1993 Supreme(All) 292

IN THE HIGH COURT OF ALLAHABAD
M. L. BHAT
RAJESH KUMAR AGRAWAL - Appellant
Versus
VIRENDRA KUMAR AGRAWAL - Respondents
First Appeal 705 Of 1989
Decided On : 05/17/1993

The deposit made by the non-partners who are strangers to the firm in respect of any amount without giving any authority to the firm to appropriate the said amount for the benefit of the firm cannot be blended with the partnership funds.

Headnote:

PARTNERSHIP - PROPERTY - FUNDS - DEPOSIT - BENAMI TRANSACTION - SHAM TRANSACTION - TRANSFER OF PROPERTY ACT, 1882 - SECTION 54 - PARTNERSHIP ACT, 1932 - SECTION 14 - BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 - SECTION 2, 3, 4, 5.

Fact of the Case:

Plaintiff filed a suit for partition claiming one-third share in house No. 124, K. P. Kackar Road, Allahabad, which is the property in suit. A declaration is also sought that the defendants Nos. 3 to 5 and late Aditya Prakash Agarwal had no right, title interest or share in house No. 124 aforesaid and inclusion of their names in the sale deed was simply Benami by their father surreptitiously and dishonestly. The defendants Nos. 1, 3, 4 and 5 jointly filed written statement. It is contended by the defendants that the property was purchased in the names of all the vendees jointly. The allegation of dishonest and surreptitious in the sale deed is denied. The plaintiffs claim that he is entitled to one-third share is also denied. It is also stated that the plaintiff is entitled to get one-seventh share of the property. Defendant No. 2 has also filed written statement. He seems to support the plaintiff. He has also stated that the suit property was purchased with the funds of the plaintiffs and defendants Nos. 1 and 2 lying at their credit in the firm but the defendant No. 1 had got the names of the defendants Nos. 3 to 5 and late Aditya Prakash Agarwal entered in the deed dishonestly. They are not the owners of the suit property nor had paid the consideration for sale. Therefore, they have no right, title or interest in the property. It is admitted that the plaintiff and defenndants Nos. 1 and 2 are partners of M/s. Bombay Furnishing Company.

Finding of the Court:

The court below dismissed the claim of the plaintiff and held that he was entitled to one-seventh share in the property as the sale deed was executed in favour of seven persons, which includes late Aditya Prakash Agarwal, who is already dead. The court below has after appreciation of their evidence come to the conclusion that the plaintiff cannot be granted relief as claimed by him in the plaint. However, he was declared owner of 1/7th share of the suit property.

Issues: 1. Whether the property was purchased from the funds of the firm or it was purchased by the partners from their own funds, which were standing to their credit in the partnership firm? 2. Whether the defendants 3 to 5 and late Aditya Prakash Agarwal would be deemed Benamidars of the partners of the firm who are real vendees of the property? 3. Whether the transaction of sale showing the names of the respondents Nos. 3 to 5 and late Aditya Prakash Agarwal as vendee is sham to the extent it evidences title in favour of respondents Nos. 3 to 5 and late Aditya Prakash Agarwal?

Ratio Decidendi: 1. The property of the firm includes all property and rights and interests in property, originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of the business of the firm and includes also the goodwill of the business. 2. If the property is shown to have been acquired in any of the aforesaid manners, it will be deemed to have been acquired by the firm unless the contrary intention appears. 3. The deposit made by the non-partners who are strangers to the firm in respect of any amount without giving any authority to the firm to appropriate the said amount for the benefit of the firm cannot be blended with the partnership funds. 4. The deposit made by the strangers with the firm is a fund which is to be kept apart and is not to be mixed up with the partnership funds, which exclusively belongs to the partnership firm. 5. The deposits made by the respondents Nos. 3 to 5 and late Aditya Prakash Agarwal with the firm cannot at all be termed as partnership property and Section 14 of the Partnership Act will have no application to such deposits because it is not the property of the firm. 6. The sale deed cannot be treated as sham or benami so far as the respondents Nos. 3 to 5 and late Aditya Prakash Agarwal is concerned.

Final Decision: Appeal dismissed.