1966 SCR (3) 400
The members of two Joint Hindu families (Appellants and Respondents) entered into partnership for carrying on business. The members of one family filed a suit in 1949 for dissolution of the partnership and the taking of accounts. The members of the second family raised the defence that the partnership was dissolved way earlier in 1936 and that accounts were then settled between the two families. They relied upon an unregistered document, which showed that the partnership had come to an end.
Since the partnership assets included immovable property and the document recorded the relinquishment by the members of AP’s family of their interest in those assets, the document was compulsorily registerable under s. 17(1) (c) of the Registration Act, 1908; and as it was not registered, it was inadmissible as evidence to prove the dissolution as well as the settlement of accounts.
- There is no cause of action as the entire claim is in fructuous.
- The suit was time barred.
Whether, the interest of a partner in partnership assets comprising of movable as well as immovable property should be treated as movable or immovable property for the purposes of s. 17(1) of the Registration ‘Act, 1908?
Supreme Court (MUDHOLKAR, J)
- The document only records the fact that the partnership had come to an end. It cannot be said to convey any immovable property by a partner to another, expressly or by necessary implication, nor is there any express reference to any immovable property, except a recital of a fact which had taken place earlier. Therefore, the unregistered deed of release by one family of its share in the partnership was admissible in evidence, even though the partnership owned immovable property.
- (w.r.t 2nd contention of respondent)SC didn’t deal with this argument since the case was adjudged within the first argument itself. The SC stated that limitation would arise only if the cause of action would exist.
- The interest of a partner in partnership assets comprising of movable as well as immovable property should be treated only as movable property. His right during the insistence of the partnership is to get his share of the profits from time to time, as may be agreed upon among the partners, and his right after the dissolution of the partnership, or with his retirement from, the partnership, is only to receive the money value of his share in the net partnership assets as on the date of dissolution or retirement, after a deduction of Liabilities and prior charges.
- Property of the firm, under S.14 of the Act means that the partners are the joint owners and there is no individual ownership over the partner.“Whatever at the commencement of the partnership is thrown at the common stock and in the course of time has been owned by the partnership belongs to the firm unless contrary has been proven.”
- If the partners buy their own property and then convert it as a common property of the partnership then it can only happen when the partners agree in a contract to hold the property as a common property. This conversion takes place by means of intention. Unless and until the intention of the parties to bring the property as a common stock in trade is present the partner cannot give up his identifiable share in the property.
- If there is an immovable property then that property has to be liquidated in the form of money and then the partners’ share has to be settled in accordance to section 48 of the Partnership Act.