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Andhra Pradesh High Court
Judges : A.RAGHUVIR, P.KODANDA RAMAYYA
K.Sreeramamurthy - Appellant
Versus
P.Anda Rao - Respondent
Decided On : 02-07-85
PARTNERSHIP - SALE DEED - VALIDITY - CINEMA EXHIBITION LICENCE - CONDITION 12 - TRANSFER OF INTEREST IN PARTNERSHIP FIRM - WHETHER HIT BY CONDITION 12 - INTERPRETATION OF CONDITION 12 - S. 29 OF THE PARTNERSHIP ACT - EFFECT OF TRANSFER OF INTEREST IN PARTNERSHIP FIRM - RIGHTS OF TRANSFEREE - CONSTRUCTION OF SALE DEED - VALIDITY OF SALE DEED.
Fact of the Case:
Plaintiffs filed a suit for accounting of a dissolved firm and, in the alternative, for the share of the assets of the partnership firm on the basis of a sale deed obtained from defendant 3. Defendant 3 obtained a license for running a theatre and sold the property to the plaintiffs. The defendant contended that the sale was hit by condition 12 of the license and consequently void.
Finding of the Court:
The court held that the sale deed in favor of the plaintiffs conveying the interest of a partner in a partnership firm was not hit by Condition 12 of the license for cinema exhibition issued under the A. P. Cinemas (Regulation) Act, 4 of 1955 and consequently not void. The court found that the sale deed did not purport to transfer the license as such or allow the transferee to exhibit films in the licensed premises. The court also held that the transfer of interest in a partnership firm, including the premises, did not amount to transferring the licensed premises for exhibiting films under the license and hence the sale was not hit by condition No. 12.
Issues: Whether the sale deed in favor of the plaintiffs conveying the interest of a partner in a partnership firm is hit by Condition 12 of the license for cinema exhibition issued under the A. P. Cinemas (Regulation) Act, 4 of 1955 and consequently void.
Ratio Decidendi: The court interpreted Condition 12 of the license to prohibit only the transfer of the licensed premises for exhibiting films under the license. The court held that a mere transfer of interest in a partnership firm, including the premises, did not amount to transferring the licensed premises for exhibiting films under the license and hence the sale was not hit by condition No. 12. The court also relied on S. 29 of the Partnership Act to hold that the transfer of interest in a partnership firm did not give the transferee any right to interfere with the conduct of the business or to require accounts or to inspect the books of the firm. The court held that the transferee was only entitled to receive the share of profits of the transferring partner and the transferee shall accept the account of profits agreed to by the partners.
Final Decision: The court allowed the appeal and held that the plaintiffs were entitled to profits under S. 29 (1) of the Partnership Act of the firm representing the transferor defendant 3 till the death of defendant 3, and thereafter they were entitled to share the assets of the firm to which defendant 3 is entitled. The suit for accounting for the subsequent period was decreed.
( 1 ) THE main question for determination in this appeal is whether the sale deed in favour of plaintiffs conveying the interest of a partner in a partnership firm is hit by Condition 12 of the licence for cinema exhibition issued under the A. P. Cinemas (Regulation) Act, 4 of 1955 and consequently void.
( 2 ) THE suit is laid for accounting of dissolved firm and in the alternative for the share of the assets of the partnership firm on the basis of the sale deed obtained by the plaintiffs from defendant 3. The plaintiffs claim that they purchased the property under sale deed dated 5-1-1970 and the half share of defendant 3 in the partnership firm consisting of defendants 1 to 3. It is averred that originally partnership firm was formed consisting of one Pydi Narashimha Apparao, father of defendants 1 and 2, defendant 3 and one Papi Naidu for running a cinema talkies. The said Papi Naidu sold his one-third share to the father of defendants 1 and 2 and defendant 3 and the half share of defendant 3 was sold to the plaintiffs and thus the plaintiffs are owners of half share in the firm and hence the suit.
( 3 ) THE suit was resisted mainly on the ground that defendant 3 obtained a licence for running the theatre sold the property to the plaintiffs and the said sale is hit by condition 12 of the licence and consequently the sale is void.
( 4 ) IT is necessary to state the previous proceedings between the parties. Defendants 1 and 2 who claimed to be the heirs of their father filed the suit for specific performance of the half share of defendant 3 on the ground that defendant 3 is bound to offer to sell his share to them as per the terms of the partnership deed dated 12-2-1950 impleading the present plaintiffs as party-defendants. The suit was dismissed on the ground that the partnership deed between the parties was not registered and hence the suit is not maintainable. But this Court while affirming the judgment of the trial Court held : vide P. Anand Rao v. G. Raja Rao AIR 1976 Andh Pra 256 that though the deed of partnership is invalid for want of registration an agreement of partnership could be implied from the circumstances of the case and the validity of the sale deed in favour of the plaintiffs was left open without giving a decision. The trial Court found on this controversy following the judgment in Viswanathan v. Namakchand AIR 1955 Mad 536 that the sale deed is void and consequently dismissed the suit as not being maintainable. Against the judgment and decree of the trial Court the present appeal is filed.
( 5 ) IT is necessary to notice that defendant 3 died pending the appeal. In view of this question it is not necessary to notice that their (Sic) issues and findings and we proceed to examine the validity of the sale deed of the plaintiffs.
( 6 ) THE Andhra Pradesh Cinemas (Regulation) Act 4 of 1955 (hereinafter called the Act) is passed as indicated in the preamble to provide for the regulation of exhibitions by means of cinematographs in the State of Andhra Pradesh. It is necessary to refer to two provisions relating to the question before us. R. 36 (4) of the A. P. Cinemas (Regulation) Rules, 1962 (hereinafter called the Rules) is in the following terms :"whenever there is a transfer of title it shall also be accompanied by a letter of consent in writing on (of) the original licensee that the licence will also be transferred in the name of the transferee. "condition 12 of the Licence reads as follows : -"the licensee shall not, without the permission of the licensing authority, assign, sublet or otherwise transfer the licence or the licensed premises, nor shall the licensee without permission as aforesaid allow any other person during the period of currency of the licence, to exhibit films in the licensed premises. "
( 7 ) THE Court below relied on the judgment of the Madras High Court in Viswanathan v. Namakchand (AIR 1955 Mad 536) (supra) where a similar condition of licence was held to make a pa
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