The interest of a partner in partnership assets, including immovable property, is not an interest in immovable property within the meaning of Section 17 (1) (b) of the Registration Act.

Headnote:
REGISTRATION ACT - SECTION 17 (1) (B) - PARTNERSHIP - INTEREST OF PARTNER IN PARTNERSHIP ASSETS - NOT AN INTEREST IN IMMOVABLE PROPERTY - RELINQUISHMENT OF SHARE IN PARTNERSHIP - NOT COMPULSORILY REGISTRABLE.
Fact of the Case:

Plaintiffs and defendants 10 to 12 belonged to one family, while defendants 1 to 9 belonged to another. These families founded a partnership at will 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 and filed a suit for partition and recovery of a share in certain immovable properties or, in the alternative, for dissolution of partnership and taking of accounts. The main objection of the defendants was that the plaintiffs had relinquished their share under an unregistered karar, Ex. B-18 dated 27-8-1936. The plaintiffs stated that Ex. B-18 was not a genuine document, was not acted upon, and was inadmissible in evidence for want of registration. The Courts below found against the plaintiffs on these legal objections, but held that the execution of the document was proved.
Finding of the Court:

The Full Bench held that the interest of a partner in partnership assets cannot be regarded as a right or interest in immovable property within the meaning of Section 17 (1) (b) of the Registration Act. It follows that in so far as there is a relinquishment of their interest in the suit firm, by the plaintiffs and defendants 10 to 12 who executed Ex. B-18 the document does not require registration.
Issues: Whether the relinquishment of a share in a partnership, which holds immovable property among other assets, requires registration under Section 17 (1) (b) of the Registration Act.
Ratio Decidendi: The interest of a partner in partnership assets, including immovable property, is not an interest in immovable property within the meaning of Section 17 (1) (b) of the Registration Act. This is because a partner's share in the partnership is not a definite share in immovable property that can be transferred or given up. Rather, a partner's share is a proportionate share of the partnership assets after they have been converted into money and applied in liquidation of the partnership's debts and liabilities.
Final Decision: The appeal was dismissed with costs.

( 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 mad

Click Here to Read the rest of this document

1958 Supreme(AP) 207

Andhra Pradesh High CourtJudges : A.V.KRISHNA RAO, P.CHANDRA REDDY, P.SATYANARAYANA RAJU, SRINIVASA CHARIAddanki Narayanappa - AppellantVersusBhaskara Krishtappa - RespondentDecided On : 12-08-58

The interest of a partner in partnership assets, including immovable property, is not an interest in immovable property within the meaning of Section 17 (1) (b) of the Registration Act.

Cases Referred (4)

Andhra Pradesh High Court
Judges : A.V.KRISHNA RAO, P.CHANDRA REDDY, P.SATYANARAYANA RAJU, SRINIVASA CHARI
Addanki Narayanappa - Appellant
Versus
Bhaskara Krishtappa - Respondent
Decided On : 12-08-58