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Allahabad High Court · body

2013 DIGILAW 2560 (ALL)

Achala Gupta v. Bank of Baroda

2013-10-08

R.K.GUPTA

body2013
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. The present Appeal has been preferred by the appellants under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 challenging the order passed by the Tribunal on 12th July, 2013 while exercising the powers vested with it under Section 30 of the said Act, 1993. The relevant facts for adjudication of the present case are that according to the appellant No. 1 she is the owner of the property in question. The appellant No. 2 was the guarantor and the loan transaction was made in favour of the Certificate Debtor firm namely United Soya Products Ltd. The Bank filed a Civil Suit for recovery of its dues and ultimately the said Civil Suit could not be decided by the Civil Court and after promulgation of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the said Civil Suit was transferred to Debts Recovery Tribunal which was registered as T.A. No. 1172/1998 and the same was allowed by the Debts Recovery Tribunal by its order dated 16th August, 2000 and the Recovery Certificate was issued. The appellant No. 2 was also jointly and severally held liable to the due alongwith principal borrower. 2. After when the said certificate was issued then the land bearing Khasra Nos. 367-374-386/4/1/1, 373/1, 375 and 377 admeasuring 12.31 acres, situated at P.H. No. 42, Village Bawariya Kalan, Tehsil Huzur, District Bhopal, M.P. was attached by the Recovery Officer. The proceedings for attachment were initiated by the Recovery Officer on the basis of the information in Form 17 submitted by the Bank. The property was to be put to auction by the Recovery Officer but the Recovery Officer by his order dated 15th June, 2012 on the objection filed by the appellant No. 1 directed to maintain status quo with the result that the property could not be put to auction. 3. According to the appellant No. 1 she was the owner of the property and according to the Bank the said property belongs to appellant No. 2 and therefore, the order for attachment was passed. 3. According to the appellant No. 1 she was the owner of the property and according to the Bank the said property belongs to appellant No. 2 and therefore, the order for attachment was passed. The Recovery Officer passed the final order on 9th August, 2012 by which the objection raised on behalf of the appellant No. 1 was allowed and the property was released but so far as the remaining property was concerned, there was no order to release but the property of which the description has been given hereinabove belonging to the appellant No. 1 was released. 4. Against the order passed by the Recovery Officer, the Bank preferred an appeal under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 to the Presiding Officer of Debts Recovery Tribunal and the Debts Recovery Tribunal vide the order impugned dated 12th July, 2013 allowed the Appeal preferred by the Bank and set aside the order dated 9th August, 2012 passed by the Recovery Officer by which the objection so raised by the appellant No. 1 was accepted. 5. In the present case, the Recovery Officer found that the property belongs to the appellant No. 1 and the Recovery Officer further observed that the property of which the description has already been given hereinabove does not belong to the appellant No. 2. The learned Counsel appearing for the appellant submitted that in the present case, the order passed by the Tribunal does not deal with the correct position of law and it was further submitted that the Tribunal has not in fact decided the clinching issue in relation to the property and unnecessarily has referred to Section 52 of the Transfer of Property Act in which the principal of lis pendens in enunciated. It is submitted that the said lis pendens is not applicable in the present facts and circumstances of the case. The learned Counsel appearing for the appellant further submitted that in the present case the clinching issue had been whether the property which was initially belonging to the appellant No. 2 the details of which has been given in earlier paragraph and whether has legally been passed on to the appellant No. 1. 6. There is no dispute that the property in question initially was belonging to the appellant No. 2. 6. There is no dispute that the property in question initially was belonging to the appellant No. 2. A partnership deed was entered into between both the appellants on 5th April, 2001. The said partnership deed has been placed on record at page No. 203 of the paper book. The partnership deed is between R.K. Tower (India) Pvt. Ltd. and Smt. Achla Gupta and the recital of the said partnership deed states that R.K. Tower (India) Pvt. Ltd. owned and possess the land situated at Village Bawadia Kalan P.C. No. 42. Tehsil Huzur, Distt. Bhopal being revenue Khasra Nos. 367-374-386/4/1/1 admeasuring 8.66 acres, Khasra No. 373/1 area 2.74 acres. Khasra No. 375 area 0.43 acres and Khasra No. 377 area 0.30 acres total Nos. 04 and total area 12.13 acres and R.K. Towers (India) Pvt. Ltd. wants to develop his said land as per use proposed by the Bhopal Master Plan, but due to lack of Working Capital, both the said parties forming a firm known as "Achalashraya Developers" for putting up a commercial & residential project on the said land, which is contributed by R.K. Towers (India) Pvt. Ltd. the appellant No. 2 as his capital in the said firm, which shall now become absolute property of the firm i.e. Achalashraya Developers. It was further stipulated that the Working Capital of the partnership shall be contributed by appellant No. 2 only as per accounts book of the firm but the said party shall have no right to claim any interest on the said amount. Thereafter, the firm