphs 8 and 9
(vi) W.P. No. 10716 of 2022 (Y. Harish & Anr. v. Y. Satish
and Others) (GM-CPC), Paragraph 11
(vii) 2009 (4) SCC 299 (Rajasthan SRTC v. Bal Mukund.
Bairwa), Paragraph 22
(viii) AIR 1974 SC 1126 (Ganga Bai v. Vijay Kumar),
Paragraph 15
26. The following points for determination arise for consideration
in this appeal:
(i) Whether the plaintiffs could have claimed a sum of
Rs.13 lakhs on behalf of Ram Das Singh i.e.
proforma defendant?
24
2025:JHHC:20764
(ii) Whether the suit was barred by Section 5 r/w
Section 8 of the Arbitration and Conciliation Act,
1996?
(iii) Whether the plaintiffs have properly pleaded and
also proved the allegation of fraud against Samir
Kumar Yadav?
(iv) Whether the suit was barred by Section 69(2) of
the Indian Partnership Act, 1932?
(v) Whether the suit was barred by Section 69(1) of
the Indian Partnership Act, 1932?
Findings of this Court
27. The plaintiffs examined 03 witnesses; PW-1 is Rama Shankar
Rai (Plaintiff No.1) and PW-2 is Dina Nath Roy (Plaintiff No.2). Both
were the partners in the Deed of Partnership No.513 dated 29.11.2012.
They filed their examination-in-chief on affidavits reiterating the facts
mentioned in the plaint and supported their case.
28. PW-1 filed his examination-in-chief stating that he is well
acquainted with the facts of this case. He further stated that the
husband of defendant No.1 and father of defendant No.2 namely
Samir Kumar Yadav had approached the plaintiffs and had induced
them to invest money in the project of land development business
situated in plot No.1327, Khata No.96 at Bhawanipur/Solagidih and
other plots measuring 40 acres. He further stated that he has already
invested Rs.25,00,000/- in the project. Believing the version of Samir
Kumar Yadav, the plaintiffs gave Rs.29,00,000/- from 29.11.2012 to
25.05.2013 to Samir Kumar Yadav. Thereafter, Samir Kumar Yadav
prepared a deed of partnership No.513, but the said deed of
partnership was never implemented. The plaintiffs had paid
Rs.5,00,000/- on 10.12.2012, Rs.50,000/- on 25.01.2013, Rs.50,000/-
on 28.12.2012 and Rs.10,00,000/- on 24.05.2013 in cash to Samir
Kumar Yadav and when they felt shortage of money, on the advice of
Samir Kumar Yadav, he took a total amount of Rs.13,00,000/- from
Ram Das Singh vide Cheque No.49130 dated 04.01.2013 for
Rs.3,00,000/-, Cheque No.49147 dated 01.02.2013 for Rs.5,00,000/-,
25
2025:JHHC:20764
Cheque No.341403 dated 15.03.2013 for Rs.2,50,000/- and Cheque
No.341402 dated 16.03.2013 for Rs.2,50,000/-, all of Allahabad Bank
and gave the same to Samir Kumar Yadav, which he had deposited in
his account and had received the amount. On the demand of Ram Das
Singh, they had issued a receipt to Ram Das Singh in which Samir
Kumar Yadav and A.K. Pandey had put their signatures as witnesses.
PW-1 further stated that Samir Kumar Yadav had issued three receipts
dated 04.01.2013, 01.02.2013 and 25.05.2013 to the plaintiffs.
Thereafter, when the plaintiffs enquired Samir Kumar Yadav about
the work, he deferred on one or the other pretext. When the plaintiffs
themselves went to the site of Bhawanipur Mouza for enquiry, they
came to know that Samir Kumar Yadav had deceived them and
misappropriated the money and neither Samir Kumar Yadav had any
title in Bhawanipur Mouza, nor he had started any work. When the
plaintiffs demanded the money from Samir Kumar Yadav repeatedly,
Samir Kumar Yadav issued three cheques of IndusInd Bank i.e.
Cheque No.335640 for Rs.3,00,000/-, Cheque No.335641 for
Rs.2,00,000/- and Cheque No.335642 for Rs.5,00,000/- to the
plaintiffs. But after some days, Samir Kumar Yadav told the plaintiffs
that he was suffering from some disease and needed money for his
treatment and requested them not to deposit the cheques for
encashment. Therefore, the Plaintiff No.1 did not deposit the cheques
and in the meantime Samir Kumar Yadav died on 14.05.2014. But
before his death, Samir Kumar Yadav had constructed a multi-
storeyed building in Chira Chas and the Defendant No.1 and 2 have
inherited the entire movable and immovable property of Samir Kumar
Yadav and they are enjoying the same. PW-1 further stated that when
the plaintiffs demanded money from the defendant Nos.1 and 2, they
did not repay the amount. Thereafter, on 14.10.2014 the plaintiff No.1
issued a legal notice to the defendant No.1 demanding Rs.29,00,000/-,
but defendant Nos.1 and 2 refused to repay the money. He further
stated that the defendant Nos.1 and 2 being the successors of the
entire movable and immovable property of late Samir Kumar Yadav
are liable to pay the due amount to the plaintiffs and the plaintiffs are
26
2025:JHHC:20764
entitled to get Rs.29,00,000/- from the defendant Nos.1 and 2. He
exhibited the original registered deed of partnership No.513 dated
29.11.2012 bearing the signatures of plaintiff No.1, Samir Kumar
Yadav and Dina Nath Roy (plaintiff no.2) as Exhibit-1 and the
signatures of Rama Shankar Rai, Dina Nath Roy and Samir Kumar
Yadav as Exhibits-1/1, 1/2 and 1/3 (with objection that the partnership
deed is not registered under the Indian Partnership Act). He further
exhibited the original receipts dated 04.01.2013, 01.02.2013 and
25.05.2013 issued by Samir Kumar Yadav as Exhibits-2, 2/1 and 2/2
(all with objection). He exhibited the original Cheque No.335640
dated 10.04.2014, Cheque No.335641 dated 21.04.2014 and Cheque
No.335642 dated 05.05.2014 issued to plaintiff No.1 by Samir Kumar
Yadav as Exhibits 3, 3/1 and 3/2 (all with objection). He exhibited
original legal notice dated 14.10.2014 as Exhibit-4.
29. During cross-examination, PW-1 admitted that in November,
2012 Samir Kumar Yadav had come to his quarter and had induced
him. He stated that he had filed the suit in the light of partnership deed
which was registered in the Sub-registry Office, Chas. He admitted
that the partnership deed did not bear the signatures of the defendant
Nos.1 and 2 and no information was given to them before preparation
of the partnership deed. He also admitted that Ram Das Singh was not
a partner in the partnership deed. He stated that the defendant No.1
had knowledge about the partnership deed apart from the partners. He
further admitted that it is mentioned in the first page of the partnership
deed that Samir Kumar Yadav had already invested Rs.25,00,000/- in
the project and each page of the partnership deed bears the signatures
of PW-1, Dina Nath Roy and Samir Kumar Yadav. He also admitted
that he had not issued any notice for arbitration to the defendant Nos.
1 and 2 and he has never amended the partnership deed. He also
admitted that he has never given any written information to the
defendant Nos.1 and 2 for making them partners in place of Samir
Kumar Yadav in the firm. He further admitted that he had not issued
any written notice to Samir Kumar Yadav with regard to the
statements made in the affidavit from 29.11.2012 to 14.05.2014, but
27
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he had told him orally several times. He stated that he has not filed
any civil or criminal case against Samir Kumar Yadav and Samir
Kumar Yadav had accepted when he was alive that he had taken
money from PW-1 and he would return the same in installments and
this fact was known to the defendant No.1. He further admitted that a
partnership deed was made without name of any firm. He also
admitted that PW-1 and Dina Nath Roy had written to Ram Das Singh
that Ram Das Singh will also be a partner, but he had not made any
amendment in the partnership deed in this connection, nor Ram Das
Singh was nominated as a partner in the partnership deed. He also
admitted that he has not filed the statements of accounts of income
and expenditure of the firm in the court as he had not received the
same. He further admitted that he came to know subsequently that the
deed of partnership was not registered in the Registrar of firm. He also
admitted that Exhibits-1/1, 1/2, 1/3, 2/1, 2/2, 3, 3/1 and 3/2 do not
bear the signatures of Defendant Nos.1 and 2.
30. PW-2 filed his examination-in-chief on affidavit stating the
same facts as stated by the PW-1 in his affidavit of examination-in-
chief. During his cross examination, PW-2 admitted that Defendant
No.1 being the legal heir of Samir Kumar Yadav has been made a
party in the suit, but no financial transaction has been made with
Defendant Nos.1 and 2. He also admitted that after death of Samir
Kumar Yadav the firm was not reconstituted. He further admitted that
the plaintiffs have not filed any complaint before police station or
other Officers with regard to misappropriation of the money from
them by Samir Kumar Yadav, nor they had given any written
information to the defendant No.1 in this connection during the
lifetime of Samir Kumar Yadav. He has also not given any written
information to the Defendant No.1 for making her a partner in the
firm. He also admitted that the documents filed in court do not bear
the signatures of Defendant Nos.1 and 2. He further admitted that
Ram Das Singh was not a partner in the partnership deed. He has not
issued any arbitration notice to the defendants before filing the suit.
He also admitted that he does not know as to whether the plaintiffs
28
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have given any written information or not to any competent authority
with regard to the forgery committed by Samir Kumar Yadav during
the period from 29.11.2012 to 14.05.2014. He also admitted that PW-
2 has not registered the deed of partnership in the Registrar of Firm.
He also admitted that he has not filed the statements of accounts of
income and expenditure of the firm in the court.
31. PW-3 filed his examination-in-chief on affidavit stating that he
knows both the parties and Samir Kumar Yadav was involved in the
business of land and in this connection, he had acquaintance with
Samir Kumar Yadav. He further stated that Samir Kumar Yadav had
taken Rs.5,00,000/- on 10.12.2012 and Rs.3,00,000/- on 04.01.2013 in
cash from the plaintiffs and had issued receipt dated 04.01.2013. He
identified the original receipt dated 04.01.2013 bearing the signature
of Samir Kumar Yadav and the signatures of PW-3 and Rakesh Ojha
as witnesses. In the same way, Samir Kumar Yadav had taken
Rs.50,000/- in cash on 25.01.2013 and Rs.5,00,000/- through cheque
on 01.02.2013 from the plaintiffs and had issued receipt dated
01.02.2013. He identified the original receipt dated 01.02.2013
bearing the signature of Samir Kumar Yadav and his signature as a
witness. He further stated that Samir Kumar Yadav had taken
Rs.10,50,000/- in cash from 28.12.2012 to 24.05.2013 and
Rs.5,00,000/- through two cheques each Rs.2,50,000/-, total
Rs.15,50,000/- from the plaintiffs and had issued receipt dated
25.05.2013. He identified the original receipt dated 25.05.2013
bearing the signature of Samir Kumar Yadav and his signature as a
witness. He further stated that Samir Kumar Yadav had taken a total
amount of Rs.29,00,000/- between 29.11.2012 and 25.05.2013 for
investment in the business of land with a promise to return the same
with profit. On repeated demand by the plaintiffs, Samir Kumar
Yadav had issued three cheques amounting a total sum of
Rs.10,00,000/- to the plaintiffs. Samir Kumar Yadav died on
14.05.2014 but before his death he constructed a multi-storeyed
building in Chira- Chas and after his death Defendant Nos.1 and 2
inherited the entire movable and immovable property of Samir Kumar
29
2025:JHHC:20764
Yadav and are enjoying the same. The plaintiffs demanded the money
from the Defendant Nos.1 and 2 being the legal heirs of Samir Kumar
Yadav, but they refused to repay the amount. He further stated that the
defendant Nos.1 and 2 being the successors of the entire movable and
immovable property of late Samir Kumar Yadav are liable to pay the
due amount to the plaintiffs and the plaintiffs are entitled to get
Rs.29,00,000/- from the defendant Nos.1 and 2. He exhibited the
signatures of Samir Kumar Yadav, PW-3 (himself) and Rakesh Ojha
on Exhibit-2 as Exhibits- 2/3, 2/4 and 2/5. He also exhibited the
signatures of Samir Kuma Yadav and PW-3 (himself) on Exhibit 2/1
as Exhibits 2/6 and 2/7. He further exhibited the signatures of Samir
Kumar Yadav and PW-3 (himself) on Exhbit-2/2 as Exhibits-2/8 and
2/9. All the exhibits were marked with objection.
