Reconstitution of a partnership does not constitute a transfer of property, and authorities must update revenue records accordingly.

JUDGMENT

The first petitioner firm is a registered partnership firm and petitioners 2 to 4 are its present partners. The first petitioner firm owns certain coffee estates situated in Thirunelli Village, Mananthavady Taluk, Wayanad District. According to the petitioners, the first petitioner firm had entered into an agreement for sale of the estate with M/s.Ramakrishna and Company. Disputes arose between the parties and the matter reached this Court in RFA No.370 of 2005. Pending RFA No.370 of 2005 before this Court, the parties arrived at a compromise as a result of which there was a reconstitution of the partnership with the then partners of the first petitioner firm retiring from the partnership and petitioners 2 to 4 being inducted as new partners. This Court through Ext.P2 judgment in RFA No.370 of 2005 referred to and recorded the compromise.

2. Since the first petitioner is a registered firm, the reconstitution of the partnership was duly intimated to the Registrar of Firms. However, the revenue records still reflect the names of the erstwhile partners of the first petitioner firm. Despite request from the petitioners to make necessary changes in the revenue records and since no action was taken on the request made by the petitioners, the petitioners approached this Court by filing W.P.(C) No.27274 of 2021 which was disposed of directing the authorities to consider the representation submitted by the petitioners and take an appropriate decision thereon after conducting necessary enquiries. It is the case of the petitioners that though the petitioners produced all the relevant records, the request of the petitioners was rejected by Ext.P8 proceedings which was again challenged before this Court by filing W.P.(C) No.12710 of 2022. Ext.P9 is the judgment in W.P.(C) No.12710 of 2022 where this Court held as follows:

“5. As contended by the Senior Counsel, the validity of Ext.P1 document of reconstitution cannot be gone into by the revenue authorities, since the compromise, based on which the reconstitution was effected, was accepted by this Court and made part of the decree in RFA No. 370 of 2005. Likewise, the question whether the reconstitution is barred by the provisions of the Foreign Exchange Management Act, 1999, the outgoing partners being foreign citizens, is for the authority under that Act to consider. The objection on the premise that the essential requirements under the Transfer of Registry Rules is not satisfied cannot also be countenanced since the request is only to effect necessary corrections in the revenue records based on the deed of reconstitution. What is sought to be corrected is the name of the persons who are now representing the firm. In the judgment in W.P.(C) No.23142 of 2019 a learned Single Judge had considered and answered this question in the following manner;

“2. When a partner ship firm is reconstituted, and when a certificate to effect that is issued, necessarily, the person who is competent to represent the firm will have to be shown as a person representing the partnership firm. Therefore, on the strength of the re-constituted partnership deed and also based on the certificate issued by the Registrar of Firms, necessary action shall be taken to effect the mutation.”

6. Thereafter, while dismissing the review petition filed by the State against that judgment, the learned Single Judge held as under;

“3. On a combined reading of Sections 14 and 19 (2) (f) of the Indian Partnership Act,1932 it would quite clear that partnership firm can hold immovable property. Partnership being a compendious personality, it also has been conferred with some of the rights that would have been otherwise available with the juristic entity by the statutory provision itself. When the statute itself confers such authority to the partnership firm to hold such property, change of partners will not change the character of the property as that belongs to the partnership firm.”

I am in respectful agreement with the above fin