Property transfers from partnership firms to companies occur automatically without a registered document when incorporating under relevant law.

JUDGMENT

(Dated this the 18^th day of March 2026)

Basant Balaji J., This intra court appeal, is filed under Section 5 of the Kerala High Court Act, 1958, by the respondents in W.P.(C.) No.17427 of 2020. The reliefs sought for in the Writ Petition was to issue a writ of mandamus or any other writ or direction to the 4^th respondent to accept land tax from the petitioner for the period from 2018 – 19 onwards for their property regarding which Ext.P3 possession certificate and Ext.P4 certificate of Genuinity were issued.

2. The question that arises for consideration is whether any interference is warranted to the judgment which directed the acceptance of land tax from the petitioner from 2018 - 19 onwards for their property on the basis of automatic vesting of the property of a partner into the property of the company u/s

575 of the Companies Act, 1956 (the Act, 1956).

3. It is not in dispute that the property was mutated in the name of the petitioner and the Thandaper No.5054 was assigned and the tax was received till 2017-18. The only ground on which the tax was not collected thereafter was that Swami Athuradas, who obtained a property from M/s.Kumari Investment Corporation Pvt. Ltd., has brought the property into a partnership firm by name, Travancore Regal Resorts, formed by him, having an extent of 17 acres and, when he retired from the partnership after the receipt of Rs.84 lakhs, the property stood in the name of Swami Athurdas, as there was no conveyance effected transferring his right in the property to the partnership firm. Any immovable property having the value of Rs.100/- and above can be conveyed only by a registered instrument. Thus, the property cannot be held to be the property of the company which was subsequently incorporated from the partnership firm.

4. According to the writ petitioner, Swami Athurdas, who obtained the property as per Sale Deed No.2124/85 of Peerumade Sub Registrar Office, had included 17 acres out of the 24 acres he obtained, into the joint stock of the partnership firm. He retired from the partnership after receiving Rs.84 lakhs being the value of 17 acres of land that included in the joint stock of the partnership firm. When the partnership firm later incorporated the same into a company, the same stands automatically transferred into asset of the company assets as per section 575 of the Act, 1956.

5. The learned Single Judge relied on the judgment of the Andhra Pradesh High Court in Vali Pattabhirama Rao and Another v. Ramanuja Ginning and Rice Factory (P) Ltd and Others ( 1984 KHC 1324 ) and that of the Bombay High Court in Salim Akbarali Nangi v. Union of India and Others (2002 SCC OnLine Bom. 1098) held that a partnership firm could be registered as a company under Section 565 of the Act, 1956 and the property of the partnership firm vested with the company under Section 575 of the Act, as there is an automatic transfer.

6. Section 366 (1) deals with Companies capable of being registered. It reads as, ‘for the purpose of this part, the word ‘company’, includes any partnership firm, limited liability partnership, co-operative society, society or any other business entity formed under any other law for the time being in force which applies for registration under this Part.’ Therefore, it was held that once the property vested with the partnership firm and subsequently the partnership firm was incorporated as a company, the assets of the firm automatically gets transferred as assets of the company. Thus, the Writ Petition was allowed and directed the 4^th respondent Village Officer to accept the land tax.

7. In Sachin Jaiswal v. M/s.Hotel Alka Raje [2025 KLT OnLine 1380 (SC)], the hon’ble