32. During cross-examination, PW-3 admitted that he knows the
plaintiffs and further admitted that the transaction of money as stated
in paragraph 3 of his affidavit had taken place between the plaintiffs
and defendants in his presence. Samir Kumar Yadav was engaged in
the business of land in Bokaro and he used to supply bricks and sand
to him. He further admitted that he has no knowledge about the
partnership firm and who were the partners in the firm and also which
partner had invested how much money. He does not know the
Defendant Nos.1 and 2. He subsequently came to know that Samir
Kumar Yadav and the plaintiffs were the partners in the partnership
deed. He had no knowledge that Samir Kumar Yadav had invested
Rs.25,00,000/- in the partnership firm and whether the partnership
firm was registered in the Registrar of Firm, Ranchi or not.
33. The plaintiffs exhibited the following documents to prove their
case:
Exhibit-1 (With Objection) Original Deed of Partnership
No.8456/513 dated 29.11.2012
Exhibit-1/1 (With Objection) Signature of Plaintiff No.1 on
Exhibit-1
Exhibit-1/2 (With Objection) Signature of Plaintiff No.2 on
Exhibit-1
Exhibit-1/3 (With Objection) Signature of Samir Kumar Yadav on
Exhibit-1
Exhibit-2 (With Objection) Money Receipt dated 04.01.2013
30
2025:JHHC:20764Exhibit-2/1 (With Objection) Money Receipt dated 01.02.2013
Exhibit-2/2 (With Objection) Money Receipt dated 25.05.2013
Exhibit-2/3 (With Objection) Signature of Samir Kumar Yadav on
Money Receipt dated 04.01.2013
Exhibit-2/4 (With Objection) Signature of Arvind Kumar Pandey
on Money Receipt dated 04.01.2013
Exhibit-2/5 (With Objection) Signature of Rakesh Ojha on Money
Receipt dated 04.01.2013
Exhibit-2/6 (With Objection) Signature of Samir Kumar Yadav on
Money Receipt dated 01.02.2013
Exhibit-2/7 (With Objection) Signature of Arvind Kumar Pandey
on Money Receipt dated 01.02.2013
Exhibit-2/8 (With Objection) Signature of Samir Kumar Yadav on
Money Receipt dated 25.05.2013
Exhibit-2/9 (With Objection) Signature of Arvind Kumar Pandey
on Money Receipt dated 25.05.2013
Exhibit-3 (With Objection) Cheque of IndusInd Bank vide
Cheque No.335640 of Rs.3,00,000/-
Exhibit-3/1 (With Objection) Cheque of IndusInd Bank vide
Cheque No.335641 of Rs.2,00,000/-
Exhibit-3/2 (With Objection) Cheque of IndusInd Bank vide
Cheque No.335642 of Rs.5,00,000/-
Exhibit4 (Without Objection) Legal Notice dated 14.10.2014
34. The Defendant Nos.1 and 2, after filing written statement, did
not adduce any evidence to rebut the evidence of the plaintiffs even
after providing many opportunities to them by the learned trial court
and no one appeared on behalf of them.
35. The Proforma Defendant No.3 (Ram Das Singh) examined
himself as a defendant witness. He filed his examination-in-chief on
affidavit stating that he is fully acquainted with the facts of the suit.
He further stated that Samir Kumar Yadav had come to his house in
the year 2013 and had requested for providing loan. Samir Kumar
Yadav had told him that he is going to start a big project of land at
Mouza-Bhawanipur (Solagidih) and he has already taken
Rs.16,00,000/- from the plaintiffs and he has himself invested
Rs.25,00,000/- in the business of land. Believing the statements of
Samir Kumar Yadav and Rama Shankar Rai, he agreed to help Samir
Kumar Yadav. Thereafter, at the instance of Samir Kumar Yadav he
filed an application for increasing the credit limit of his account in
Allahabad Bank from Rs.20,00,000/- to Rs.30,00,000/- in which
Samir Kumar Yadav became a guarantor and Ram Das Singh
31
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deposited title deed of landed property measuring 06 decimals bearing
Plot No.1606 (Navin Co-operative Plot No.173), Khata No.01, which
was purchased through Registered Sale Deed No.385 dated
21.01.2006, in the name of Samir Kumar Yadav as collateral security
and accordingly his credit limit was increased from Rs.20,00,000/- to
Rs.30,00,000/-. Thereafter, the proforma defendant (Ram Das Singh)
paid altogether Rs.13,00,000/- to Samir Kumar Yadav vide Cheque
No.049130 dated 04.01.2013 for Rs.3,00,000/-, Cheque No.049147
dated 01.02.2013 for Rs.5,00,000/-, Cheque No.341403 dated
15.03.2013 for Rs.2,50,000/- and Cheque No.341402 dated
16.03.2013 for Rs.2,50,000/- of Allahabad Bank for business purpose.
Thereafter at the instance of Samir Kumar Yadav, the plaintiffs issued
a receipt dated 02.02.2013 for Rs.8,00,000/- in which Samir Kumar
Yadav was a witness. After some months, when he demanded to
return the money, Samir Kumar Yadav deferred to repay on one or the
other pretext. He further stated that when he enquired about the status
of the land of Bhawanipur mouza, he came to know that Samir Kumar
Yadav had no title over the land and he had also not started any work.
Due to not returning of money, his interest on the loan amount
reached to Rs.5,00,000/- and the bank threatened him to declare his
account as N.P.A. This witness further stated that Samir Kumar
Yadav died on 14.05.2014 but before his death Samir Kumar Yadav
had constructed a multi-storeyed building at Chira Chas. After death
of Samir Kumar Yadav, Defendant Nos.1 and 2 inherited the entire
movable and immovable properties and they are enjoying the same.
He further stated that the defendant Nos.1 and 2 being the successors
of the entire movable and immovable properties of late Samir Kumar
Yadav are liable to pay Rs.13,00,000/- and the interest amount of
Rs.5,00,000/- to him and he is entitled to get a total amount of
Rs.18,00,000/- from the defendant Nos.1 and 2.
36. The Proforma Defendant No.3 exhibited the following
documents: –
Exhibit-A (without objection) Original Money Receipt dated
02.02.201332
2025:JHHC:20764Exhibit-A/1 (without objection) Signature of Plaintiff No.1 on
Exhibit-A
Exhibit-A/2 (without objection) Signature of Plaintiff No.2 on
Exhibit-A
Exhibit-A/3 (without objection) Signature of Samir Kumar Yadav on
Exhibit-A
Exhibit-A/4 (without objection) Signature of Arvind Kumar Pandey
on Exhibit-A
Exhibit-B (without objection) Original attested copy of Statement
of Account from 01.01.2013 to
19.09.2016 of A/C
No.20982246324, Allahabad Bank,
B.S. City
37. During his cross-examination on behalf of the plaintiffs,
proforma defendant admitted that Samir Kumar Yadav had also taken
Rs.16,00,000/- from the plaintiffs apart from him and Samir Kumar
Yadav had also not returned the money of the plaintiffs. He further
admitted that at the instance of Samir Kumar Yadav cash credit limit
of his account was increased from Rs.20,00,000/- to Rs.30,00,000/-
and Samir Kumar Yadav had taken loan from him, but due to non-
return of the loan of Rs.13,00,000/- by Samir Kumar Yadav, he could
not repay the loan amount to the bank and in the year 2016 bank
recovered money from his fixed deposit and his limit in cash credit
account in the bank was reduced to Rs. 15 lakhs. No one appeared on
behalf of the Defendant Nos.1 and 2 to cross examine proforma
defendant and therefore, he was discharged by the trial court.
Point of Determination No. (i)
38. The two plaintiffs and Samir Kumar Yadav executed a
registered deed of partnership which was registered before Sub-
Registrar, Chas, Bokaro on 29.11.2012 but not registered with
registrar of firms under the Indian Partnership Act, 1932. Samir
Kumar Yadav expired on 14.05.2014 and the suit was filed on
15.12.2014 for recovery of Rs. 29 lakhs from the wife and daughter of
33
2025:JHHC:20764
Samir Kumar Yadav who were made defendant nos. 1 and 2
respectively stating that the plaintiffs had paid Rs. 16 lakhs in cash to
Samir Kumar Yadav and the plaintiffs had paid further amount of Rs.
13 lakhs to Samir Kumar Yadav by taking the same from proforma
defendant no.3 for the partnership business. It was asserted that
initially the plaintiffs paid Rs. 5 lakhs to Samir Kumar Yadav, but on
account of financial crunch they approached the proforma defendant
and proforma defendant no.3 had given the following cheques:
Cheque Number and date Amount
Cheque No.49130 dated Rs.3,00,000/-
04.01.2013
Cheque No.49147 dated Rs.5,00,000/-
01.02.2013
Cheque No.341403 dated Rs.2,50,000/-
15.03.2013
Cheque No.341402 dated Rs.2,50,000/-
16.03.2013
Total Rs. 13,00,000/-
All the aforesaid cheques were of Allahabad Bank, Sector -IV
Branch and all the aforesaid cheques were issued in the name of Samir
Kumar Yadav by the proforma defendant. In receipt of some of the
aforesaid cheques the plaintiffs had issued a money receipt dated
02.02.2013 in favour of the proforma defendant and it was stated that
in the money receipt Samir Kumar Yadav was a witness. The money
receipt dated 02.02.2013 has been exhibited as exhibit-A.
39. Upon perusal of the money receipt dated 02.02.2013 (exhibit-
A), it is apparent that the plaintiffs had issued the money receipt for a
total amount of Rs. 8 lakhs and the money receipt was issued in
favour of the proforma defendant in which the following cheques have
been mentioned: –
(i) Cheque No.49130 dated 04.01.2013 for an amount of
Rs. 3 lakhs,34
2025:JHHC:20764
(ii) Cheque No.49147 dated 01.02.2013 for an amount of
Rs. 5 lakhs.
40. It was also stated in the money receipt dated 02.02.2013
(exhibit-A) that the aforesaid cheques amounting to total of Rs. 8
lakhs have already been received by the plaintiffs from the account of
the proforma defendant no.3 in the name of R.D. Singh Contractor
bearing account no. 20982246324. It further appears from the money
receipt dated 02.02.2013 (exhibit-A) that the plaintiffs also mentioned
therein that they had made the proforma defendant no.3 as partner in
the partnership to the extent of the share of the plaintiffs in the
partnership. The money receipt dated 02.02.2013 (exhibit-A), refers to
two witnesses;
(i) Samir Kumar Yadav (died prior to filing of the suit), and
(ii) A.K. Pandey, who was examined as P.W. 3 (Arvind
Kumar Pandey).
41. The statement of account of Allahabad Bank bearing no.
20982246324 has been exhibited as exhibit-B by the proforma
defendant no. 3. The plaintiffs produced three money receipts, exhibit
2,2/1 and 2/2, issued by Samir Kumar Yadav (deceased partner). The
plaint as well as exhibits 2, 2/1, 2/2, A and B (statement of accounts)
reveal as follows:
Cheque Number Amount
Cheque No.49130 Rs.3,00,000/- Mentioned in the
Dated 04.01.2013 plaint and exhibit- 2
and also in exhibit-A
Cheque No.49147 Rs.5,00,000/- Mentioned in the
Dated 01.02.2013 plaint and exhibit- 2/1
and also in exhibit-A
Cheque No.341402 Rs.2,50,000/- as Mentioned in the
Dated 16.03.2013 per plaint and plaint and exhibit- 2/2
exhibit- 2/2 but for Rs.2.5 lakhs but
was only for amount does not
Rs.36,000/- in the match with the
35
2025:JHHC:20764
statement of statement of account
account (exhibit - (exhibit -B).