was finally dissolved on 18th May, 2002. The deed of dissolution has also been placed on record as Annexure No. A/9 with the paper book. Thereafter, the firm was finally dissolved on 18th May, 2002. The deed of dissolution has also been placed on record as Annexure No. A/9 with the paper book. According to the deed of dissolution entered into between R.K. Towers (India) Pvt. Ltd. and Smt. Achla Gupta a joint declaration was made that the partnership carried on under the deed of partnership dated 5th April, 2001 between these two parties was liable to be treated to have been dissolved by mutual consent as no business activity has taken place till date and the appellant No. 2 was not able to continue the partnership hence that deed of dissolution was executed and consequently business of said partnership firm was to be carried out with all assets and liabilities of firm by the remaining partner, i.e. the appellant No. 1 and she became proprietor of said firm being only left as partner and the appellant No. 2 surrendered all his claims and entitlements which might have been legally available prior to this deed of dissolution of partnership under reference hence the appellant No. 2 shall have no right to claim any assets of the firm including land situated at Village Bawaria Kalan which was the absolute property of the firm. There were only two partners in the said firm and after relinquishment of claim by R.K. Towers (India) Pvt. Ltd. in favour of the appellant No. 1, the said firm became proprietorship firm and the appellant No. 1 being the proprietor of the said firm, the property passed on to her. After deed of dissolution, the name of the appellant No. 1 was mutated in the revenue record which are also placed on record. 7. On the basis of the aforesaid, this is to be seen that whether the arrangement is as per law which has been made between the appellants in constituting the partnership firm and also in dissolution of the partnership firm and whether on the dissolution of said firm the property whether has legally been passed on to the appellant No. 1 and the property as such whether has become the personal property of the appellant No. 1. 8. Admittedly, in the present case the property in question was not mortgaged but the property was attached by the Recovery Officer on the basis of the Form No. 17 filed by the Bank before the Recovery Officer. 8. Admittedly, in the present case the property in question was not mortgaged but the property was attached by the Recovery Officer on the basis of the Form No. 17 filed by the Bank before the Recovery Officer. The Bank assumed that the property as such was belonging to the appellant No, 2 who was a guarantor. The arrangement which has been made hereinabove to answer the aforesaid question, it would be proper to refer to herein Sections. 14, 15 and 40 of the Indian Partnership Act, 1932 which are being quoted as under: "14. The property of the firm--Subject to contract between the partners, the property of the firm includes all property and rights and interest in property originally brought into the stock of the firm, or acquired, by the purchaser or otherwise, by of for the firm, or for the purposes and in course of the business of the firm, and includes also the goodwill of the business. Unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm. Goodwill is an asset of partnership--It was held by the Allahabad High Court in view of Section 14 of the Partnership Act, 1932 it cannot be denied that goodwill of a Partnership is an asset of the partnership. But the section does not lay down that every partnership has goodwill, or that the goodwill of every partnership has any substantial value. Individual asset of partner.--A partnership firm is an association of persons but in spite of that unity between themselves, every partner can have his own separate existence from the firm. Any right which a partner has over any property, other than the partnership property, would remain as his individual asset. The mere fact that the particular person has chosen to include himself as a partner of a firm will not result in incorporation of all his individual properties as the assets of the partnership. 15. Application of the property of the firm.--Subject to contract between the partners, the property of the firm shall be held and used by the partners exclusively for the purposes of the business. 40. Dissolution by agreement.--A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. 9. 15. Application of the property of the firm.--Subject to contract between the partners, the property of the firm shall be held and used by the partners exclusively for the purposes of the business. 40. Dissolution by agreement.--A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. 9. Section 14 of the said Act provides that subject to contract between the partners, the property of the firm includes all property and rights and interest in property originally brought into the stock of the firm, or acquired, by the purchaser or otherwise, by or for the firm, or for the purposes and in course of the business of the firm, and also includes the goodwill of the business. It also provides that unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm. Section 15 provides that subject to contract between the partners, the property of the firm shall be held and used by the partners exclusively for the purposes of the business. Section 40 provides that a firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. 