Rajinder Kumar v. Sunita Gupta & Ors.

1. The captioned application has been filed by the defendant no. 2, son of late Sh. Gopal Krishan Gupta, who was the erstwhile partner of the partnership firm namely M/s Capital Metal industries. defendant no. 2, seeking directions to the Court Receiver appointed vide Order date 21.12.2023 to repay the unsecured loan of Rs. 76 lakhs advanced by the applicant/defendant no. 2 to the partnership firm.

2. Dr. Amit George, the learned counsel for the applicant/defendant no. 2 submits that on account of death of late Sh. Gopal Krishan Gupta on 09.06.2022 the partnership firm stood dissolved, however, the plaintiff who is the surviving partner of the firm continued the operations of the firm on the pretext of winding up the partnership firm under Section 47 of the Indian Partnership Act 1932 (‘Act of 1932’) and during this period the plaintiff also cleared the debts of the partnership firm. 2.[1] He stated that the unsecured loan advanced by the applicant/defendant no. 2 is undisputed and is duly reflected in the audited balance sheet of the partnership firm for the financial year (‘FY’) 2022-23 under the head of ‘Unsecured Loans’ of the firm. The said balance sheet has been filed by the plaintiff with the present suit and is thus, an undisputed document. 2.[2] He stated that during the period of winding up of the firm i.e. from 09.06.2022 to 31.03.2023, plaintiff has cleared the debt of almost 90% creditors of the firm including his close relatives, however, despite the knowledge of the debt owed to the applicant/defendant no. 2, the plaintiff with a mala fide intent has elected not to repay the applicant/defendant NO. 2’s debt of Rs. 76 lakhs.

3. Mr. Tanmay Mehta, the learned counsel for the plaintiff submits that the applicant/defendant no. 2 has been arrayed as a party in the present suit as one of the legal heirs of late Sh. Gopal Krishan Gupta; and not as a creditor of the dissolved firm. He stated that the application filed by applicant/defendant no. 2 in his capacity as a creditor is thus, not maintainable. 3.[1] He stated that at the time when the partnership stood dissolved, the firm was a going concern having around 80-90 labourer/employees working for manufacturing and administration of the firm. There were pending orders from the clients of the firm and other obligations were pending to be complied with, like payment of Taxes, GST, Bank Loan, Unsecured Loans, Salaries, etc. Therefore, on legal advice and as per Section 47 of the Act of 1932, the plaintiff was constrained to continue the business activities of the firm as was permissible under law, which were necessary in the course of winding up and to complete transactions pending at the time of deemed dissolution of the firm. 3.[2] He stated that as far as the settlement of debts of certain creditors other than applicant/defendant no. 2 is concerned, it has been done to protect the interest of the firm as all the debts settled by the plaintiffs during this period, were interest bearing debts. 3.[3] He stated that at this stage when the applicant/defendant no. 2 has not filed any counter-claim with respect of his outstanding credit qua the partnership firm, the applicant cannot convert the present suit into a recovery suit without paying proper court fee and by filing the present application. 3.[4] He stated that any application for interim relief can only be filed if the interim relief so sought is in the aid of final relief and in the present case where the applicant has not prayed for any final relief, the application of interim could not be allowed, he places reliance on the Judgement of Supreme court in the case of Bharat Aluminium & Co. v. Kaiser Aluminium Technical Service, Inc.[1] 3.[5] He stated that plaintiff is ready and willing to clear all the dues of the defendants with respect to unsecured debts of applicant/defendant no. 2 as reflected in the balance sheet of the partnership firm and the share of late Sh. Gopal Krishan Gupta, however, it cannot be done in a piecemeal manner. He stated that it should be done through a full and final settlement of the accounts with the legal heirs of late Gopal Krishan Gupta. In this regard plaintiff relies on order dated 08.12.2023 whereby it was recorded in the orders that “plaintiff has offered to buy the 50% share of the defendants in the aforesaid partnership firm at a valuation of Rs. 20.[5] Crores and accordingly offered to pay a sum of Rs.10.25 Crores to the defendants (in addition of Rs. 76,00,000/- payable to the defendant no.2 on account of personal loan stated to have been advanced by defendant no.2 to the firm).” 3.[6] He stated that the valuation of Rs. 20.[5] crores put forwarded by the plaintiff matches with the valuation prepared by the Court Receiver and filed with the report dated 18.03.2024 which came out to be around Rs. 20 crores on the basis of following heads:i. Value of Land – 14.40 Crores. ii. Plaint and machinery – 1.52 Crore. iii. Debt recoverable from market – 3 Crores. iv. Monies lying in Bank – 2 Crores Civil Appeal no. 7019. 2015 (SC) at para 196 3.[7] He stated that this offer was acceptable to defendant nos. 1 and 2 however, was rejected by defendant nos. 3 and 4, who assessed a valuation of Rs. 40 crores without any basis. He stated that there are internal inheritance disputes amongst the defendants which have adversely affected the settlement of the accounts of the dissolved firm. He stated that the operation of firm is lying standstill and these piecemeal payouts will benefit the defendant no. 2 and negatively impact the firm. 3.[8] He stated that as per Section 48 of the Act of 1932, piecemeal settlement of account of the firm by allowing claims of certain alleged creditors before the final rendition of accounts of the firm is beyond the purview of the Partnership Act. The only mechanism which has been comprehensively laid down under the Act for distribution of the assets after dissolution comes into play after the final determination of its accounts after liquidation of the assets of the firm 3.[9] He stated that let the assets of the firm be liquidated as prayed by him para 3(c) of his application i.e., I.A. 25079/2023. Analysis and findings