B)
Cheque No.341403 Rs.2,50,000/- as Mentioned in the
Dated 15.03.2013 per plaint and plaint and exhibit- 2/2
exhibit- 2/2 for Rs.2.5 lakhs but
name of bearer of the
cheque does not reflect
in the statement of
account (exhibit -B).
42. Thus, the claim relatable to proforma defendant no.3 does not
match completely from the statement of account (exhibit-B).
43. Further, it is the case of the plaintiffs and also the proforma
defendant no.3 that all the alleged cheques were issued by the
proforma defendant no.3 directly in the name of Samir Kumar Yadav.
However, it is their specific case that the money was paid to Samir
Kumar Yadav for the partnership business.
44. So far as defendant no. 3 is concerned, he has deposed before
the court that when Samir Kumar Yadav and Rama Shankar Rai
informed the proforma defendant no.3 about their financial crisis, he
told them that he had a cash credit limit of Rs. 20 lakhs with
Allahabad Bank and then at the instance of Samir Kumar Yadav,
proforma defendant no.3 increased the cash credit limit to Rs. 30
lakhs and Samir Kumar Yadav also became a guarantor and
mortgaged his property with Allahabad Bank relating to registered
sale-deed no. 385 dated 21.01.2006 in the cash credit account of the
proforma defendant no. 3. The defendant no. 3 has further deposed
that after increase of the cash credit limit he issued the aforesaid
cheques total for an amount of Rs. 13 lakhs from the said cash credit
account and he exhibited the statement of account from 01.01.2013 to
19.09.2016 (exhibit-B). He has further stated that at the instance of
Samir Kumar Yadav, the plaintiffs issued money receipt dated
36
2025:JHHC:20764
02.02.2013 (exhibit-A) for an amount of Rs. 8 lakhs. Proforma
defendant no.3 also deposed that after payment of the amount to
Samir Kumar Yadav, defendant no. 3 had asked him to return the
money. Subsequently, the cash credit account of the defendant no. 3
was carrying interest of Rs. 5 lakhs and the bank was threatening the
defendant no. 3 that his cash credit account would be declared Non-
Performing Asset (NPA). He has further deposed that on 14.05.2014,
Samir Kumar Yadav died and had built a multi-storeyed building and
the defendant nos. 1 and 2 inherited the entire property of Samir
Kumar Yadav. He has stated in his evidence that since Samir Kumar
Yadav had taken money from him, therefore, his legal heirs and
successors are supposed to return the money to the extent of Rs. 13
lakhs and also interest which the bank had charged to the extent of Rs.
5 lakhs and claimed that defendant nos. 1 and 2 are supposed to return
the amount of Rs. 18 lakhs to defendant no. 3.
45. During his cross-examination, defendant no. 3 has stated that
Samir Kumar Yadav had taken Rs. 16 lakhs from the plaintiffs in the
name of Solagidih project and Samir Kumar Yadav had not returned
the amount to the plaintiffs. He has further stated in his cross-
examination that he had enhanced the cash credit limit in his account
in Allahabad Bank from Rs. 20 lakhs to Rs. 30 lakhs at the instance of
Samir Kumar Yadav and Samir Kumar Yadav had taken loan from the
plaintiffs and on account of non-refund of Rs. 13 lakhs, he was not
able to clear the dues of the bank. He also stated that in the year 2016
the bank adjusted his Fixed Deposit in the cash credit account and
reduced the credit limit to Rs. 15 lakhs.
46. The perusal of the evidence of proforma defendant no. 3 clearly
reveals that there was a direct dealing between Samir Kumar Yadav
and proforma defendant no. 3. Proforma defendant no.3 had enhanced
the cash credit limit in his bank account from Rs. 20 lakhs to Rs. 30
lakhs and had thereafter issued the cheques and ultimately his cash
credit account was overdrawn and the fixed deposit was adjusted.
Further, Samir Kumar Yadav had mortgaged his personal landed
37
2025:JHHC:20764
property in the cash credit account of proforma defendant no.3 and
had also become a guarantor in the Cash Credit Account for the
purpose of enhancement of limit. The Proforma Defendant no.3 was
seeking to recover the money paid to Samir Kumar Yadav from his
Cash credit account in which Samir Kumar Yadav was a guarantor
and mortgagor.
47. The proforma defendant no.3 in his evidence-in-chief has stated
that Samir Kumar Yadav had approached him in the year 2013 and
stated that he was in need of money and requested the defendant no. 3
to give him money by way of loan. He has stated that Samir Kumar
Yadav had come to him along with the plaintiffs. He has further stated
that Samir Kumar Yadav and the plaintiffs told him that they are
going to enter into a big project in relation to the land in which it is
likely to have huge profit and for that purpose, Samir Kumar Yadav
had also taken Rs. 16 lakhs from the plaintiffs and had invested his 25
lakhs in business, but more money was required. Defendant no. 3
further stated that Samir Kumar Yadav assured him that the amount
given by him by way of loan will remain secured and defendant no. 3
would get back the amount. His further evidence is that he was
swayed away and trusted Samir Kumar Yadav and the plaintiff no.1
and agreed to help Samir Kumar Yadav; when he told Samir Kumar
Yadav that there is no much amount in his bank account but has a
cash credit limit of Rs. 20 lakhs in Allahabad Bank which he has
already utilized for the purpose of his business, then Samir Kumar
Yadav induced him to increase the limit of cash credit account in
which Samir Kumar Yadav would become the guarantor by
mortgaging his landed property; consequently, the defendant no. 3,
after being swayed away by the assurance and plan of Samir Kumar
Yadav, applied for enhancement of cash credit limit from Rs. 20 lakhs
to Rs. 30 lakhs and ultimately the account of the defendant no.3
became overdrawn and it was to become a Non-Performing Asset of
the bank.
38
2025:JHHC:20764
48. So far as exhibit-A dated 02.02.2013 is concerned, the same is
issued in favour of the proforma defendant no.3 by the plaintiffs in
which Samir Kumar Yadav and A.K. Pandey (P.W-3) are witness and
as per exhibit-A the plaintiffs claimed to have received amount of Rs.
8 lakhs through two cheques, but the statement of account and also the
evidence of proforma defendant no. 3 (D.W-1) reveals that the amount
was directly received by Samir Kumar Yadav and not by or through
the plaintiffs. The exhibit- A further reveals that the plaintiffs agreed
that in lieu of the aforesaid amount of Rs. 8 lakhs, the plaintiffs made
the proforma defendant no.3 as partner in the partnership but this is
not supported by the oral evidence of proforma defendant no. 3 or
even by the evidence of A.K. Pandey (P.W-3). It has come in the
evidence of P.W-1 that the plaintiffs had written to Proforma
defendant no.3 that he will also be a partner, but had not made any
amendment in the partnership deed nor defendant no. 3 was
nominated as a partner in the partnership firm. P.W-1 also admitted
that he has not filed the statements of accounts of income and
expenditure of the firm in the court as he had not received the same.
P.W-1 further admitted that he came to know subsequently that the
deed of partnership was not registered in the Registrar of firm.
49. The case of the plaintiffs is that they borrowed money from the
proforma defendant no.3 to give the money to Samir Kumar Yadav.
The perusal of the evidence of defendant no. 3 reveals that he had
agreed to lend the amount to Samir Kumar Yadav and it was Samir
Kumar Yadav who had promised to return the amount to the
defendant no.3 . There is no mention that the cheques were handed
over to the plaintiffs and the plaintiffs had handed over the cheques to
Samir Kumar Yadav either on their behalf or on behalf of the
defendant no. 3. The evidence of the defendant no. 3 reveals that there
was a direct dealing between Samir Kumar Yadav and the defendant
no. 3 but the defendant no. 3 is not the plaintiff before this Court.
50. It is also important to note that Samir Kumar Yadav had
mortgaged his landed property to the bank and became a guarantor for
39
2025:JHHC:20764
enhancement of the cash credit amount of the proforma defendant
no.3. The cash credit account was for the business of the proforma
defendant no.3 and not for the partnership firm or to lend money to
the plaintiffs and the cash credit account was on the verge of turning
NPA in which the proforma defendant no.3 served the interest through
his fixed deposit. The plaintiffs as well as the proforma defendant
no.3 alleged that the amount taken by Samir Kumar Yadav from the
cash credit account of the proforma defendant no.3 was put to
personal use by Samir Kumar Yadav and not utilised for partnership
business and therefore the partnership business never started. The
proforma defendant no.3 did not join as co-plaintiff in the case and the
plaintiffs made out a case that they had taken money from proforma
defendant no.3 to give to Samir Kumar Yadav for the partnership
business.
51. The proforma defendant no.3 also stated that he would file
counter claim against the defendant no. 1 and 2 and also the plaintiffs
for realization of the amount but no such counter claim was filed.
52. The proforma defendant no.3 deposed that on 14.05.2014,
Samir Kumar Yadav died and had built a multistoried building and
that the defendant nos. 1 and 2 inherited the entire property of Samir
Kumar Yadav, therefore, his legal heirs and successors are supposed
to return the money to the extent of Rs. 13 lakhs and also interest
which the bank had charged to the extent of Rs. 5 lakhs and claimed
that defendant nos. 1 and 2 are supposed to return the amount of Rs.
18 lakhs to defendant no. 3.
53. In view of the aforesaid findings and discussions, this court is
of the considered view that the plaintiffs have failed to prove that the
defendant no 3 had paid the amount to Samir Kumar Yadav on behalf
of the plaintiffs so as to maintain the suit for recovery of money
amounting to Rs.13 lakhs by the plaintiffs alleged to have been paid
by the defendant no.3 to Samir Kumar Yadav.
40
2025:JHHC:20764
54. This Court finds that the learned trial court, while considering
the statement of account of the cash credit account of the defendant
no. 3 (exhibit-B) has also failed to consider that cheque no. 341402
dated 16.03.2013 was for an amount of Rs. 36,000/- only and not for
Rs. 2,50,000/- and therefore, aggregate of the four cheques of
defendant no. 3 did not match with his claim of Rs.13 lakhs, the
detailed discussion in this connection has already been made above.
55. Further, the learned trial court while decreeing the amount of
Rs. 13 lakhs with respect to defendant no. 3 has recorded that the
defendant no. 3 was paying interest on the loan amount of Rs. 13
lakhs which was given to Samir Kumar Yadav on the
undertaking/guarantee given by the plaintiffs. In fact, the defendant
no. 3 had paid interest to the bank with respect to his own cash credit
account which as per his own case, was for his own business in which
Samir Kumar Yadav had mortgaged his sale-deed of land and had also
become a guarantor.
56. The Court decreed the amount of Rs. 13 lakhs to the plaintiffs
inclusive of the amount paid by defendant no. 3 to Samir Kumar
Yadav merely by observing that the payment was made to Samir
Kumar Yadav by the defendant no. 3 on undertaking/guarantee given
by the plaintiffs. This was never the case of the plaintiffs. Rather, the
plaintiffs pleaded that the plaintiffs sought financial help from
defendant no. 3 to give money to Samir Kumar Yadav for partnership
business and therefore, they filed the suit for recovery of the entire
amount [cash amount paid by the plaintiffs to Samir Kumar Yadav to
the extent of Rs. 16 lakhs and paid by defendant no. 3 to the extent of
Rs. 13 lakhs, total being Rs. 29 lakhs]. The learned trial court has not
considered the materials on record properly to come to its findings. As
per the evidence of proforma defendant no.3, he had given the amount
to Samir Kumar Yadav as loan which Samir Kumar Yadav had
promised to refund. As held above, the evidence of the defendant no.