10. On the basis of the aforesaid sections, it is clear that the property acquired by the firm will be the property of the partnership firm including all the movable and right and interest of the property shall be created in favour of the partners of the firm and the dissolution of the firm as per Section 15 would be made with the mutual contract between the partners and Section 40 provides that there can be a dissolution subject to the contract. In the present case the property which was initially belonging to the appellant No. 2 was made to be the property of the firm which is clear from the partnership deed dated 5th April, 2001 and subsequent deed of dissolution dated 18th May, 2002 the appellant No. 2 has relinquished all his right, and interest acquired on the property of the firm and subsequently there being a contract by virtue of Section 15 of the Act, there was a dissolution and thereafter, the property came to the Appellant No. 1 and the name of the appellant No. 1 was also mutated. After the deed of dissolution, the property passed as the personal property of appellant No. 1. While mutating the names since the name of the partnership firm was wrongly mutated therefore, an application for correction was moved and in place of appellant No. 2 firm the name of the appellant No. 1 was mutated by the revenue authorities vide its order dated 16th January, 2007. 11. In this reference, the learned Counsel appearing for the appellant relied upon the judgment passed by the Apex Court in Addanki Narayanappa v. Bhaskara Krishnappa (dead) and thereafter his heirs, AIR 1966 SC 1300 and its relevant para No. 3 heavily relied upon the appellant runs as under: "3. Direct cases upon this point of the Courts in India are few but before we examine them it would be desirable to advert to the provisions of the Partnership Act itself bearing on the interest of partners in partnership property. Section 14 provides that subject to contract between the partners the property of the firm includes all property originally brought in to the stock of the firm or acquired by the firm for the purposes and in due course of the business of the firm. Section 15 provides that such property shall ordinarily be held and used by the partners exclusively for the purposes of the business of the firm. Though that is so, a firm has no legal existence under the Act and the partnership property will, therefore, be deemed to be held by the partners for the business of the partnership. Section 29 deals with the right of a transferee of a partner's interest and Sub-section (1) provides that such a transferee will not have the same rights as the transferor partner but he would be entitled to receive the share of profits of his transferor and that he will be bound to accept the account of profits agreed to by the partners. Sub-section (2) provides that upon dissolution of the firm or upon a transferee partner ceasing to be a partner the transferee would be entitled as against the remaining partners to receive the share of the assets of the firm to which his transferor was entitled and will also be entitled to an account as from the date of dissolution. Section 30 deals with the case of minor admitted to the benefits of partnership. Section 30 deals with the case of minor admitted to the benefits of partnership. Such minor is given a right to share of the property of the firm and also right to a share in the profits of the property as may be agreed upon. But his share will be liable for the acts of the firm through would not be personally liable for the same. Sub-section (4) however, debars a minor from suing the partners for accounts or his share of the property or profits of firm save when severing his connection by the firm. It also provides that when he severing his connection with the firm Court shall make a valuation of his share from the property of the firm. Section 31 deal with incoming and outgoing partners. Some of the consequences of retirements of a partner are dealt with in Sub-sections (2) and (3) of Section 32 while some others are dealt with in Sections 36 and 37. Under Section 37 the outgoing partner or the estate of a deceased partner, in the absence of a contract to the contrary, would be entitled to at the option of himself or his representatives to his share of profits made since he ceased to a partner as may be attributable to the use of his share of the property of the firm or to interest at the rate of the six per cent per annum on the amount of his share in the property of the firm. Subject of dissolution of a firm and the consequences are dealt with in Ch. VI, Sections 39 to 55. Subject of dissolution of a firm and the consequences are dealt with in Ch. VI, Sections 39 to 55. Of these the one which is relevant for this discussion is Section 48 which runs-- "In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed: (a) losses, including deficiencies of capital, shall be paid first out of profit, next out of capital, and, lastly, if necessary, by the partners individually, in the proportions, in which they were entitled to share profits, (b) the assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order: (i) in paying the debts of the firm to third parties; (ii) in paying to each partner rateably what is due to partner from the firm for advances as distinguished from capital; (iii) in paying to each partner rateably what is due to him on account of capital; and (iv) the residue, if any, shall be divided among the partners in the proportion in which they were entitled to share profits. On a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is right in by the partners when the partnership is formed or which may be required in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realization of this property, and upon dissolution of the partnership to share in the money representing the value of the property. No. doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall in his share from time-to-time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in Clause (a) and Sub-sections (i), (ii) and (iii) of Clause (b) of Section 48. It has been stated in Lindley On Partnership, -- at P. 375 'What is meant by the share of a partner is his proportion of the