4. This Court has heard the learned counsel for the parties and perused the record.

5. The application at paragraph 6 sets out the details of the near relatives of the plaintiff who were repaid their debt by the plaintiff after the dissolution of the firm on 09.06.2022. The details read as under: “…

1. Prem Goel Plaintiff’s Son’s Father-inlaw.

2. Sunita Gupta [Actual Name Sunita Gupta but incorrectly recorded in the Subject Balance Sheet]. Plaintiff's Son's Mother-in- Law.

3. Sristhi Goel Plaintiff’s Son’s Sister-in- Law.

4. Amit Agarwal HUF Plaintiff’s Son.

5. Nisha Gupta Partnership’s Firm’s Main Manager’s Wife Mr. Adish Gupta …”

6. The non-applicant/plaintiff in its reply has admitted the aforesaid repayment and stated that the said payments were made with the bona fide intent to reduce the liabilities of the firm. The plaintiff states that all actions were taken in the best interest of the firm and denies any wrongdoing in the repayment of the interest-bearing loans to the debtors enlisted at paragraph 6 of the application.

7. The applicant/defendant no. 2 has drawn this Court’s attention to the balance sheet of the dissolved firm as on 31.03.2023 filed by the plaintiff which acknowledges the outstanding debt due to the applicant. The relevant extract of the balance sheet reads as under: Particulars As at 9th June As at 31st March 2023 As at 31 March (a) Unsecured Term Loans from banks:- - - - (b) Axis Bank 23,410,027.71 15,353,067.01 Loans repayable on demand from banks - - from other parties - - - Unsecured Loans Amit Aggarwal HUF 1,300,000.00 - 1,300,000.00 Anju Kohli 1,500,000.00 1,500,000.00 Neha Aggarwal 900,000.00 900,000.00 900,000.00 Nisha Gupta 5,000,000.00 5,000,000.00 Prem Goel 2,500,000.00 2,500,000.00 Shanker Gupta 7,600,000.00 7,600,000.00 7,600,000.00 Sristhi Goel 4,000,000.00 4,000,000.00 Sunita Gupta 3,500,000.00 3,500,000.00 Ved Prakash HUF 400,000.00 400,000.00 400,000.00 Gopal Kishan Gupta (Legal Heir) - 55,591,162.37 Advance from customers BM Copper 13,422.00 28,418.00 BNS Handicrafts 102,419.00 Hyderabad Precision Mfg. Co. Pvt. Ltd. 100,000.00 92,074.00 Metal Indian Corporation 67,503.00 R L Enterprises 347,520.00 347,520.00 R.M. Tools & Components 40,000.00 40,000.00 Shri Anand Metal 25,000.00 Tempcon India 100,000.00 Impact Stickers - 5,000.00 Sai Creations - 3,255.00 Suraj Mal Garg Private Limited - 1,162.00 Total (B) 50,905,891.71 64,592,653.37 42,469,005.01 Total (A+B) 51,020,176.71 64,592,653.37 42,955,972.01

8. The non-applicant/plaintiff states that in addition to defendant no. 2, debt is also due and payable to Ms. Neha Aggarwal and Ved Prakash HUF. The applicant/defendant no. 2 states that both Ms. Neha Aggarwal and Ved Prakash HUF are near relatives of the plaintiff and he has no objection if in addition to the applicant, Ms. Neha Aggarwal and Ved Prakash HUF are paid off their debt as reflected in the balance sheet.

9. The non-applicant/plaintiff during arguments has not disputed the liability of the dissolved firm to repay the debt amount of Rs. 76 lakhs to the applicant/defendant no. 2. The plaintiff admits that the said amount is due and payable. The limited submission made by the plaintiff is that the directions for release of payment be made in addition to adjudicating on the reliefs sought by the plaintiff for sale of the immovable and movable assets of the dissolved firm so as to wind up the affairs of the firm. The plaintiff also refers to the offer of settlement recorded in the orders dated 04.09.2023 and 08.12.2023.