3 reveals that there was a direct dealing between Samir Kumar Yadav
and the defendant no.3 and the plaintiffs have failed to prove that the
41
2025:JHHC:20764
defendant no 3 had paid the amount to Samir Kumar Yadav on behalf
of the plaintiffs so as to maintain the suit by the plaintiffs for recovery
of money from the legal heirs and successors of Samir Kumar Yadav
paid by proforma defendant no.3 directly to Samir Kumar Yadav.
57. In view of the aforesaid findings, no decree could have been
passed by the learned trial court in favour of the plaintiffs for recovery
of any amount relatable to the defendant no.3.
58. The point of determination no.(i) is accordingly decided in
favour of the appellants (defendant no.1 and 2) and against the
respondents.
Point of Determination No. (ii)
59. The arbitration clause in the present case is referrable to a
clause in original deed of partnership No.8456/513 dated 29.11.2012
(exhibit-1 marked with objection) and admittedly this deed of
partnership though registered under the Registration Act, 1908, is not
registered under the Act of 1932. The defendant nos. 1 and 2, inter
alia, raised objection in connection with non-registration of the
partnership deed under section 59 of the Act of 1932 and also referred
to Clause in the partnership deed with respect to arbitration.
Admittedly, at any point of time no petition was filed under section
8(1) of Act of 1996 to object to the jurisdiction of the court to try the
suit and to refer the matter for arbitration.
60. The learned trial court decided this point under issue no. 4 vide
paragraph 11 of the impugned judgment and observed that section 8
of the Arbitration and Conciliation Act, 1996 stipulates that if there is
an arbitration clause in the agreement and any matter, which is the
subject of an arbitration agreement is brought before the judicial
authority, a party to the arbitration agreement or any person claiming
through or under him, if applies not later than the date of his first
statement on the substance of dispute, the court may refer the parties
to arbitration unless it finds that prima facie, no valid arbitration
agreement exists. The learned court recorded that in the instant case
no petition was filed by defendant nos. 1 and 2 to refer the matter for
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arbitration by invoking arbitration clause and consequently, the
submission of defendant nos. 1 and 2 that the suit was barred by
section 5 of the Arbitration and Conciliation Act, 1996 was rejected
and the issue no. 4 relatable to the point of determination no. (ii) was
decided in favour of the plaintiffs and against defendant nos. 1 and 2.
61. The findings of the learned trial court are sought to be
supported by the learned counsel for the respondents by referring to
the judgment passed by the Hon’ble Bombay High Court in “Garden
Finance Ltd. v. Prakash Inds. Ltd. & Anr.” reported in AIR 2002
BOM 8, wherein a reference has been made to the judgment passed by
the Hon’ble Supreme Court in the case of “P. Anand Gajapathi Raju
Vs. P.V.G. Raju (dead)” reported in (2000) 4 SCC 539 wherein the
requirements that have to be satisfied before the Court in terms of
section 8 have been laid down. In the said judgment of the Hon’ble
Supreme Court, it has been held that the conditions which are required
to be satisfied under sub-section (1) and (2) of section 8 of the
Arbitration Act before the court can exercise its powers are:
(i) There is an arbitration agreement.
(ii) A party to the agreement brings an action in the Court against
the other party.
(iii) Subject-matter of the action is the same as the subject-matter of
the arbitration agreement.
(iv) The other party moves the court for referring the parties to
arbitration before it submits his first statement on the substance
of the dispute.
After referring to the aforesaid judgment of the Hon’ble
Supreme Court, the Hon’ble Bombay High Court ultimately held that
in absence of an application under section 8 for referring the dispute to
arbitration, provisions of section 5 of the Arbitration and Conciliation
Act, 1996 do not come into play and do not operate. The Hon’ble
Bombay High Court held as under:
“9…. In order to afford the plaintiff a complete opportunity
of being heard on an application under S. 8 of the
Arbitration Act, in my opinion, it would have to be held that
the party which seeks to refer the dispute to the Arbitrator
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2025:JHHC:20764has to make a written application for that purpose, so that
the Plaintiff, who has instituted the suit, knows exactly the
grounds on which the reference is sought. In the present
case, though the Defendant has been served with this suit
long back, there is no written application made….
…Thus, there is no application made under Section 8
for referring the dispute to the arbitration and therefore as
there is no application made for referring the dispute to the
arbitration, provisions of Section 5 do not come into play
and do not operate…”
62. Similarly, reliance has been placed by the learned counsel for
the respondents upon the judgment passed by the High Court of
Karnataka in “Y. Harish & Anr. V. Y. Satish & Ors.” [W.P. No.
10716 of 2022 (GM-CPC)], wherein it has been held as follows:
“11. The language of Section 8 before and after the
amendment is explicit and clear. It requires a formal,
independent and specific application before and or at the
time of filing of written statement seeking reference to
arbitration. The judgment cited by the learned counsel for
the respondent No. 1/plaintiff rendered by the Co-ordinate
Bench of this Court in the case of P. Tarachand vs.
Seshamal M. Jain (supra) is squarely applicable is the
present case in hand. This Court in the above said
judgment has held that the proceedings pertaining to
domestic arbitration, the only provision that purports to
oust the jurisdiction of the Civil Court is Section 8 of the
Act of 1996. The Coordinate Bench of this Court was of the
view that provisions of the Act of 1996 clearly indicates
that apart from Section 8, there is no provision under the
Act of 1996 that ousts the jurisdiction of the Civil Court.
Even Section 8 contemplates that the matter is referred to
arbitration by the Civil Court only subject to party invoking
and complying with mandatory requirements of Section 3
within the lime stipulated therein.
12. In the light of the principles laid down by the Co-
ordinate Bench of this Court and also the judgment cited
supra, in the present case on hand, petitioners have not at
all invoked Section 8 of the Act of 1996. On the contrary,
the present petitioners have filed application under Order 7
Rule 11(d) of CPC seeking rejection of plaint on the ground
that it is barred by law. Even till today, the present
petitioners have not taken recourse to the provisions of
Section 8 of the Act of 1996.”
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63. This Court fully agrees with the view expressed in the aforesaid
two judgments passed by the Hon’ble Bombay High Court and High
Court of Kartanaka that the ouster of jurisdiction of civil court, on the
ground of existence of arbitration clause, can be urged by filing an
application under section 8 of Arbitration and Conciliation Act, 1996
which has to be filed prior to filing the written statement on merits,
failing which section 5 of the Arbitration and Conciliation Act, 1996
does not come into operation.
64. This court is of the view that learned trial court has rightly
decided the issue no. 4 which is corresponding to the point of
determination no. (ii) and held that the suit was not barred by section
5 of the Arbitration and Conciliation Act, 1996.
The point of determination no. (ii) is accordingly decided in favour
of the respondents and against the appellants.
Point of determination no. (iii)
65. Before proceeding to decide this point, it would be relevant to
deal with the law settled with respect to nature of pleading and proof
when an allegation of fraud is made. The pleadings are required to be
specific with particulars of allegation of fraud and it is to be proved
beyond all reasonable doubts and the evidence cannot travel beyond
the pleadings with respect to allegations of fraud. It is also settled law
that the allegations of fraud through clever drafting when made to
circumvent the legal bar to institute a suit cannot be sustained in the
eyes of law.
66. In the judgment reported in (1994) 1 SCC 502 (supra), it has
been held in paragraph 41 that mere pleadings do not make a strong
case of prima facie fraud. The material and evidence have to show it.
A reference has been made to a previous judgment of Privy Council
wherein it was held that fraud like any other charge of a criminal
offence whether made in civil or criminal proceedings, must be
established beyond reasonable doubt. A finding as to fraud cannot be
based on suspicion and conjecture. Paragraph 41 and 42 of the
judgment reported in (1994) 1 SCC 502 (Supra) are quoted as under: –
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“41. Again it appears that the High Court found a strong
prima facie case against defendant 4 merely on reading the
plaint. Pleadings make only allegations or averments of
facts. Mere pleadings do not make a strong case of prima
facie fraud. The material and evidence has to show it. No
material whatsoever is referred to by the High Court.
42. In A.L.N. Narayanan Chettyar v. Official Assignee, High
Court Rangoon the Privy Council held that:
“Fraud like any other charge of a criminal
offence whether made in civil or criminal
proceedings, must be established beyond
reasonable doubt. A finding as to fraud
cannot be based on suspicion and
conjecture.”
67. In the judgment passed by the Hon’ble Supreme Court reported
in (2022) 2 SCC 573 (Supra), it has been observed through paragraph
8 and 9 that in case of fraud, the pleading must set forth full
particulars and the case can only be decided on the particulars as laid
and there can be no departure from them in evidence. It has been held
that general allegations are insufficient. It has been observed that even
as per Order VI Rule 4 of CPC in all cases in which the party
pleading relies on any misrepresentation, fraud, breach of trust, willful
trust or undue influence, particulars shall be stated in the pleading and
that when the suit is barred by any law, the plaintiff cannot be allowed
to circumvent that provision by means of clever drafting so as to avoid
mention of those circumstances by which the suit is barred by law of
limitation. In the aforesaid judgment passed by the Hon’ble Supreme
Court, it was held that the allegation of fraud was made without any
particulars only with a view to get out of the bar under Section 34 of
the SARFAESI Act and by clever drafting, the plaintiff of the said
case intended to bring the suit maintainable. The paragraph relevant
for the purposes of this case are quoted as under: –
“8. In Bishundeo Narain in para 22, it is observed and
held as under :
“22. … Now if there is one rule which is better
established than any other, it is that in cases of
fraud, undue influence and coercion, the parties
pleading it must set forth full particulars and the
case can only be decided on the particulars as laid.
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There can be no departure from them in evidence.
General allegations are insufficient even to amount
to an averment of fraud of which any court ought
to take notice however strong the language in
which they are couched may be, and the same
applies to undue influence and coercion. See Order
6 Rule 4, Civil Procedure Code.”
8.1. Similar view has been expressed in Ladli Parshad
Jaiswal and after considering the decision of the Privy
Council in Bharat Dharma Syndicate Ltd. v. Harish
Chandra, it is held that a litigant who prefers allegation of
fraud or other improper conduct must place on record
precise and specific details of these charges. Even as per
Order VI Rule 4 in all cases in which the party pleading
relies on any misrepresentation, fraud, breach of trust,
wilful default, or undue influence, particulars shall be
stated in the pleading. Similarly in K.C. Sharma & Co.
[Union of India v. K.C. Sharma & Co., (2020) 15 SCC
209] it is held that “fraud” has to be pleaded with
necessary particulars. In Ram Singh [Ram Singh v. Gram
Panchayat Mehal Kalan, (1986) 4 SCC 364], it is
observed and held by this Court that when the suit is
barred by any law, the plaintiff cannot be allowed to
circumvent that provision by means of clever drafting so
as to avoid mention of those circumstances by which the
suit is barred by law of limitation.
8.2. ………………………….”
68. In the judgment passed by the Hon’ble Supreme Court reported
in (2024) 8 SCC 700 (Annapurna B. Uppin & Others vs.
Malsiddappa & Anr.), it has been observed in paragraph 16 that the
law is well-settled that legal heirs of a deceased partner do not become
liable for any liability of the firm upon the death of the partner.
Paragraph 16 of the aforesaid judgment is quoted as under: –
“16. Thirdly, there was no evidence on record to show
that a fresh partnership deed was executed reconstituting
the firm in which the present appellants had become
partners so as to take upon themselves the assets and
liabilities of the firm. The law is well settled that legal
heirs of a deceased partner do not become liable for any
liability of the firm upon the death of the partner.”
69. In the judgment passed by the Hon’ble Supreme Court reported
in (2025) SCC OnLine SC 125 (Sunkari Tirumala Rao & Others vs.
