ADDANKI NARAYANAPPA Vs. BHASKARA KRISHTAPPA

JUDGEMENT

(1.) This case has come before the Full Bench on a reference made by our learned brother Krishna Rao J., in second appeal heard by the learned Judge. The appeal arises out of a suit for partition and recovery of a share in certain immovable properties or in the alternative for dissolution of partnership and for taking of accounts. Plaintiffs 1 and 2 and defendants 10 to 12 belong to one family viz., Addanki family while defendants 1 to 9 belong to another family viz; Bhaskara family. These families founded a partnership at will somewhere in 1926 and carried on business in hulling rice and decorticating ground-nuts. On 2-2-1949 the plaintiffs issued a notice of dissolution of partnership being Ex. A-15 in the case. Thereafter on 4-3-1949 they filed the present suit claiming a one-fourth share in the properties belonging to the firm. The main objection of the defendants to this suit was that the plaintiffs had relinquished their share under Ex. B-18 dated 27-8-1936 under an unregistered karar. The plaintiffs in reply stated that Ex-B-18 was not a genuine document, that it was not acted upon and above all, that it was inadmissible in evidence for want of registration. These legal objections were found against by the Courts below. The execution of the document, however, was held to be proved. When the matter came up in second appeal, the question about the genuineness of the document was not canvassed, there having been a concurrent finding of its having been executed. The question as to whether it was acted upon was also not pressed and the only objection on which arguments were advanced before the learned Judge was that the document was inadmissible in evidence, for want of registration.

(2.) It is admitted that what the plaintiffs purported to relinquish and assign to the 1st defendant under Ex. B-18 related to property worth more than Rs. 100.00. It may be mentioned that the Madras High Court in an earlier case in Venkataratnam v. Subba Rao, ILR 49 Mad 738: (AIR 1926 Mad 1040) held the view that a document which is executed by a partner of a partnership whereby he relinquishes his share in the partnership property, does not fall under Section 17(1) (b) of the Indian Registration Act. The learned Judges held that although the partnership might hold immovable property the relinquishment would not amount to his having given up his interest in the immovable property, for, although the property held by a partnership is regarded in law as partnership property and not that of any individual and the partner is only entitled to a share in the partnership assets after dissolution, it could not be predicated that he would have necessarily, on a dissolution, an interest in the immovable property, for it might happen that at the time of the dissolution after converting all property, the adjustment would be by payment of the debts due by the partnership, next the payment of advances made by the partners and the residue, if any, to be divided amongst the partners. This view of the learned judges was dissented from in a subsequent case of the same High Court in Samuvier v. Ramasubbier, ILR 55 Mad 72; (AIR 1931 Mad 580). In view of the conflicting decisions the learned Judge thought that the matter should be considered by a Full Bench and an authoritative pronouncement given. Hence this reference to the Full Bench.

(3.) The relevant provision of the Registration Act which makes registration of documents pertaining to immovable property compulsory and which applies to this case is Section 17(1)(b), which is as follows: 17(1)(b): Other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property." By the document Ex. B-18 the plaintiffs declared that they give up their share in the machine etc. and in the business and also made over the same to the other partners alone completely by way of adjustment. The document also says that the other partners shall carry on business without the plaintiffs having anything to do with the profit and loss. It further recites that the other partners have given the plaintiffs property forming one Venkata Subbaiahs share previously. Having regard to the tenor of the document, it is contended by the learned counsel for the appellant that it operates to extinguish the right of the plaintiffs in immovable property and as such it clearly fell within the purview of Section 17(1) (b) of the Registration Act. There can be no doubt that if by this document the interest in immovable property is sought to be extinguished then it is compulsorily registrable. The question, therefore, is what is the nature of the interest of a partner in the partnership property, where the partnership property consists of movable and immovable property, would the relinquishment of a right or interest in immovable property or could it be described as a benefit arising out of land within the meaning of immovable property as defined in Section 3 of the General Clauses Act? It has to be observed that the law relating to partnership has now been embodied in the Partnership Act, Act IX of 1932. Prior to this Act the law relating to partners and their rights inter se was governed by Chapter XI of the Indian Contract Act (as it then stood). Section 253 of the Contract Act related to the rights determining the partners mutual relations and Sub-section (7) of Section 253 enacted that if from any cause whatsoever any member of partnership ceases to be so, the partnership automatically dissolves as between all other members. While this was the position under the Contract Act, such a position does not arise under the Indian Partnership Act. There is no dissolution of the partnership as such on one of the partners retiring from the partnership.