IN THE HIGH COURT OF ALLAHABAD
R. N. RAY
MOHAN LAL BAHRI (DECEASED BY L.R.S) - Appellant
Versus
K.L.BAHRI - Respondents
First Appeal 142 Of 1977
Decided On : 11/25/1997
PARTNERSHIP - PURCHASE OF PROPERTY - PRESUMPTION - REBUTTAL - PARTNERSHIP ACT, 1932 - SECTION 14 - INTERPRETATION - PROPERTY PURCHASED IN NAME OF ONE PARTNER BUT PAID FOR BY FIRM - PRESUMPTION OF PARTNERSHIP PROPERTY - REBUTTAL BY EVIDENCE OF CONTRARY INTENTION.
Fact of the Case:
A partnership firm purchased land in the name of one of the partners, Mohan Lal Bahri, using funds from the firm's account. The other partner, K. L. Bahri, filed a suit claiming that the land was partnership property and sought an injunction restraining Mohan Lal Bahri from using or transferring the land.
Finding of the Court:
The court held that the land was partnership property, as the purchase was made in the interest of the firm and not for Mohan Lal Bahri's personal benefit. The court relied on the fact that the purchase was made using funds from the firm's account, that the land was intended to be used for the firm's business premises, and that there was no evidence of any contrary intention.
Issues: 1. Whether the land purchased in the name of one partner but paid for by the firm was partnership property. 2. Whether the presumption of partnership property could be rebutted by evidence of contrary intention.
Ratio Decidendi: The court applied Section 14 of the Partnership Act, 1932, which provides that property bought with partnership funds is presumed to be partnership property. The court held that this presumption could be rebutted by evidence of a contrary intention, but that Mohan Lal Bahri had failed to provide such evidence. The court also considered the fact that the land was purchased for the firm's business premises, which further supported the conclusion that it was partnership property.
Final Decision: The court dismissed the appeal and affirmed the judgment and decree of the lower courts, holding that the disputed property was the property of the partnership firm.
( 1 ) AGGRIEVED by the judgment and decree passed by Sri Chandra Mohan, District Judge, Banda on 7-4-1977 in Original Suit No. 12 of 1973, defendant No. 1 as appellant has preferred this appeal. Respondent K. L. Bahri filed a suit restraining the defendant Mohan Lal Bahri, Madan Lal Bahri and Girdhar Lal by permanent injunction for using the lane for their individual benefits by transferring or constructing thereon, using etc. and also for injunction for demolition of the constructions shown as A B C D and boundary given in the plaint. The land in suit was the property of the firm M/s. K. L. Bahri and Co. Banda. The petitioners case is that the plaintiff and defendants Nos. 1 and 2 are real brothers. They entered into partnership agreement on 20-2-53 by registered agreement to form a partnership to carry on whole-sale cloth business at Banda in the name and style of M/s. K. L. Bahri and Co. The share of each of the three partners were equal. Till the year 1959, the business was looked mostly by the plaintiff and defendant No. 1 and in the said year another separate business in the name and style of M/s Bahri Brothers was opened at Kanpur by the plaintiff and other two brothers to carry on whole-sale cloth business by forming a separate8 partnership and plaintiff was active partner there. The business of M/s. K. L. Bahri and Co. at Banda was mostly looked after by the defendants Nos. 1 and 2. In the year 1962, the partners of the firm thought to acquire their own business premises, and purchased the land in dispute which is only at a distance of 25 to 30 yards away from the old rented premises where from said partnership business was being carried. That land was purchased from Sri Anwaru-ur-zaman, Advocate, Banda, for a sum of Rs. 11,500. 00. The land was purchased out of fund of M/s. K. L. Bahri for having their own business premises of the firm on that land but the defendant No. 1 in collusion with the defendant No. 2 got the sale deed executed and registered on 24-8-62 in his own name and kept the facts concealed from the plaintiff, who was at the relevant time, in Kanpur. On account of the disputes between the partners regarding the accounts, stocks, cash in hand and other assets and liabilities of the firm which arose amongst the partners of the firm, said business at Banda stopped on 1-7-65. Ultimately, the differences etc. were referred to the three arbitrators. The arbitrators could not successfuly arbitrate their disputes and the order of the arbitrators was stayed under the order of the District Judge, Banda on 28-8-1973 and the learned District Judge was pleased to cancel the clause or arbitration as embodied in the partnership deed. As the plaintiff had to go to Srinagar (Kashmir) in connection with the marriage of his daughter and taking advantage of the temporary absence of the plaintiff, the defendant with the help of Sri Sohan Lal Sahgal and his son Narinder Kumar Sahgal and S. K. Agarwal, a P. W. D. Contractor started raising unauthorised construction over the disputed land for their own benefit and also entered into an agreement to sell the disputed land to the defendant No. 3 without any right, title or interest, in respect of the disputed land, the disputed land belonged to the partnership firm only.
( 2 ) AFTER having knowledge of these intentions conspiracy and the alleged fraudulent attempt of the defendant, the plaintiff filed the suit for the aforesaid reliefs.
( 3 ) IT has been submitted that the defendant No. 1 Mohan Lal Bahri was highly educated amongst the brothers, who was M. A. LL. B. and was a very cunning man and he was dealing with the Income and Sales tax matters of the firm. The accounts were prepared under his supervision, he used to look after and attend the business of the firm M/s K. L. Bahri and Co. and he had never intended nor thought to purchase the land for himself but subsequently the greed over-powered him and though it was purchased for constructing of the premises o
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