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Penki Aruna Kumari), it has been held that Section 69(1) prohibits a
suit amongst the partners of an unregistered partnership firm, for the
enforcement of a right either arising from a contract or conferred by
the Act, unless the suit amongst the partners is in the nature of
dissolution of the partnership firm and/or rendition of accounts. It has
also been held in the same judgement that Section 69(2) prohibits the
institution of a suit by an unregistered firm against third persons for
the enforcement of a right arising from a contract. It has been further
held that the nature of bar under Section 69 of the Indian Partnership
Act, 1932 is of a mandatory character and there could be exemption
from application of section 69 when the suit is for enforcement of
statutory right conferred under any other law or a common law right.
It has also been held that the defence that the partnership business had
not yet commenced cannot be a reason to overcome the jurisdictional
bar under Section 69(1) of the Partnership Act, 1932. In the said case,
the partnership deed revealed that a sum of Rs. 30,00,000/- was given
to the respondent which was then sought to be recovered and a suit for
recovery was filed by a set of partners together on one side against
another partner for the purpose of enforcing a right accruing under the
partnership agreement and the suit was held to be barred under section
69. It has been held that a suit for dissolution of the partnership firm and
rendition of accounts, especially considering that the factum of non-
registration of the partnership firm would not have acted as bar in a suit
for dissolution in light of the exception carved out under Section 69(3).
70. Paragraph 8 and 14 to 16 of the aforesaid judgment reported in
2025 SCC OnLine SC 125 (supra) are quoted as under: –
“8. It is evident from a reading of sub-sections (1) and
(2) of Section 69 that it assumes a mandatory character.
Section 69(1) prohibits a suit amongst the partners of an
unregistered partnership firm, for the enforcement of a
right either arising from a contract or conferred by the
Act, unless the suit amongst the partners is in the nature
of dissolution of the partnership firm and/or rendition of
accounts. Section 69(2) prohibits the institution of a suit
by an unregistered firm against third persons for the
enforcement of a right arising from a contract. As a
consequence, a suit filed by an unregistered partnership
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firm and all proceedings arising thereunder, which fall
within the ambit of Section 69 would be without
jurisdiction.
“14. A perusal of the partnership deed clearly reveals that
the sum of Rs. 30,00,000/- which was given to the
respondent and which is now sought to be recovered, was
rendered by the petitioners as capital for the purpose of
acquiring 75% shares collectively in the partnership firm.
As per the arrangement, the respondent was to hold the
remaining 25% shares. Therefore, there is no doubt that
the suit for recovery was filed by a set of partners together
on one side, against another partner, for the purpose of
enforcing a right accruing under the agreement.
15. It is a clear as a noon day that the present suit had not
been instituted by or on behalf of the firm against any
third persons so as to fall under the ambit of Section 69(2).
The petitioners have also not filed the instant suit for
enforcing any statutory right conferred under any other
law or a common law right so as to exempt the application
of Section 69. Hence, the rigours of Section 69(1) would
apply on such a suit and the partnership firm being
unregistered would prevent the petitioners from filing a
bare suit for recovery of money from the respondent.
16. It would have instead been appropriate for the
petitioner to have preferred a suit for dissolution of the
partnership firm and rendition of accounts, especially
considering that the factum of non-registration of the
partnership firm would not have acted as bar in a suit for
dissolution in light of the exception carved out under
Section 69(3). The defence that the partnership business
had not yet commenced and thus, such a suit for
dissolution could not have been preferred, would not be of
any avail to the petitioners, particularly for overcoming
the jurisdictional bar under Section 69(1). The High Court
is right in taking the view that a suit of such nature could
not be said to be maintainable in the absence of the
registration of the partnership firm.”
71. Now coming to the facts of this case, admittedly , Samir
Kumar Yadav (since deceased) [husband of Defendant No.1 and
father of Defendant No.2] executed a deed of partnership with the
plaintiffs on 29.11.2012 registered under registration act but was not
registered under the Act of 1932. It is the case of the plaintiffs that
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prior to execution of the Partnership Deed, Samir Kumar Yadav had
induced the plaintiffs to enter into a partnership for land development
business for one of the projects at Mouza- Bhawanipur @ Solagidih
and told the plaintiffs that he had already invested Rs.25,00,000/- in
the project and for further investment, plaintiffs would be added as
partners in the project and would get immense profit. Thereafter,
Samir Kumar Yadav showed about 40 acres of vast tract of land
bearing Plot No.1327, Khata No.96 and other plots of the same khata
of Mouza Bhawanipur @ Solagidih and projected very rosy picture
regarding the land development business and upon his insistence, the
plaintiffs paid Rs.29,00,000/- only to Samir Kumar Yadav on different
dates for land development business. There is no pleading as to when
Samir Kumar Yadav showed about 40 acres of vast tract of land
bearing Plot No.1327, Khata No.96 and other plots of the same
khata of Mouza Bhawanipur @ Solagidih and this assumes
importance as the partnership deed dated 29.11.2012 registered
under the Registration Act does not refer to the said property and it
only says that Samir Kumar Yadav had invested Rs.25 Lakhs for the
land development business.
72. As per the case of the plaintiffs, initially the plaintiffs paid
Rs.5,00,000/- to Samir Kumar Yadav and thereafter, due to financial
crunch, they approached the Proforma Defendant no.3 to provide
monetary help for smooth running of the business who gave a total
amount of Rs.13,00,000/- to Samir Kumar Yadav for development of
the partnership business. The plaintiffs had issued a money receipt
dated 02.02.2013 to the proforma defendant in which Samir Kumar
Yadav was a witness. The plaintiffs had given the rest amount of
Rs.11,00,000/-, totaling to Rs. 16 lakhs in cash to Samir Kumar Yadav
and Samir Kumar Yadav had issued three money receipts to the
plaintiffs for a total of Rs.29 lakhs.
73. It is the specific case of the plaintiffs that when the plaintiffs
enquired about the status of the financial condition of the business,
Samir Kumar Yadav did not give the actual status of the financial
position of the partnership business and later on, they found that
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neither any land in Mauza Bhawanipur in Khata No.96 for the land
development business was ever purchased by Samir Kumar Yadav
nor partnership business was ever started and nothing was invested by
Samir Kumar Yadav in the business and Samir Kumar Yadav had
taken Rs.29,00,000/- from the plaintiffs by playing fraud upon them.
74. There is no pleading as to when the plaintiffs enquired from
Samir Kumar Yadav about the progress in the business and when and
how they came to know that Samir Kumar Yadav had not invested
any money in the business and when and how they discovered the
alleged fraud committed by Samir Kumar Yadav. It is important to
note that it is not the case of the plaintiffs that Samir Kumar Yadav
ever told the plaintiffs/ proforma defendant no.3 that he had
purchased the aforesaid particular property in his name, rather their
case is that Samir Kumar Yadav had shown the said property to
them and gave a rosy picture with respect to land development
business.
75. It is the case of the plaintiffs that when the plaintiffs demanded
to return their amount, Samir Kumar Yadav issued three post-dated
cheques in the name of plaintiff no.1 totaling 10 lakhs of April/May
2014 as contained in exhibit- 3 series and since he was suffering from
some disease, he had asked the plaintiff no.1 not to present the
cheques and soon thereafter died on 14.05.2014. The money is sought
to be recovered from the defendant no. 1 and 2, the legal heirs and
successors of Samir Kumar Yadav who are said to have inherited the
properties of Samir Kumar Yadav and are enjoying and possessing the
building constructed by Samir Kumar Yadav. It has been argued that
it is a common law remedy to recover money, fraudulently taken by
Samir Kumar Yadav, from plaintiff no. 1 and 2 and proforma
defendant no.3 for the partnership business of land development and
hence bar under section 69 of the Act of 1932 is not applicable. In the
aforesaid background, it is crucial as to whether the case of fraud has
been properly pleaded and also proved to seek exemption of bar under
section 69 of the Act of 1932.
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76. It is important to note that in the partnership deed (exhibit-1) it
has been simply mentioned that Samir Kumar Yadav had already
invested an amount of Rs.25 lakhs on one of his projects at
Bhawanipur and the plaintiffs were to invest Rs. 7.5 lakhs each and
the shared profit and loss would be 50% of Samir Kumar Yadav and
25% each of the plaintiff no. 1 and 2 and a bank account was also to
be opened by the plaintiff no.1 and Samir Kumar Yadav. Although
the plaintiffs in their plaint have alleged that Samir Kumar Yadav
had not taken any steps for opening the bank account but have
completely omitted to say that the responsibility of opening the bank
account was the joint responsibility of the plaintiff no. 1 and Samir
Kumar Yadav. It is alleged that the partnership business of land
development never commenced and bank account was also not
opened and the entire money paid to Samir Kumar Yadav was utilised
by Samir Kumar Yadav. As per the plaintiffs, the partnership
agreement amongst the plaintiffs and Samir Kumar Yadav was
entered and the plaintiffs also invested Rs.29 lakhs although they were
to invest only 15 lakhs but the partnership business did not commence
and in fact Samir Kumar Yadav did not have/purchase any land for
development in Bhawanipur, which was the sole purpose of
partnership and that the amount was fraudulently taken by Samir
Kumar Yadav (deceased partner).
77. In order to escape the rigors and bar under Section 69 of the Act
of 1932, it has been argued by the learned counsel for the plaintiffs-
respondents that the suit arises out of civil liability and the plaintiffs
are asserting common law right against Samir Kumar Yadav who
fraudulently induced the plaintiffs to invest Rs. 29,00,000/- by falsely
claiming to start a land development project at Bhawanipur which
never existed.
78. In LPA No. 66 of 2006 (Ram Narayan Renu vs. The State of
Bihar & Others) it has been held that right to recover money lost to
the plaintiff by reason of an action or inaction on the part of the
defendant is a common law right and unless there is express bar for
exercising such common law right or withdrawal of such right by an
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express provision of law or unless the same is gathered by necessary
implication, it cannot be inferred that the party had no right of action.
It was submitted that as far as right to sue is concerned, it is common
law or inherent right. The principle of ubi jus ibi remedium was also
referred to submit that where there is a right there is remedy.
79. It has been argued that exhibits 2, 2/1 and 2/2 would reveal that
Samir Kumar Yadav (in his individual capacity) took money from the
plaintiffs for investing in a land development project. As per para 7 of
the plaint, the plaintiffs came to know on enquiry that no land for land
development business was ever purchased by Samir Kumar Yadav
and in order to deceive the plaintiffs, Samir Kumar Yadav executed a
deed of partnership dated 29.11.2012 (exhibit-1). It has been also
alleged that after receiving money Samir Kumar Yadav played fraud
and diverted the funds for his personal use. It was also asserted that as
per clause 6 of the deed of partnership dated 29.11.2012, it was
mandatory to open a bank account in the name of the firm, but no
such account was opened by Samir Kumar Yadav and further from
Exhibit-3, 3/1 and 3/2, it is apparent that Samir Kumar Yadav in his
personal capacity had issued three post-dated cheques (as part
payment) in the name of the plaintiff No. 1 when the plaintiffs after
discovery of fraud by Samir Kumar Yadav demanded the amount of
Rs. 29,00,000/- and therefore it is asserted that the plaintiffs have a
common law right to recover their lost money from Samir Kumar
Yadav in his personal capacity. The suit was filed on 15.12.2014 after
the death of Samir Kumar Yadav who expired on 14.05.2014. As per
the plaint, Samir Kumar Yadav and the plaintiffs executed partnership
deed on 29.11.2012.
80. The perusal of partnership deed reveals that neither any details
of the property at Bhawanipur has been mentioned nor it has been
mentioned that Samir Kumar Yadav had invested Rs. 25,00,000/- to
buy any land or had already bought any land. It has been simply
mentioned that Samir Kumar Yadav had invested Rs. 25,00,000/- on
the project. The partnership was at will and as per partnership deed,
the plaintiffs were to invest Rs. 7,50,000/- each and the bank account
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was to be opened for the project and was to be operated jointly by
Samir Kumar Yadav and Rama Shankar Roy. It was never the sole
responsibility of Samir Kumar Yadav to open the bank account. The
profit and loss were to be distributed amongst the partners to the
extent of 50% to Samir Kumar Yadav and 25% each to the plaintiffs.