partnership assets after they have been all realized and converted into money, and all the partnership debts and liabilities have been paid and discharged. This it is and this only which on the death of a partner passes to the representatives, or to a legatee of his are.... And which on his Bankruptcy passes to his trustee.' This statement of law is based upon a number of decisions of the English Courts. One of these in Rodriguez v. Speyer Bros., 1919 Act 59 where at P. 68 it has been observed: "When a debt due to a firm is got in no partner has any definite share or interest in that debt; his right is merely to have the money so received applied, together with the other assets, in discharging the liabilities of the firm, and to receive his share of any surplus there may be when the liquidation has been completed. No doubt this decision was subsequent to enactment of the English Partnership Act of 1890. Even in several earlier cases, as for instance, Darby v. Darby, (1936) 61 E.R. 992, the same view has been expressed. That was a case where two persons purchased lands on a joint speculation with their joint monies for the purpose of converting them into building plots and reselling them at a profit or loss. It was held by Kindersley V.C. that there was a conversion of the property purchased out and out and upon the death of one of the partners his share in the part of the unrealized estate passed to his personal representatives. It was held by Kindersley V.C. that there was a conversion of the property purchased out and out and upon the death of one of the partners his share in the part of the unrealized estate passed to his personal representatives. After examining the earlier cases the learned Vice-Chancellor observed at P. 995-- 'The result then of the authorities may be thus stated : Lord Thurlaw was of opinion that a special contract was necessary to convert the land into personality and Sir, W. Grant followed that decision. Lord Eldon on more than one occasion strongly expressed his opinion that Lord Thurlaw's decision was wrong. Sir, J. Leach clearly decided in three cases that there was conversion out and out; and Sir L. Shadwell, in the last case before him, clearly decided in the same way. That is the state of the authorities. Now, it appears to me that, irrespective of authority, and looking at the matter with reference to principles well established in this Court, if partners purchase land merely for the purpose of their trade, and pay for it out of the partnership property, that transaction makes the property personally, and effects a conversion out and out.' He then observed-- 'This principle is clearly laid down by Lord Eldon in Grawshay v. Collins, (1808) 15 Ves. 218 and by Sir W. Grant in Feather-stonhaugh v. Fenwick, (1810) 17 Ves. 298, and the right of each partner to insist on a sale of all the partnership property, which arises from what is implied in the contract of partnership is just as stringent as a special contract would be. If, then, this rule applies to ordinary stock-in-trade, why should it not apply to all kinds of partnership property? Suppose that partners, for the purpose of carrying on their business, purchase, out of the funds of the partnership, leasehold estate, or take a lease of land, paying the rent out of the partnership funds, can it be doubted that the same rule which applies to ordinary chattels would apply to such leasehold property? I do not think it was ever questioned that, on a dissolution, the right of each partner to have the partnership effects sold applies to lease hold property belonging to the partnership as much as to any other stock-in-trade. No one partner can insist on retaining his share unsold. I do not think it was ever questioned that, on a dissolution, the right of each partner to have the partnership effects sold applies to lease hold property belonging to the partnership as much as to any other stock-in-trade. No one partner can insist on retaining his share unsold. Nor would it make any difference in whom the legal estate was vested, whether in one of the partners or in all; this Court would regulate the matter according to the equities. And Sir, W. Grant so decided in (1810) 17. Ves. 298'." 12. On the basis of the judgment so passed by the Apex Court it is clear that once any property is made the property of partnership firm then during the subsistence of the partnership a partner may assign his share to another and after the dissolution in terms to the agreement the property will pass on to another subsisting partner. 13. The Counsel for the appellant has also placed reliance on the judgment passed in Ram Sahay Mall Rameshwar Dayal v. Bishwanath, AIR 1963 Patna 221, to substantiate the view that once any property is made the property of partnership firm then during the subsistence of the partnership a partner may assign his share to another and after the dissolution in terms to the agreement the property will pass on to another subsisting partner. 14. The learned Counsel appearing for the respondent Bank submitted that the manner in which the property has been passed without any registration cannot be accepted and such a transfer would be contrary to Section 17 of the Registration Act and it was submitted that in the absence of any registration of the property no valid title is passed on the appellant No. 1. The Counsel appearing for the Bank also placed reliance on the Article 44(B)(H) of the Stamps Act which read as under: "44(B) (a) where there is no share of contribution in partnership or where such share of contribution does not exceed Rs. 50,000/-. (b) Where such share of contribution is in excess of Rs. 50,000/-. (H) Dissolution of partnership or retirement of a partner-- (a) Where on dissolution of partnership or on retirement of a partner, any immovable property is taken as his share by a partner other than a partner who brought in that property as his share of contribution in the partnership. (b) in any other case." 15. 