A partnership firm can hold immovable property and its reconstitution, recognized by legal authorities, should not be contested by revenue officials regarding record entries.

JUDGMENT

Dated this the 24th day of January, 2023 The first petitioner is the Brahmagiri B Estate, a partnership firm in ownership and possession of a coffee plantation in Mananthavady Taluk. The first petitioner, through its then partners, had entered into an agreement for sale of the estate. There arose some disputes with respect to the sale, which ultimately reached this Court in RFA No.370 of 2005. Pending the appeal, the parties came to a compromise, as per which the partnership was decided to be reconstituted by admitting petitioners 2 to 4 herein, the nominees of M/s.Ramakrishna and Company, the firm with which the first petitioner had executed the agreement for sale. Yet another condition was that the existing partners of M/s.Brahmagiri B Estate would retire from the partnership. Based on the compromise, Ext.P1 document of reconstitution was executed between the parties and RFA No.370 of 2005 was disposed of, recording the compromise and making it part of the decree.

2. After reconstitution of the partnership, the second petitioner was appointed as Managing Partner of the firm and the reconstitution was entered in the records of the Registrar of Frms. Even after completing the above formalities, the names of the erstwhile partners continued as such in the thandaper account and basic tax receipts. Therefore, the first petitioner submitted a representation requesting to make necessary corrections in the revenue records and to permit to pay tax in the name of the firm which owns the land. It was pointed out in the representation that mutation is not necessary and all that is required is correction of the entries in the revenue records. Later, the fourth respondent provided petitioners with a copy of the legal opinion issued by the District Legal Officer, Wayanad, stating that, since all the existing partners had resigned prior to the reconstitution, the firm ceased to exist.

Further the reconstitution is not in compliance with Section 3 (1) of the Partnership Act and none of the incidents of Transfer of Registry Rules have taken place. As the fourth respondent refused to take action in the light of the legal opinion, petitioners approached this Court and as per Ext.P10 judgment the petitioners' application was directed to be disposed of after conducting proper enquiry and assessing the germane factual and legal circumstances, including the judicial pronouncements. The petitioners were accordingly heard and Ext.P13 order issued, rejecting the application. Hence, this writ petition.

3. Adv.T.Krishnannuni, learned Senior Counsel appearing for the petitioners, submitted that none of the reasons stated in the impugned order are germane as far as the request for correction of entries in the revenue records are concerned. What has been done under Ext.P1 is only reconstitution of the partnership and bringing the properties to the common stock of the firm. The question whether the partnership got dissolved or was duly reconstituted would depend upon the intention of the parties. In any event, reconstitution of the partnership having been accepted by this Court and appeal decreed in terms of the compromise, the revenue authorities can no longer decide the legality of the reconstitution. Reliance is placed on the judgment in W.P.(C) No.23142 of 2019, wherein, under similar circumstances, this Court directed the revenue authorities to act strictly in accordance with the certificate of reconstitution issued by the Registrar of Firms.

4. Adv.S.Renjith, learned Special Government Pleader appearing for the respondents, submitted that the existing partners having retired from the firm prior to the induction of the new partners, the firm had ceased to exist and no question of reconstitution would arise thereafter. Moreover, since the Brahmagiri B Estate was owned by foreign nationals named Michael Melville Van Ingen and Robert Van Ingen, the alleged transfer is prohibited under the Foreign Exchange Management Act, 1999 and the Foreign Exchan