81. It has been alleged in the plaint that Samir Kumar Yadav
showed about 40 acres of land pertaining to Khata No. 96 Plot No.
1327 and other plots of Mouza Bhawanipur and projected a very rosy
picture regarding land development business and upon his insistence,
the plaintiffs paid Rs. 29,00,000/-. However, no particulars have been
mentioned in the plaint as to when Samir Kumar Yadav had showed
the land of the aforesaid description.
82. In paragraph 7 of the plaint, an allegation has been made that
after making huge investment of Rs.29,00,000/-, the plaintiffs started
to inquire from Samir Kumar Yadav regarding the status of financial
condition of the business and he on some pretext or the other did not
give the actual status of the financial position of partnership business
and later on, upon inquiry made by the plaintiffs, it was found that no
land for land development business was purchased by Samir Kumar
Yadav and in order to deceive the amount of the plaintiffs, Samir
Kumar Yadav executed a deed of partnership, though actually no
partnership business was started as nothing was invested by Samir
Kumar Yadav in the business and he had taken Rs.29,00,000/- from
the plaintiffs by playing fraud upon them.
83. This Court finds that while making aforesaid statement in
paragraph 7 of the plaint, no foundational detail has been furnished as
to when the plaintiffs enquired from Samir Kumar Yadav and when
they discovered that no land was purchased by Samir Kumar Yadav
for land development business. This is over and above the fact that it
is not the case of the plaintiffs that Samir Kumar Yadav ever projected
that the land of the aforesaid description was already purchased by
Samir Kumar Yadav or ever belonged to Samir Kumar Yadav. As per
the plaint Samir Kumar Yadav had only stated that he had already
invested Rs. 25 lakhs in the land development business.
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84. It has been further asserted in paragraph 8 of the plaint that
when the plaintiffs got information that Samir Kumar Yadav had no
land in mouza Bhawanipur in Khata No.96, the plaintiffs started
making demand of refund of their amount, which was taken by Samir
Kumar Yadav. In connection with this statement also, no particulars
have been mentioned in the entire plaint as to when and how the
plaintiffs discovered the alleged fraud and when they demanded the
amount back and when they were issued post-dated cheques by Samir
Kumar Yadav. The fact remains that in spite of allegation of fraud, it
was stated by the plaintiffs that at the request of Samir Kumar Yadav,
they did not deposit the cheques.
85. Admittedly, the plaintiffs neither gave any notice seeking
dissolution of the partnership firm on account of fraud nor took any
steps to rescind the contract on account of fraud nor took any step for
rendition of account of the partnership firm.
86. It was only after death of Samir Kumar Yadav, the plaintiff
no.1 took steps to issue notice to his legal heirs and successors and
then joined hands with plaintiff no.2 and also included the claim of
defendant no.3 and filed suit for recovery of money of Rs.29 lakhs so
as to recover the money from the property of Samir Kumar Yadav.
Admittedly, one of the personal properties of Samir Kumar Yadav
stood mortgaged to bank in the cash credit account of the proforma
defendant no.3 in which Samir Kumar Yadav was also a guarantor.
The plaintiffs alleged that the partnership business never started.
87. As already mentioned above , in entire plaint there is no
allegation that Samir Kumar Yadav had ever told the plaintiffs or even
the proforma defendant no.3 that he had already purchased land in
Bhawanipur for land development business by investing Rs.25 lakhs,
much less purchased particular land in Khata No. 96 and the
partnership deed also does not refer to any purchase of land by Samir
Kumar Yadav but it only refers that Samir Kumar Yadav had invested
Rs.25 lakhs and the purpose for which Rs.25 lakhs was invested could
only come to light if the plaintiffs had taken steps for rendition of the
accounts of the firm, as on the date of filing the suit the partnership
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had already dissolved on account of death of the third partner Samir
Kumar Yadav.
88. This Court finds that though allegation of fraud has been made
in the plaint, but no foundational particulars with respect to date of the
various incidents with regard to allegations made against Samir
Kumar Yadav have been mentioned. This is over and above the fact
that even as per the plaint Samir Kumar Yadav never projected that he
had purchased any property in his name by investing Rs. 25 lakhs for
land development business. In all the exhibits i.e. Exhibits 2, 2/1, 2/2
and Exhibit-A, it has been simply mentioned that partnership deed
dated 29.11.2012 was entered into for developing the land in Mouza
Bhawanipur in Khata No. 96 Plot No. 1327, but in these exhibits also,
there is no mention that Samir Kumar Yadav ever purchased or ever
projected that he had already purchased the aforesaid property for land
development business.
89. The partnership deed is dated 29.11.2012 showing three
partners, namely, Samir Kumar Yadav, Dina Nath Roy and Rama
Shankar Rai.
90. This Court further finds that as per the deed of partnership
dated 29.11.2012, Samir Kumar Yadav had already invested an
amount of Rs. 25,00,000/- on the project mentioned in the deed of
partnership and the capital investment was to be contributed by the 2 nd
partner and 3rd partner to the extent of Rs. 7,50,000/- each and
therefore the total capital investment would become Rs. 40,00,000/-
and the profit and loss share proportion amongst three partners i.e.
Samir Kumar Yadav, Dina Nath Roy and Rama Shankar Rai was in
percentage ratio of 50% : 25% : 25%.
91. By virtue of deed of partnership dated 29.11.2012, the
partnership had commenced and this court is of the considered view
that commencement of partnership is not the same as commencement
of partnership business. Further as per the deed of partnership, the
bank account was to be opened for the particular project in any bank
at Bokaro Steel City and was to be operated jointly by Samir Kumar
Yadav and Rama Shankar Rai, but as per the records no bank account
56
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was opened. In the meantime, Samir Kumar Yadav expired in the year
2014. It is the case of the plaintiffs that they had made investment in
the partnership firm of Rs. 16,00,000/- in cash and certainly the cash
investment has nothing to do with opening of bank account.
92. This Court finds that the plaintiffs had filed the suit for
realization of the amount invested in the partnership firm, but instead
of filing a suit for accounts upon dissolution of the firm on account of
death of Samir Kumar Yadav, they filed the suit for realization of
their alleged contribution made to the firm by alleging that Samir
Kumar Yadav had defrauded them and induced them to make
investment in the partnership firm.
93. This Court is of the considered view that allegation of fraud
was made without any foundational particulars, after death of the
partner Samir Kumar Yadav when the partnership was already
dissolved due to death of one of the partners, namely, Samir Kumar
Yadav and the suit was also decreed without production of the
accounts of the partnership firm. The learned trial court has not
recorded any finding as to when deceased partner Samir Kumar
Yadav committed the alleged fraud and when and how and upon what
enquiries and from whom the plaintiffs and the defendant no.3
discovered the fraud alleged to have been committed by deceased
partner Samir Kumar Yadav. These foundational facts were neither
pleaded nor proved by the plaintiffs. Such foundational pleadings are
not only required for identifying the cause of action for the purposes
of limitation etc but also required to be pleaded and adequately proved
by the person who alleges fraud to claim a relief on account of fraud .
The pleadings assume importance as the allegation of fraud has to be
proved beyond reasonable doubt and the defendant should have an
opportunity to respond to the particulars of such pleadings and take an
adequate defense. It is in this backdrop, the party alleging fraud has to
stick to the foundational pleading of fraud and is not permitted to go
beyond pleading. When foundational pleadings on fraud are missing,
the suit based on fraud has to fail and the rigors of statutory bar under
section 69 will come into play when it relates to allegation of fraud
57
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against a partner of a partnership firm unregistered under the Act of
1932. In absence of fraud, the statutory bar under section 69 of the
Act of 1932 is not excluded.
94. This court is of the considered view that the plaintiffs have
made allegations of fraud without material particulars and have also
failed to prove the allegations of fraud. There is neither any proper
and particular pleadings with regards to the allegation of fraud giving
the foundational details nor there is any proof of fraud against Samir
Kumar Yadav. The suit was filed with allegation of fraud to
completely oust the remedies, rights and liabilities of partners under
the Act of 1932 and to directly realise the amount so contributed in
the partnership firm from the legal heirs and successors of the
deceased partner. The remedy was certainly available for rendition of
accounts of the partnership firm under section 69(3) of the Act of
1932 when the partnership stood dissolved upon death of the partner
Samir Kumar Yadav and even a remedy was available for dissolution
of the firm during life time of Samir Kumar Yadav, which the
plaintiffs or the defendant no. 3 did not avail. The plaintiffs were
seeking to recover the capital contribution of Rs.16 lakhs as per the
partnership deed which they claimed to have paid in cash and for
realisation of further payment of Rs.13 lakhs by the defendant no.3
being the contribution in the partnership business by alleging that the
partnership business never started. However, the fact remains that
partnership had commenced and merely because the partnership
business was never started that does not take the matter outside the
coverage of the Act of 1932.
95. In view of the aforesaid findings, this point of determination
no. (iii) is decided in favour of the appellants and against the
respondents.
Points of determination no. (iv) and (v)
96. Section 69 of the Act of 1932 deals with the effect of non-
registration, which is quoted as under: –
“69. Effect of non-registration.–(1) No suit to enforce a
right arising from a contract or conferred by this Act shall be
instituted in any Court by or on behalf of any person suing as
58
2025:JHHC:20764a partner in a firm against the firm or any person alleged to
be or to have been a partner in the firm unless the firm is
registered and the person suing is or has been shown in the
Register of Firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be
instituted in any Court by or on behalf of a firm against any
third party unless the firm is registered and the persons suing
are or have been shown in the Register of Firms as partners in
the firm.
(3) The provisions of sub-sections (1) and (2) shall apply also
to a claim of set-off or other proceeding to enforce a right
arising from a contract, but shall not affect–
(a) the enforcement of any right to sue for the dissolution
of a firm or for accounts of a dissolved firm, or any right
or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court
under the Presidency-towns Insolvency Act, 1909, or the
Provincial Insolvency Act, 1920, to realise the property
of an insolvent partner.
(4) This section shall not apply–
(a)………………………………………………………”
97. At this stage it would be relevant to refer to the judgements
rendered by the Hon’ble Supreme Court in the context of bar to civil suit
under section 69(2) of the Act of 1932, in particular, judgment in the
case of Raptakos Brett and Co (supra) reported in (1998) 7 SCC 184
which has been explained in the judgement passed in the case of
Haldiram Bhujiawala (supra), reported in (2000) 3 SCC 250 and
Purushottam (supra) reported in (2007) 15 SCC 58 and has also been
considered and summarized in the judgement passed in the case of Shiv
Developers (supra) decided by Hon’ble Supreme Court in Civil Appeal
No. 785 of 2022, whose paragraph 16.2 [in the context of the judgement
of Raptakos Brett and Co (supra)] and paragraph 17 are quoted as under
:-
“16.2 This Court further exposited on the scope of the words
“enforcing a right arising under the contract”, as used in Section
69(2) of the 1932 Act; and after a detailed survey of the reports and
precedents which led to the frame of the said provision as also after
reference to various authorities on the point, this Court explained
the rationale and object of the provision that the same was intended
to protect those in commerce who deal with a partnership firm in
business, inasmuch as they ought to be enabled to know the names
of the partners of the firm before they deal with them in business;
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and the bar of Section 69(2) is not attracted to any and every
contract referred to in the plaint as a source of title to an asset
owned by the firm. This Court held and explained as under:
“23. The further and additional but equally important aspect
which has to be made clear is that the contract by the
unregistered firm referred to in Section 69(2) must not only be
one entered into by the firm with the third-party defendant but
must also be one entered into by the plaintiff firm in the
course of the business dealings of the plaintiff firm with such
third-party defendant.