50,000/-. (H) Dissolution of partnership or retirement of a partner-- (a) Where on dissolution of partnership or on retirement of a partner, any immovable property is taken as his share by a partner other than a partner who brought in that property as his share of contribution in the partnership. (b) in any other case." 15. On the basis of the aforesaid, this is to be seen that the Apex Court in N. Khaderwali Saaheb v. N. Gudu Saheb, II (2003) SLT 14 : (2003) 3 SCC 229 , has dealt with the question in Para 3 of the judgment has held that distribution of assets may be done either by way of an arbitration award or by mutual settlement between the partners themselves. The documents which records the settlement in the case is an award which does not require registration under Section 17 of the Registration Act since the document does not transfer or assign interest in any asset and the Para 3 of the said judgment runs as under: "3. We have carefully perused the award in question. By the award the arbitrators have distributed the assets of the dissolved firm between the partners in accordance with their respective shares in the partnership. The real question for consideration is whether such an award amounts to creation of or transfer of any fresh rights in movable or immovable properties so as to bring it within the ambit of Section 17 of the Registration Act. A perusal of the award shows that it is simply a case of distribution of assets of the dissolved firm amongst the partners themselves. A partnership firm is not an independent legal entity, the partners are the real owners of the assets of the partnership firm. Actually the firm name is only a compendious name given to the partnership for the sake of convenience. The assets of the partnership belong to and are owned by the partners of the firm. So long as partnership continues each partner is interested in all the assets of the partnership firm as each partner is owner of the assets to the extent of his share in the partnership. The assets of the partnership belong to and are owned by the partners of the firm. So long as partnership continues each partner is interested in all the assets of the partnership firm as each partner is owner of the assets to the extent of his share in the partnership. On dissolution of the partnership firm, accounts are settled amongst the partners and the assets of the partnership are distributed amongst the partners as per their respective shares in the partnership firm, Thus, on dissolution of a partnership firm, the allotment of assets to individual partners is not a case of transfer of any assets of the firm. The assets which hereinbefore belonged to each partner, will after dissolution of the firm stand allotted to the partners individually. There is no transfer or assignment of ownership in any of the assets. This is the legal consequence of distribution of assets on dissolution of a partnership firm. The distribution of assets may be done either by way of an arbitration award or by mutual settlement between the partners themselves. The document which records the settlement in this case is an award which does not require registration under Section 17 of the Registration Act since the documents does not transfer or assign interest in any asset. This question stands concluded by a decision of the Court in S.V. Chandra Pandian v. S.V. Sivalinga Nadar. This was also a case of distribution of assets of a dissolved firm by way of an award. This Court noticed that the award read as a whole made it clear that the arbitrators had confined themselves to the property belonging to the partnership firm and has scrupulously avoided other properties. While distributing the residue assets, the arbitrators allocated the properties to the partners. Section 48 of the Partnership Act was applied and, the properties were allocated to the partners as per their share on the distribution of the residue. The award sought to distribute the assets of the partnership firm after settlement of accounts on dissolution. This Court took the view that the property falling to the share of the partner on distribution of the residue would naturally belong to him exclusively. But since in the eye of law it is money and not immovable property there is no question of registration under Section 17 of the Registration Act. This Court took the view that the property falling to the share of the partner on distribution of the residue would naturally belong to him exclusively. But since in the eye of law it is money and not immovable property there is no question of registration under Section 17 of the Registration Act. It was further observed (at SCC P. 607, para 18) 'even if one looks at the award as allocating certain immovable property since there is no transfer, no partition or extinguishment of any right therein there is no question of application of Section 17(1) of the Registration Act'." As observed in the above case, in the present case also we are satisfied that the award seeks to distribute the residue after settlement of accounts on dissolution, while distributing their residue the arbitrators allocated the properties to the partners. The award in such circumstances did not require registration under Section 17(1) of the Registration Act. 16. The Apex Court in AIR 1966 SC page No. 1300 has further held that documents recording previous fact of dissolution of partnership and relinquishment of interest of partner in partnership assets is a way of adjustment and it is not compulsory to get it registered. In this reference the para Nos. 2 and 5 held as under. "2. The relevant portion of the Karar reads thus-- 'As disputes have arisen in our family regarding partition, it is not possible to carry on the