• Arbitration

I started giving consultation to a business owned by Y in 1994. In 1997 Y proposed that a manufacturing unit be started together. Due to good relations with Y, I accepted to enter into a partnership, but Y wanted the partnership to be btw X (son of Y) & I.

Ours was a de-facto partnership based on good will of Y and since X was 18 years old we did not see any problem, but according to his affidavit in court now, he could not have been 18 then, maybe that is why Mr Y insisted that No Deed of Partnership be registered, but the firm was. A plot was bought and structure erected on loans in 2004. The firm did brisk business till 2006 while X’s only contribution was signing of cheques. At this point I underwent a by-pass surgery of the heart and could not attend to the firm, during this time, Y took responsibility of managing the business who took advantage of my absence and moved stocked raw material and machinery from this firm to his own citing convenience in looking after the business. Upon my return, a request to return the material or make payment for its worth was made and same was promised. But delaying techniques were being adopted which ultimately led to complete shut down of operations of the said firm in the year 2007, please note that X during this period due to differences with his own father, chose to pursue other career options rather than the one he committed to years ago and joined a reputed business school for further studies and was placed in a company in UK & hurriedly left the country giving full GPA authority to his father Y.
All operations were shut in 2007 as was agreed upon by both parties verbally.
Since firm ABC also owed money to my wife and with no scope of recovery of any money, the building premises was leased to my wife's firm 'WI' for a nominal amount in consent and total agreement of the GPA holder, with the clause that allows 'WI' to sub-let the said premises to run her own business. The differences between X & Y grew during this time and X only returned in 2014 for the cremation of his father – Y (GPA) who fell critically sick in 2013, and again left hurriedly without any dialogue. In the years that followed, X filed multiple litigation cases against his Mother, other family members and I to name a few. 
Against Me, x has filed a case arbitrating half of the proceeds of rent collected by WI which has over the years reinvested most of the money generated from sub-letting in maintain the plot & building and has also made additions to structure to suit the needs of its tenants. 
What is rightfully his is not being denied, half of the property. But can he demand a share from firm WI over which I have no control.
Asked 4 years ago in Business Law

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9 Answers

No he cannot demand a share in firm he is not partner. He can rightfully claim the rent received after deduction of all the maintaince but cannot.claim a share in other firm.

The property was leased with an agreement of his power of attorney with due consent.

Also kindly clearfy on what grounds he is claiming share inspite of not having any right over the said firm??

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

as per GPA executed by X his father was authorised to act on his behalf

2) on basis of GPA father had leased premises to your wife firm

3) further your wife firm was authorised to sublet the premises

4)X is not entitled to 50 per cent of rent collected over the years

Ajay Sethi
Advocate, Mumbai
87911 Answers
6207 Consultations

5.0 on 5.0

Dear Client,

Claim against WI is not maintainable except lease amount if due.

What kind of recovery by wife from ABC firm ?

Whats her role and what payment she attributed in that firm.

Show petition filed against Wife.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

GPA executed by son in favour of father authorises father to execute agreement on his behalf

2)lease deed should have been executed by father

3) it is necessary to peruse various documents cited by you to advice

4) cheating case can be filed by partner X

Ajay Sethi
Advocate, Mumbai
87911 Answers
6207 Consultations

5.0 on 5.0

No criminal case made out.

show claim filed by X. than only precise can be offered.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

A valid lease agreement was signed under which though rent can be claimed by him but his demand to share in wife firm is authorized as it separate firm held by separate individuals.

Further, no criminal case can be instituted under these circumstances.

He can claim share in property though by fulfilling his obligation as to providing you with the half of amount of tax paid by you.

Donot worry he has no legal.riggt to claim in your wife firm as she is third party even otherwise you can claim maintainance and property tax from him while dividing the rent.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Basically Wi is a firm run by your wife in which you have no role to play except as a landlord of ABC company which is a lessor of this leased out property to Wi firm on lease.

Therefore the other partner of ABC i.e., X cannot claim any rights in Wi's firm.

If X has initiated any legal dispute in court in this, it can be challenged on merits and documentary evidences.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

keeping the above facts in mind can X claim portion of the rent earned by WI. however i am agreeable to pay half of the rent received by ABC from WI and share the property in the ratio upon vacation of the premises.

As you have confirmed tht X is just another partner in ABC, in which you as a partner have reiterated that there is no role played by ABC with Wi's company, then there is no reason that X can claim any profit from Wi's firm.

Also X claims collusion btw my wife and I with the intention of cheating him and denying him a share of the rent earned by WI and can a criminal case be filed based on that?

No criminal complaint is maintainable because there is no fraud played by your wife nor you.

Even if he manages to register a FIR, you can challenge the same on the basis of documentary evidences and merits on your side and get acquitted.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

1. Since the firm was not dissolved the partners even if sleeping continues with the right to claim full share.

2. However you can cite his ljg absence from business and closure of business to deprive his share, if any from the firm.

3. Now if Y in discharge of clearing the debt of the firm gives any property to your wife there is no illegality in it and hence X can not claim share in the rent collected so far.

4. It is not clear under whose name the plot or the house was purchased.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

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