24. … The real crux of the question is that the legislature,
when it used the words “arising out of a contract” in Section
69(2), it is referring to a contract entered into in course of
business transactions by the unregistered plaintiff firm with
its defendant customers and the idea is to protect those in
commerce who deal with such a partnership firm in business.
Such third parties who deal with the partners ought to be
enabled to know what the names of the partners of the firm are
before they deal with them in business.
25. Further, Section 69(2) is not attracted to any and every
contract referred to in the plaint as the source of title to an
asset owned by the firm. If the plaint referred to such a
contract it could only be as a historical fact. For example, if
the plaint filed by the unregistered firm refers to the source of
the firm’s title to a motor car and states that the plaintiff has
purchased and received a motor car from a foreign buyer
under a contract and that the defendant has unauthorisedly
removed it from the plaintiff firm’s possession, — it is clear
that the relief for possession against the defendant in the suit
does not arise from any contract which the defendant entered
into in the course of the plaintiff firm’s business with the
defendant but is based on the alleged unauthorised removal of
the vehicle from the plaintiff firm’s custody by the defendant. In
such a situation, the fact that the unregistered firm has
purchased the vehicle from somebody else under a contract has
absolutely no bearing on the right of the firm to sue the
defendant for possession of the vehicle. Such a suit would be
maintainable and Section 69(2) would not be a bar, even if the
firm is unregistered on the date of suit. The position in the
present case is not different.”
17. The aforesaid decision in Haldiram Bhujiawala(supra) was
further considered and applied by this Court in Purushottam
(Supra) while holding as under :
“24. With respect, we find ourselves in complete agreement
with the principles enunciated in Haldiram Bhujiawala.
Having regard to the purpose Section 69(2) seeks to achieve
and the interest sought to be protected, the bar must apply60
2025:JHHC:20764to a suit for enforcement of right arising from a contract
entered into by the unregistered firm with a third party in
the course of business dealings with such third party. If the
right sought to be enforced does not arise from a contract to
which the unregistered firm is a party, or is not entered into
in connection with the business of the unregistered firm with
a third party, the bar of Section 69(2) will not apply.”
98. The Hon’ble supreme court while applying the aforesaid
position in law referred to the transaction involved in the said case
whose significant feature was the sale of shares by the unregistered
plaintiff firm to the contesting defendant and not the one arising out of
the business of the partnership firm and it was held in paragraph 20 of
the judgement that the transaction in question was not the one entered
into by the plaintiff firm during the course of business (of building
construction) and it had been an independent transaction of sale of
firm’s share in the suit property to the contesting defendant and
therefore the bar under section 69(2) of the Act of 1932 was not
applicable. The Hon’ble Supreme Court while holding the suit
maintainable also held that the subject suit cannot be said to be the
one for enforcement of right arising from a contract; rather the subject
suit is clearly the one where the plaintiff seeks common law remedies
with the allegations of fraud and misrepresentation as also the suit is
for statutory rights of injunction and declaration in terms of the
provisions of the Specific Relief Act, 1963 as also the Transfer of
Property Act, 1882 (while alleging want of the sale consideration) and
ultimately held that the bar of Section 69(2) of the Act of 1932 does
not apply to the case. Paragraph 20 of the aforesaid judgment is
quoted as under: –
“20. To put it differently, the relevant principles, when applied
to the facts of the present case, leave nothing to doubt that the
transaction in question was not the one entered into by the
plaintiff firm during the course of its business (i.e. of building
construction); and it had been an independent transaction of
sale, of the firm’s share in the suit property, to the contesting
defendants. The bar of Section 69(2) is not attracted in relation
to the said sale transaction. Moreover, the subject suit cannot
be said to be the one for enforcement of right arising from a
contract; rather the subject suit is clearly the one where the
plaintiff seeks common law remedies with the allegations of
61
2025:JHHC:20764fraud and misrepresentation as also of the statutory rights of
injunction and declaration in terms of the provisions of the
Specific Relief Act, 1963 as also the Transfer of Property Act,
1882 (while alleging want of the sale consideration). Therefore,
the bar of Section 69(2) of the 1932 Act does not apply to the
present case.”
99. Upon conjoint reading of section 69 (1) and (2) of the Act of
1932 read with the judgements relied upon by the parties, this court
finds that the law relating to bar under section 69 has been crystalized
in the recent judgement passed by the Hon’ble Supreme Court
reported in 2025 SCC Online SC 125 (supra), wherein it has been
held that though section 69 (1) and (2) of the Act of 1932 assumes a
mandatory character, but the bar of filing the civil suit under section
69 of the aforesaid Act of 1932 will not apply if the suit is filed for
enforcement of any statutory right or for enforcement of common law
rights. In the said case, the petitioners before the Hon’ble Supreme
Court had not filed the suit for enforcing any statutory right conferred
under any other law or a common law right so as to exempt the
application of Section 69 and hence it was held that the rigors of
Section 69(1) would apply on such a suit and the partnership firm
being unregistered would prevent the petitioners from filing a bare
suit for recovery of money from the respondent. In the said case it has
also been held that mere fact that the partnership business had not
commenced does not take the case out of the rigors of bar to suit
under section 69 of the Act of 1932. Paragraph 8, 15 and 16 of the
aforesaid judgement are quoted as under: –
“8. It is evident from a reading of sub-sections (1) and
(2) of Section 69 that it assumes a mandatory character.
Section 69(1) prohibits a suit amongst the partners of an
unregistered partnership firm, for the enforcement of a
right either arising from a contract or conferred by the
Act, unless the suit amongst the partners is in the nature
of dissolution of the partnership firm and/or rendition of
accounts. Section 69(2) prohibits the institution of a suit
by an unregistered firm against third persons for the
enforcement of a right arising from a contract. As a
consequence, a suit filed by an unregistered partnership
firm and all proceedings arising thereunder, which fall
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within the ambit of Section 69 would be without
jurisdiction.
9………….
15. It is a clear as a noon day that the present suit had
not been instituted by or on behalf of the firm against any
third persons so as to fall under the ambit of Section
69(2). The petitioners have also not filed the instant suit
for enforcing any statutory right conferred under any
other law or a common law right so as to exempt the
application of Section 69. Hence, the rigours of Section
69(1) would apply on such a suit and the partnership firm
being unregistered would prevent the petitioners from
filing a bare suit for recovery of money from the
respondent.
16. It would have instead been appropriate for the
petitioner to have preferred a suit for dissolution of the
partnership firm and rendition of accounts, especially
considering that the factum of non-registration of the
partnership firm would not have acted as bar in a suit for
dissolution in light of the exception carved out under
Section 69(3). The defence that the partnership business
had not yet commenced and thus, such a suit for
dissolution could not have been preferred, would not be
of any avail to the petitioners, particularly for
overcoming the jurisdictional bar under Section 69(1).
The High Court is right in taking the view that a suit of
such nature could not be said to be maintainable in the
absence of the registration of the partnership firm.”
(emphasis supplied)
100. While deciding issue no. 3 as to Whether the suit is barred by
Section 69(2) of Indian Partnership Act, 1932? – the learned trial
court recorded as under: –
“As discussed above, it is admitted case that the said
firm is unregistered firm as it was not registered before
Registrar of Firm and the names of the partners were
not included in the registrar of firm. However, from the
oral and documentary evidence, it is evidently clear
that actually the partnership business never started and
by playing fraud upon the plaintiffs, Samir Kumar
Yadav. husband of the Defendant No.01 and the father
of the Defendant No. 02 took Rs.29,00,000/-, out of
which Rs.13,00,000/- was taken from the Defendant and
Samir Kumar Yadav also induced the Defendant No.03
to enhance cash credit of his account lying with
63
2025:JHHC:20764Allahabad Bank as Samir Kumar Yadav mortgaged his
property and became guarantor of proforma Defendant
No.03 as he mortgaged his immovable property and
thereafter, the cash credit limit of the Defendant No.03
was enhanced upto Rs.30,00,000/- and the Defendant
No.03 after withdrawing the amount from the bank had
given Rs.13,00,000/- to the plaintiffs and Samir Kumar
Yadav through different cheques and to this effect, one
money receipt (vide Exhibit-B) was also issued by the
plaintiffs in which Samir Kumar Yadav became witness.
The oral and documentary evidence regarding
non-inception of partnership business, playing
deception upon the plaintiffs and Defendant No.03 and
taking of Rs.29,00,000/- by Samir Kumar Yadav have
not been controverted by the Defendant No.01 and 02
who are the legal heirs of Samir Kumar Yadav and
enjoying the property which was mortgaged by Samir
Kumar Yadav to enhance the cash credit limit of
Defendant No.03 and the Defendant No.03 is paying
interest on the said amount and these facts have not
either been controverted or challenged by the
Defendant No.01 and it has become unimpeached and
unrebutted.
Now, in the light of above discussions, Section
69(2) of the Indian Partnership Act, 1932 and relevant
principles are being discussed herein below that the bar
engrafted u/s 69 of Indian Partnership Act, 1932 is
applicable in the case on hand or not.
For dealing with the question raised in this issue,
it may be taken note of the provisions contained in
Section 69(2) of the Act of 1932 as
follows…………………………………………
Ld. Counsel for the plaintiff further argued that the
question arising in this issue could be directly answered
with reference to the principles enunciated by the
Hon’ble Supreme Court in the case of Raptakos Brett &
Co. Ltd. Vs. Ganesh Property which have been further
explained and applied by the Hon’ble Supreme Court in
the case of Haldiram Bhujiawala and Purushottam, In
Haldiram Bhujiawala case the Hon’ble Supreme Court
has laid down principles that to attract the bar of
Section 69(2) of Indian Partnership Act, 1932, the
contract in question must be the one entered into by
firm with the third party defendant and must also be the64
2025:JHHC:20764one entered into by the plaintiff firm in the course of its
business dealings; and that Section 69(2) of the Act of
1932 is not a bar to a suit filed by an unregistered firm,
if the same is for enforcement of statutory right or
common law right.
In the suit at hand that no contract has been
entered into by the firm or the partners of the firm with
the third party (defendants) nor it was entered into by
the plaintiff’s firm or plaintiffs in the course of its
business dealing, rather the admitted fact is that the
husband of the Defendant No.01 and father of the
defendant no 02 i.e. Samir Kumar Yadav by playing
fraud upon the plaintiffs and the Defendant No.03 took
Rs 29,00,000/- and when it was detected nothing was
invested by Samir Kumar Yadav nor he had any land in
Khata No.96. Thereafter, the plaintiffs started to make
demand and in order to repay the said amount, Samir
Kumar Yadav had Issued three cheques having total
amount of Rs.10,00,000/- and all these facts clearly
suggestive of this fact that actually no partnership
business had started and the amount was taken by
Samir Kumar Yadav by playing fraud upon the
plaintiffs and the Defendant No.03 as such the bar
engrafted u/s 69(2) of the Act of 1932 and the principles
vividly exposited in Raptakos Brett & Co. Ltd. Vs.
Ganesh Property and Haldiram Bhujiawala and
Purushottam is not applicable in the case at hand
because the plaintiffs have filed the suit for enforcement
of statutory right or a common law right.
While answering the Issue No.01 in Haldiram
Bhujiwala case, the Hon’ble Supreme Court referred
………………….
Taking up the facts of the present case, one of the
significant features herein is that actually no
partnership business had Initiated, rather by playing
fraud and deception, Samir Kumar Yadav took
Rs.29,00,000/- from the plaintiffs including
Rs.13,00,000/- from proforma defendant/Defendant
No.03 and in order to repay the amount issued three
cheques and in the meantime he died.
The transaction in question is clearly between the
parties for the purpose of business transaction and
Samir Kumar Yadav by playing fraud upon the
plaintiffs and the Defendant No.03 took Rs. .29,00,000/-
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2025:JHHC:20764
from them and no evidence has been adduced by the
Defendants that actually the partnership business had
started and there was vast tract of land was in the name
of Samir Kumar Yadav and the same was incorporated
for the partnership business. As such it can be safely
inferred that the transaction arising out of contract with
the third party and this factual aspect is apparent from
the basic plaint averments, oral and documentary
evidence on record.