business or to make investment in future. Moreover, you yourself have undertaken to discharge some of the debts payable by us in the coastal parts in connection with our private business. Therefore, from this day onwards we have closed the joint business. So, from this day onwards, we have given up (our) share in the machine, etc., and in the business, and we have made over the same to you alone completely by way of adjustment. You yourself shall carry on the business without ourselves having anything to do with the profit and loss. Hereinbefore, you have given up to us the property forming our Venkatasubbayya's share which you have purchased and delivered possession of the same to us even previously. You yourself shall carry on the business without ourselves having anything to do with the profit and loss. Hereinbefore, you have given up to us the property forming our Venkatasubbayya's share which you have purchased and delivered possession of the same to us even previously. In case you want to execute and deliver a proper document in respect of the share which we have given up to you, we shall at your own expense, execute and deliver a document registered." This document on its face shows that the partnership business had come to an end and that file Addanki family had given up their share in the 'machine, etc. in the business' and had made it over to the Bhaskara family. It also recites the fact that the Addanki family had already received certain property which was purchased by the partnership presumably as that family's share in the partnership assets. The argument advanced by Mr. Alladi Kuppuswami is that since the partnership assets included immovable property and the document records relinquishment by the members of the Addanki family of their interest in those assets, this document was compulsorily registrable under Section 17(1)(c) of the Registration Act and that as it was not registered it is inadmissible in evidence to prove the dissolution of the partnership as well as the settlement of accounts. 5. It seems to us that looking to the scheme of the Indian Act no other view can reasonably be taken. The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated his right is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the partnership or the 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. It is true that even during the subsistence of the partnership a partner may assign his share to another. In that case what the assignee would get would be only that which is permitted by Section 29(1), that is to say, the right to receive the share of profits of the assignor and accept the account of profits agreed to by the partners. There are not many decision of the High Courts on the point. In the few that there are the preponderating view is in support of the position which we have stated. In Joharmal v. Tejram Jagrup, (1893) ILR 17 Bom. 235 which was decided by Jardine and Telang. JJ., the latter took the view that though a partner's share does not include any specific part of any specific item of partnership property, still where the partnership is entitled to immovable property, such share does include an interest in immovable property and, therefore, every instrument operating to create or transfer a right to such share requires to be registered under the Registration Act. In coming to this conclusion he mainly purported to rely upon an observation contained in the fifth edition of Lindley On Partnership at P. 347. This observation is not to be found in the present edition of Lindley's Partnership nor in the 9th or 10th editions which were brought to our notice. The 5th edition, however, is not available. In coming to this conclusion he mainly purported to rely upon an observation contained in the fifth edition of Lindley On Partnership at P. 347. This observation is not to be found in the present edition of Lindley's Partnership nor in the 9th or 10th editions which were brought to our notice. The 5th edition, however, is not available. The learned Judge after quoting an earlier statement which is that the doctrine merely amounts to this that on the death of a partner his share in the partnership property is to be treated as money, not as land, says: "This obviously would not affect matters either during the lifetime of a partner, Lindley, L.J., says in so many words that it has no practical operation till his death (P. 348) - or as against parties strangers to the partnership, e.g., the firm's debtors." While it is true that the position so far as third persons are concerned would be different it may be pointed out that in Forbes v. Steven, (1870) 10 Eq 178, James V.C., has as quoted by the learned Judge, said: "It has long been the settled law of this Court that real estate bought or acquired by a partnership for partnership purposes (in the absence of some controlling agreement, or direction to the contrary) is, as between the partners and as between the real and personal property, and devolves and is distributable and applicable as personal estate and as legal assets." Telang J., seems to have overlooked, and we say so with great respect, the words "as between the partners" which precede the words "and as between the real and personal representative of the partner deceased" and to have confined his attention solely to the latter. We have not found in any of the editions of Lindley's Partnership as adverse criticism of the view of the Vice-Chancellor. But, on the contrary, as already stated, the view expressed is in fully accord with these observations. We have not found in any of the editions of Lindley's Partnership as adverse criticism of the view of the Vice-Chancellor. But, on the contrary, as already stated, the view expressed is in fully accord with these observations. Jardine J., has discussed the English authorities at length and after referring to