Case Note & Summary
The matter involved two appeals from orders arising out of Special Civil Suit No.2/2012 pending before the Civil Judge, Senior Division, Bicholim. The parties were related family members who operated a partnership firm named M/s. R.S. Shetye & Brothers, which held a mining lease as its primary asset. The firm had long-standing commercial agreements with entities from the Damodar Mangalji Group. Disputes arose when reports emerged of alleged illegalities by Damodar Mangalji Group, leading to the termination of a contractor, M/s. Rajani Mineral Exports, by the firm through defendant No.5. The plaintiff, Kunda Madhukar Shetye, a partner with 34% share, opposed the termination and publicly disavowed the decision, asserting that the agreements with Damodar Mangalji Group remained valid and that defendant No.5 had no authority. In response, the other partners (the Majority) expelled the plaintiff from the firm on 21 December 2011, accusing her of acting against the firm's interests and in favor of the Damodar Mangalji Group. The plaintiff challenged the expulsion as illegal, citing the absence of any provision for expulsion in the partnership deed, and filed the suit seeking declarations that she continued as a partner, the expulsion was void, and that defendant No.5's acts did not bind the firm. She also sought injunctions to restrain the Damodar Mangalji Group from acting on termination notices and to prevent the Majority from obstructing her participation in the firm's business. The defendants contested the suit. The Majority argued that the plaintiff's expulsion was justified under the partnership deed, that further association with the Damodar Mangalji Group endangered the firm's sole asset, and that the plaintiff was acting at the behest of that group. Defendant No.5 claimed authority under a power of attorney from his mother (defendant No.1) and a prior partnership role. The Damodar Mangalji Group, while denying allegations of wrongdoing, contended that their agreements with the firm prohibited changes in its constitution, rendering the expulsion invalid. In interim proceedings, the trial court partly allowed the plaintiff's injunction application on 25 June 2012, restraining defendant No.5 from acting as a partner or representing the firm, and restraining defendants 6–8 from acting on the termination letters. The plaintiff appealed this order in Appeal From Order No.54/2012, presumably seeking broader relief. Meanwhile, the defendants 1–4 applied under Order 39 Rule 4 of the Code of Civil Procedure, 1908 to modify the 25 June 2012 order; the application was dismissed on 2 February 2015, leading to Appeal From Order No.8/2015 by those defendants. Both appeals were heard together by the High Court of Bombay at Goa and disposed of by a common judgment dated 12 March 2015. The excerpt of the judgment provided does not include the court’s analysis, conclusions, or the final operative directions; hence, the outcome of the appeals and the court's reasoning on the legal issues cannot be stated.
Issue of Consideration
APPEAL FROM ORDER No. 54 OF 2012
Case Details
2015 LawText (BOM) (03) 113
Appeal From Order No.54/2012 & Appeal From Order No.8/2015
Mr. S. D. Lotlikar, Senior Advocate with Mr. Shivan Dessai; Mr. Rafiq Dada, Senior Advocate with Mr. S.S. Kantak, Senior Advocate, Mr. Preetam Talaulikar, Mr. A. Kamat; Mr. V. A. Lawande; Mr. A. N. S. Nadkarni, Senior Advocate with Mr. D. Lawande, Mr. Nikhil Pai, Mr. S.S. Rebello; Mr. Y. V. Nadkarni, Mr. N. Noronha, Ms. Divya Shirgam; Mr. D. J. Pangam; Mr. D. Pangam and Mr. P. Sawant
Smt. Kunda Madhukar Shetye (in AO 54/2012) & Smt. Shaila Subrao Shetye and Ors. (in AO 8/2015)
Smt. Shaila Subrao Shetye and Ors. (in AO 54/2012) & Smt. Kunda Madhukar Shetye and Ors. (in AO 8/2015)
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Nature of Litigation
Civil suit for declaration and injunction relating to partnership expulsion and authority of defendant No.5
Remedy Sought
Plaintiff sought declaration that she continues as partner, expulsion is void, defendant No.5 has no authority, termination notices illegal, and injunctions against defendants 6-8 and Majority
Filing Reason
Majority expelled plaintiff from partnership Firm citing her acting against interest of Firm by supporting Damodar Mangalji Group
Previous Decisions
Trial court partly allowed interim injunction application on 2012-06-25 restraining defendant No.5 from acting as partner and restraining defendants 6-8 from acting on termination letters; application under Order 39 Rule 4 by defendants 1-4 dismissed on 2015-02-02
Submissions/Arguments
Majority argued that plaintiff was rightly expelled for acting against interest of Firm and that further commercial relationship with Damodar Mangalji Group was not in Firm's interest due to illegalities reported against them.
Majority contended that plaintiff was set up by Damodar Mangalji Group and that her insistence on associating with them endangered the sole asset of the Firm.
Majority asserted that defendant No.5 Ramakant was not a stranger but held valid power of attorney of defendant No.1 and was a former partner.
Majority claimed that the decision to expel was taken under the articles of the partnership deed and was valid.
Damodar Mangalji Group argued that they had no intention of reneging from commitments and that the agreement with Firm mandated no change in constitution, so plaintiff could not be expelled.
Plaintiff contended that there was no provision in partnership deed for expulsion and that the expulsion was illegal and void.
Plaintiff alleged that Majority was acting at the behest of some other entity and not in the best interest of the Firm.
Judgment Excerpts
The parties to these appeals, Kunda Madhukar Shetye that is the original plaintiff, defendant No.1 Shaila Subrao Shetye, defendant No.2 Shriram Gajanan Shetye, defendant No.3 Pandurang Gajanan Shetye and defendant No.4 Vijay Gajanan Shetye, are related. They have been carrying out business together as partners in partnership Firm under the name and style of “M/s. R.S. Shetye and Brothers”.
On 21 December 2011, a communication was issued by Shaila, Shriram, Pandurang and Vijay (referred to as Majority) to the plaintiff that the declaration issued by her was contrary to the decision taken by the Firm, and that the plaintiff was acting against the interest of the Firm and in the interest of Damodar Mangalji Group. By this communication, the Majority expelled the plaintiff from the Firm.
The plaintiff wrote to the Registrar of Firm and informed the Registrar that the Majority may apply for change in the constitution of Firm which should not be permitted as there is no provision in the partnership deed for expulsion of any partners and such attempt is illegal and void.
The Appeal From Order No.54/2012 challenges the order passed by the Civil Judge, Senior Division, Bicholim in Special Civil Suit No.2/2012 dated 25 June 2012 in the application for interim relief filed by the appellantoriginal plaintiff. The Appeal From Order No.8/2015 is filed by the original defendants No.1 to 4 in the same suit challenging the order dated 2 February 2015 dismissing the application filed by them under Order 39 Rule 4 of the Civil Procedure Code, 1908 for modification of the order dated 25 June 2012.
Procedural History
Plaintiff filed Special Civil Suit No.2/2012 before Civil Judge, Senior Division, Bicholim. Trial court partly allowed injunction application on 2012-06-25. Plaintiff filed AO 54/2012. Defendants 1-4 applied under Order 39 Rule 4 CPC for modification, which was dismissed on 2015-02-02, leading to AO 8/2015. Both appeals heard together by High Court of Bombay at Goa.
Acts & Sections
- Code of Civil Procedure, 1908: Order 39 Rule 4