Therefore, the bar of Section 69(2) of the Act of
1932 doesn’t apply to the present case, as such the
Issue No. 03 is decided in favour of the plaintiffs and
against the Defendant No.01 & 02.
101. While recording the aforesaid findings, the learned trial
court clearly recorded that-
A. the partnership deed dated 29.11.2012 amongst plaintiffs and
deceased Samir Kumar Yadav was registered under the
Registration Act, but was not registered under the Indian
Partnership Act, 1932.
B. the transaction in question is clearly between the parties for the
purpose of business transaction;
C. one of the significant features is that actually no partnership
business had initiated, rather by playing fraud and deception,
Samir Kumar Yadav took Rs.29,00,000/- from the plaintiffs
including Rs.13,00,000/- from proforma defendant/Defendant
No.03 and in order to repay the amount issued three cheques
and in the meantime he died. (16 lakhs in cash from the
plaintiffs and 13 lakhs through cheque from defendant no. 3);
D. no partnership business had initiated and in fact no evidence
was adduced by the Defendant nos. 1 and 2 that actually the
partnership business had started;
E. no evidence has been adduced by the Defendant no. 1 and 2
that there was vast tract of land in the name of Samir Kumar
Yadav and the same was incorporated for the partnership
business;
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F. there is no involvement of any third party therefore the suit was
not barred under section 69(2) of the Indian Partnership Act,
1932;
G. otherwise also, section 69(2) of the Act of 1932 was not
applicable in the case at hand because the plaintiffs filed the
suit for enforcement of statutory right or a common law right.
102. This court is of the considered view that so far as the bar of suit
under section 69(2) of the Act of 1932 is concerned , it has been
rightly held to be not applicable as the suit was primarily between the
plaintiffs [who were also the partners of the unregistered firm] and the
legal heirs and successors of the deceased partner and the suit was not
relating to enforcement of a right against third party arising from a
contract with the partnership firm. Section 69(2) prohibits the
institution of a suit by an unregistered firm against third persons for the
enforcement of a right arising from a contract with third parties .
103. This is in consonance with the judgements rendered by the
Hon’ble Supreme Court in the context of bar to civil suit under section
69(2) of the Act of 1932 in the case of Raptakos Brett and Co (supra)
reported in (1998)7 SCC 184 which has been explained in the
judgement passed in the case of Haldiram Bhujiawala (supra),
reported in (2000) 3 SCC 250 and Purushottam (supra) reported in
(2007) 15 SCC 58 and has also been considered and summarized in the
judgement passed in the case of Shiv Developers (supra) decided by
Hon’ble Supreme Court in Civil Appeal No. 785 of 2022, as discussed
above.
104. In the present case, the learned trial court held that bar under
Section 69(2) of the 1932 Act will not apply on both the counts-
(a) the case is not relating to any third-party contract with
the partnership firm and
(b) that the plaintiffs were seeking to enforce common
law rights for recovery of the amount fraudulently
received by Samir Kumar Yadav (deceased partner)
from the plaintiffs/defendant No.3.
105. Since, this court has held above while answering point of
determination no. (iii) that the allegation of fraud by Samir Kumar
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2025:JHHC:20764
Yadav (deceased partner) has neither been properly pleaded nor
proved, the finding of the learned trial court with respect to bar under
section 69 (2) of the Act of 1932 is sustained only on the ground that
the case is not relating to any third-party contract with the partnership
firm.
106. While recording the aforesaid findings, the learned trial court
has neither framed any issue nor recorded any finding with respect to
bar under section 69(1) of the Indian Partnership Act, 1932. The
present case certainly does not involve enforcement of any statutory
right and no such argument has been advanced on behalf of the
respondents (plaintiffs) that the suit involved enforcement of any
statutory right. As already held above, the allegation of fraud against
the deceased partner Samir Kumar Yadav has neither been properly
pleaded nor proved and accordingly, the argument of the respondents
(plaintiffs) that they were seeking to enforce common law right on
account of fraud is also not sustainable.
107. The argument on behalf of the respondents (plaintiffs) is that
the suit involves enforcement of common-law right-on account of
fraud and also the fact that partnership business never commenced and
that the entire amount was taken by Samir Kumar Yadav in his
individual capacity and was to be recovered from the property of
Samir Kumar Yadav which was being enjoyed by his legal heirs and
successors, the defendant no. 1 and 2. It is also their case that claim of
the plaintiffs was outside the purview of the partnership and hence the
suit was maintainable. It is their case that in order to deceive the
plaintiffs, Samir Kumar Yadav had executed a deed of partnership
dated 29.11.2012 (exhibit-1) but after receiving the money from the
plaintiffs, both directly and through the proforma defendant no. 3,
Samir Kumar Yadav played fraud upon the plaintiffs and diverted the
entire fund to his personal use. It has further been argued that the
learned trial court has rightly held that since no actual business had
commenced and the suit was based on allegation of fraud, the bar
under Section 69 does not apply. On the other hand, it is the case of
the the appellants (defendant no.1 and 2) that the plaintiffs cannot
68
2025:JHHC:20764
file suit to enforce a right arising from a contract i.e., partnership
agreement against Samir Kumar Yadav (deceased partner) from his
legal heirs (defendant no.1 and 2) and the bar under section 69 (1) of
the Act of 1932 would apply.
108. This court finds that it was the plaintiffs’ own case that the
amount was paid by the plaintiffs for the partnership business; the
amount was an investment in partnership business and the money
receipts as exhibited also showed that the alleged amount was given in
the partnership business. Admittedly, the partnership firm was formed
through registered deed, registered under the registration act and
contribution of the plaintiffs in the partnership was also mentioned. It
was the case of the plaintiffs that they had given money for the
partnership business and pursuant to the partnership deed. In such
circumstances it cannot be said that the entire alleged amount was
taken by Samir Kumar Yadav in his individual capacity and not as a
partner so as to maintain the suit.
109. Section 69(1) of the Act of 1932 bars enforcement of right by
or on behalf of a person suing as a partner and against the person who
has been a partner unless the partnership firm is registered under the
Act of 1932. The suit was certainly barred under section 69 (1) of the
Act of 1932.
110. Section 69(1) of the Act of 1932 clearly provides that no suit to
enforce a right arising from a contract or conferred by the Act of
1932 shall be instituted in any Court by or on behalf of any person
suing as a partner in a firm against the firm or any person alleged to
be or to have been a partner in the firm unless the firm is registered.
111. The present suit was filed by the two partners of unregistered
partnership firm for realisation of money invested in the partnership
firm from the legal heirs of the deceased partner, Samir Kumar
Yadav. Further, the argument that the partnership business had not
yet commenced and thus, such a suit was maintainable is of no avail
to the plaintiffs for overcoming the jurisdictional bar under Section
69(1). The formation of partnership firm is different from
commencement of business of partnership firm. Once a partnership
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firm is formed and partners contribute in the partnership as capital or
for business, the bar under section 69 (1) of the Act of 1932 would be
applicable in connection with filing of the suit seeking enforcement of
right by or on behalf of a partner against another partner, unless the
partnership firm is registered under the Act of 1932.
112. This court is of the considered view that in the present case the
suit is barred in terms of section 69(1) of the Act of 1932 as the
plaintiffs are seeking to recover the amount invested in the
unregistered partnership firm/ partnership business. They claim to
have invested 15 lakhs as capital (7.5 lakh by each plaintiff) in terms
of the partnership deed and claim to have additionally invested Rs. 1
lakh in partnership business, total Rs.16 lakhs in cash.
113. Section 69(3) of the Act of 1932 provides that the bar to
institute suit under Section 69(1) and under Section 69(2) shall also
apply, inter alia, to other proceedings to enforce a right arising from a
contract, but shall not affect the enforcement to any right to sue for the
dissolution of a firm or for accounts of a dissolved firm or any right or
power to realise the property of a dissolved firm.
114. In the present case, the partnership stood dissolved prior to
filing of the suit on account of death of Samir Kumar Yadav
(deceased partner) and the suit has been filed for recovery of alleged
investment in the partnership firm from the legal heirs and successors
of Samir Kumar Yadav (deceased partner) by alleging fraud against
deceased partner Samir Kumar Yadav and consequently seeking
enforcement of common law right without availing the remedy of
rendition of accounts of the partnership firm in terms of Section 69(3)
of the Act of 1932. As held above, the allegation of fraud has neither
been properly pleaded nor proved. Consequently, bar under section
69(1) comes into play and the only remedy left was seeking rendition
of accounts of the partnership firm in terms of section 69(3) of the Act
of 1932.
115. In order to wriggle out from the aforesaid bar to suit under
Section 69(1) of the Act of 1932, it has been argued by the plaintiffs
that the suit was filed in their individual capacity primarily seeking to
70
2025:JHHC:20764
recover the payment made by the plaintiffs/Defendant No.3 to Samir
Kumar Yadav (deceased partner) in his individual capacity and
therefore, it has been argued that the suit was maintainable in spite of
non-registration of the partnership deed dated 29.11.2012 under the
Act of 1932 and the suit was not barred under Section 69(1) of the Act
of 1932. It is also their specific case that the partnership business
never commenced and therefore, bar under Section 69 of the Act of
1932 was itself not maintainable.
116. The aforesaid argument is devoid of any merits. It was never
the case of the plaintiffs that they had given money to Samir Kumar
Yadav (partner) in his individual capacity. Plaintiffs, according to their
own case, had entered into the partnership business with Samir Kumar
Yadav and they had invested in the partnership business as partners of
the firm and were seeking recovery of the money paid which according
to them was diverted for his own use by Samir Kumar Yadav. The
plaintiffs proceeded without seeking rendition of the account of the
partnership firm although their case was that the they had invested in the
partnership business.
117. As a cumulative effect of the aforesaid findings, it is held that
the suit was not barred under section 69(2) of the Act of 1932 but was
barred under section 69(1) of the Act of 1932.
118. The finding and the consequences are summarized as under:-
i. The point of determination no. (i) has been decided against
the respondents (plaintiffs) and in favour of the appellants
and it is held that the plaintiffs could not have claimed a sum
of Rs. 13 lakhs on behalf of Ram Das Singh i.e., sole
proforma defendant.
ii. The point of determination no. (ii) has been decided in favour
of the respondents (plaintiffs) and against the appellants and
it is held that the suit was not barred by section 5 read with
section 8 of the Arbitration and Conciliation Act, 1996.
iii. The point of determination no. (iii) has been decided against
the respondents (plaintiffs) and in favour of the appellants
and it is held that the plaintiffs have neither properly pleaded71
2025:JHHC:20764nor proved the allegation of fraud against Samir Kumar
Yadav (deceased partner).
iv.The point of determination no. (iv) has been decided against
the appellants and in favour of the respondents (plaintiffs)
and it is held that the suit was not barred by section 69(2) of
the Act of 1932.
v. The point of determination no. (v) has been decided in
favour of the appellants and against the respondents
(plaintiffs) and it is held that the suit was barred by section
69(1) of the Act of 1932. The firm being unregistered, the
plaintiffs had a remedy to seek rendition of accounts of the
firm in terms of section 69(3) of the Act of 1932.
119. Consequently, the suit is held as not maintainable in view of
bar under section 69(1) of the Act of 1932.
120. The impugned judgment passed by the learned Sub-Judge-IV,
Bokaro in Money Suit No.62 of 2014 is set-aside except to the extent
it relates to point of determination no (ii) and (iv). Consequently, the
impugned money decree is also set-aside.
121. This First appeal is allowed in the aforesaid terms.
122. Pending interlocutory application, if any, is closed.
123. Office to prepare decree.
124. Let this judgement be communicated to the learned court
concerned through FAX/e-mail.
(Anubha Rawat Choudhary, J.)
Pankaj/AFR
72