the documents upon which reliance was placed on behalf of the defendants stated his opinion thus-- "To lay down that the three letters in question, which deal generally with the assets, movable and immovable, without specifying any particular mortgage or other interest in real property require registration, would I incline to think, in the present state of the authorities, go too far. It may be argued that such letters are not instruments of gift of immovable property' but rather disposal of a share in a partnership of which the business is money lending, and the mortgage securities merely incidental thereto." The view of Telang J., was not accepted by the Madras High Court in Venkataratnam v. Subba Rao, ILR 49 Mad 788. : (AIR 1926 Mad 1040). The learned Judges there discussed all the English decisions as also the decision in Sudarsanam Maistri v. Narasimhulu Maistri, (1902) ILR Mad 149 and Gopala Chetty v. Vijayaraghava Chariar, ILR 45 Mad 378 : 1922-1 AC 488 : ( AIR 1922 PC 115 ) and the opinion of Jardine J., in Joharmal's case (1893) ILR 17 Bom. 235 held that an unregistered deed of release by a partner of his share in the partnership business is admissible in evidence, even where the partnership owns immovable property. The learned Judges pointed out that though a partner may be a co-owner in the partnership property he has no right to ask for a share in the property but only that the partnership business should be wound up including therein the sale of immovable property and to ask for his share in the resulting assets. This decision was not accepted as laying down the correct law by a Division Bench of the same High Court in Samuvier v. Ramasubbier, ILR 55 Mad 72: ( AIR 1931 Mad 580 ). This decision was not accepted as laying down the correct law by a Division Bench of the same High Court in Samuvier v. Ramasubbier, ILR 55 Mad 72: ( AIR 1931 Mad 580 ). The learned Judges there relied upon the decision in Ashworth v. Manu, (1880) 15 Ch D 363 in addition to the opinion of Telang, J., and also referred to the decision in Gray v. Smith, (1889) 43 Ch D 208 in coming to a conclusion contrary to the one in the earlier case. It may be pointed out that the learned Judges have made no reference to the decision of the Privy Council in Gopala Chetty's case, ILR 45 Mad 378: 1922-1 AC 488: ( AIR 1922 PC 115 ) though that was one of the decisions relied upon by Phillips, J., in the earlier case. In so far as Ashworth's case, (1880) 15 Ch D 363 is concerned that was a case which turned on the provisions of the Mortmain Acts and is not quite pertinent before them and which is now before us. In (1889) 43 Ch D 208 Kekewich, J., held that an agreement by one of the partners to retire and to assign his share in the partnership assets including immovable property, is an agreement to assign an interest in land and falls within the Statute of Frauds. The view of Kekewich, J., seems to have received the approval of Cotton, L.J., one of the Judges of the Court of Appeal, though no argument was raised before it challenging its correctness. It may, however, be observed that even according to Kekewich, J., the authorities (1800) 5 Ves 308 and (1846) 5 Hare 369 on Appeal to (1842) 2 Ph 266 establish that one may have an agreement of partnership by parole, notwithstanding that the partnership is to deal with land. He however, went on to observe: "But it does not seem to me to follow that an agreement for the dissolution of such a partnership need not be expressed in writing, or rather that there need not be a memorandum of the agreement for dissolution when one of the terms of the agreement, either expressly or by necessary implication, is that the party sought to be charged must part with and assign to others an interest in land. That seems to me to given rise to entirely different consideration. That seems to me to given rise to entirely different consideration. In the one case you prove the partnership by parole: You prove the object, the terms of the partnership, and so on. But in the other case it is one of the essential terms of the agreement that the party to be charged shall convey an interest in land, and that seems therefore, to bring it necessarily within the Section 4 of the Statute of frauds." In the case before us, as also in Samuvier's case, ILR 55 Mad 72: ( AIR 1931 Mad 580 ) the document cannot be said to convey any immovable property by a partner to another expressly or by necessary implication. If we may recall, the document executed by the Addanki partners in favour of the Bhaskara partners records the fact that the partnership business has come to an end and that the latter have given up their share in "the machine etc. and in the business" and that they have "made over same to you alone completely by way of adjustment". There is no express reference to any immovable property herein. No doubt, the document does recite the fact that the Bhaskara family has given to the Addanki family certain property. This, however, is merely a recital of a fact which had taken place earlier. To cases of this type the observations of Kekewich, J., which we have quoted do not apply. The view taken in Samuvier's case, ILR 55 Mad 72: ( AIR 1931 Mad 580 ) seemed to commend itself to Varadachariar, J. in Thirumjalappa v. Ramappa, ( AIR 1938 Mad 133 ) but it was reversed in Ramappa v. Tirumalappa, ( AIR 1939 Mad 884 )." 17. On the basis of the law so laid down in two judgments passed by the Apex Court reference of which have already been quoted hereinabove according to which the partnership firm is the mutual adjustment made by the partners and the same does not require any registration as per Section 17 of the Registration Act. Further the Bombay High Court in Dr. Nariman Aspandiar Irani v. Dr. Adi Merwan Irani, AIR 1989 Bom. 362 and its Para 10 is relevant which is quoted as under: "10. Further the Bombay High Court in Dr. Nariman Aspandiar Irani v. Dr. Adi Merwan Irani, AIR 1989 Bom. 362 and its Para 10 is relevant which is quoted as under: "10. According to the plaintiff, the "gift" is not valid as it is not made by registered instrument and attested by two witnesses as required by Section 123 of the Transfer of Property Act. The Defendant, on the other hand, asserts that the share in the partnership property even if it includes immovable assets is not immovable property. In view of the Supreme Court's ruling in Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300 . Followed in Common of Income-tax, West Bengal v. Juggilal Kamlapat, AIR 1967 SC 401 uphold the submission of Mr. Vyas, learned Counsel for the Defendant, that the interest of partners in a partnership firm, although it owns immovable property including leasehold interest is movable property and, therefore, a document evidencing relinquishment of interest of one partner is not compulsorily registerable. Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300 . There is no merit in the plaintiffs contention that the gift has not been accepted. The conduct of the parties and especially the letter dated 27th December, 1976 (Exh. D-page 5) written by the defendant proves acceptance of the gift." 18. Further the Apex Court in Gangadhar Madhavrao Bidwai v. Hanmantrao Vyankatrao Mungale, II (1996) CLT 15 (SC) : I (1995) BC 158 (SC) : (1995) 3 SCC 205 further held that the property belonging to the partnership firm on deed of dissolution is passed on 2 another partners, there is no requirement of registration under Section 17 of the Partnership Act, 1932. Paragraph 4 of the judgment runs as under: "4. The real question that arises for consideration is if the recital in the Deed of Dissolution dated 18th September, 1961 showing that Plot No. 699 was partnership property was inadmissible for want of registration. It was found by the High Court and could not be disputed by the respondent that if Plot No. 699 was held to be a partnership property then it did not require registration. It is true that this plot was purchased in 1955 by the respondent alone, but he was not precluded in law from bringing it in the partnership. It was found by the High Court and could not be disputed by the respondent that if Plot No. 699 was held to be a partnership property then it did not require registration. It is true that this plot was purchased in 1955 by the respondent alone, but he was not precluded in law from bringing it in the partnership. The circumstances and the three documents indicate that even though the land was purchased by the respondent, it appears both the parties have been treating this property as being in joint ownership of both. This may have been due to good relations which existed between them prior to 1959 but there appears no reason to discard the recital in these documents which unequivocally establish that the property at the time of dissolution was owned by the partnership. The recital in the Deed of Dissolution of partnership of September 1961 that it was a partnership property, could not be ignored. Apart from it, the appellant had filed earlier Suit in which the claim of the appellant that these documents were obtained under duress was not accepted. Even though the Suit was dismissed on ground of limitation, but the genuineness of the documents was not doubted. If that be so, then the recital in the dissolution deed could not be ignored. The High Court was in absence of any challenge to Ext. 48 not justified in recording the finding that recital in the deed did not carry out intention of executants. Shri Sen was correct in submitting that once it was held that Plot No. 699 was partnership property then there was no need for registration and the appellant's Suit was liable to be decreed." 19. 48 not justified in recording the finding that recital in the deed did not carry out intention of executants. Shri Sen was correct in submitting that once it was held that Plot No. 699 was partnership property then there was no need for registration and the appellant's Suit was liable to be decreed." 19. Considering the fact that the appellant No. 1 has validly acquired the property and that there is no question of applying Section 52 of the Transfer of Property Act in which principle of lis pendens is enunciated because the property was not at all mortgaged but the individual property of the mortgagor i.e. the appellant No. 2 was made stock of the partnership firm, it is not the case that the property which was mortgaged, to frustrate the mortgage the partnership firm was constituted between the appellants but on the application submitted for attachment by the Bank the property of the appellant No. 1 was treated to be the property of the appellant No. 2 who was the a guarantor but has not mortgaged the said property. Both the partners entered into partnership agreement to carry out the business subsequently, on dissolution of the partnership, the appellant No. 2 relinquished all his rights and interest in favour of the appellant No. 1 to all the assets and stock of the firm therefore, the appellant No. 1 became the absolute owner. Thus, the Tribunal unnecessarily, held that the construction of the partnership firm was only made to frustrate the recovery of the Bank which cannot be accepted because the property was not mortgaged by the mortgagor i.e. the appellant No. 2 and further the constitution of the partnership firm and dissolution was much prior to attachment order passed by the Recovery Officer. 20. In view of my aforesaid discussions, the order passed by the Tribunal on 12th July, 2013 is set aside and the order passed by the Recovery Officer stands restored. A copy of this judgment be supplied to the parties as well as to the DRT concerned, alongwith the original records, if summoned earlier, as per law.