w w w . L a w y e r S e r v i c e s . i n



Bahubali Estates Ltd. v/s Sewnarayan Khubchand & Others

    FA. No. 35 of 2021 with I.A. No. CAN 3 of 2021

    Decided On, 13 April 2022

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR
    By, JUSTICE SOUMEN SEN & THE HONOURABLE MR. JUSTICE AJOY KUMAR MUKHERJEE

    For the Appellant: Joydeep Kar, Sr. Advocate, Sakya Sen, Piyali Sengupta, Avirup Chatterjee, Soumo Roy, Advocates. For the Respondents: Bhaskar Ghosh, Sr. Advocate, Kamal Krishna Pathak, Rajdeep Bhattacharjee, Souvik Maji, Advocates.



Judgment Text

Soumen Sen, J.

The appeal is arising out of a decree passed by the Judge 5th Bench, City Civil Court, Calcutta on 5th July, 2019 in Title Suit no. 1076 of 1998. This suit was for declaration, eviction and recovery of possession.

The trial Judge dismissed the suit on the grounds that the plaintiff has failed to establish that the defendants are guilty of breach of express covenants of the registered deed of lease dated 17th June, 1982, as the plaintiff itself has failed to establish its title clearly by cogent evidence. The suit was also dismissed due to defective notice. The appellant is aggrieved by the findings of the learned Trial court in so far as it observed that the plaintiff has failed to establish its title in the suit property. The limited issue on which the appeal is being heard is with regard to the propriety of the findings of the learned trial judge in observing that the plaintiff has no title in the suit property.

The other issues with regard to the defective notice and forfeiture of lease are not decided in this appeal as the said issues are not raised and Mr. Joydeep Kar, learned Senior Counsel representing for the appellant has admitted that there has been a defect in the notice. The suit property originally belonged to three persons, namely, Ghamandilal Saraogi, Kamala Devi and Kamal Kumar Gangwal. They were the joint owners of premises no. 9C Lord Sinha Road, Kolkata. They granted a lease in respect of a portion of the suit premises in favour of the defendant no.1 for a term of 99 years with an option for renewal of a further 99 years at the same rent and in accordance with the terms and conditions contained in the said registered indenture of lease dated 17th June, 1992. The said joint owners entered into a partnership on 16th October, 1987 with Smt. Nina Devi Gangwal, Sanjay Kumar Jain, Alka Jain and Illa Jain. The recital of the partnership would show that the parties decided to carry on business in partnership and the said joint owners had agreed to bring the joint property with all their rights therein, as their respective contributions to the capital of the partnership firm and the said property would henceforth be treated as the joint property of the partnership firm. The parties have decided to carry on a partnership business under the name and style of Bahubali Estates with effect from 22nd October, 1987. The said partnership was duly registered with the registrar of firms.

The plaintiff disclosed the certificate of registration which shows that the registrar of firms West Bengal acknowledges receipt of the document on 13th November, 1987. The firm was registered and allotted registration No.L- 37922 dated 13th November, 1987. Thereafter the partners decided to form a joint stock company to carry on continuing the said business of the firm with seven shareholders. The shareholders of the joint stock company were the partners of the said partnership firm. One of the objects to be pursued by the company on its incorporation would be to continue its business in the style of Bahubali Estate Limited. The company was incorporated on 13th April 1988. The plaintiff thus, claims to be the owner of the suit property. The plaintiff claimed that the defendant has defaulted in payment of rent on and from November, 1992 and payment municipal taxes from November, 1992 to April, 1998. The plaintiff alleged that by a notice dated 3rd April, 1998 the plaintiff duly terminated the registered lease dated 17th June, 1982 on the expiry of the month of May, 1998, for the aforesaid breach of express covenants of the said lease and demanded possession of the demised premises from the defendant no.1. The defendant contested the suit by filing a written statement. In the written statement the defendant alleged that the right, title and interest of the lessor of the defendant no.1 in the suit premises could not be transferred in favour of the plaintiff without execution of a formal registered deed of transfer and in the absence of such a registered deed, the plaintiff cannot claim any right, title and interest over and in respect of the suit property. The defendant no. 1 clearly stated that they are still willing to pay the rent in respect of the lease property to the lawful owner of the premises but because of the bona fide dispute regarding ownership of the suit property, the defendant no.1 has been prevented from paying such lease rent since 1992.

At the trial, the plaintiff failed to produce the partnership deed. However, the certificate of registration of the partnership firm dated 13th November, 1987 was produced along with GD lodged with the local police station intimating the loss of original deed of partnership. The officer of the police station concerned also produced the letters intimating the loss of the original partnership deed. The learned Judge did not accept the said certificate of registration in absence of the certified copy of the registered partnership deed and the plaintiff did not mention the loss of the partnership deed in the plaint. The mentioning of the partnership deed in the memorandum of association being Exhibit 3 as proof of existence of the partnership was not accepted.

The learned trial Judge relying upon Exhibit C and Exhibit D being letters dated 14th August, 1990 and 18th August, 1990 respectively issued on the letter head of Kamal Kumar Gangwal claiming rent from the defendants up to 31st March, 1990 after the suit property became the partnership property since October, 1987 after execution of the partnership deed. It was held that the plaintiff has failed to establish its title clearly in the suit property.

Mr. Joydeep Kar learned Counsel appearing on behalf of the appellant submits that the learned Trial Judge has completely overlooked Section 14 of the Partnership Act read with Section 575 of the Companies Act. Mr. Kar has relied upon the partnership deed and the balance sheet of the partnership firm filed along with an application for additional evidence at the appellate stage to contend that the recitals in the partnership deed and the balance sheet would clearly show that the partnership became the sole owner of the suit property in as much as the rents were being deposited to the partnership’s account only.

Mr. Kar submits that there is no requirement of any separate transfer deed or its registration when a partner decides to contribute an asset belonging to him as his contribution to the partnership. Mr. Kar has relied upon the oft cited decision of the Hon’ble Supreme Court in Addanki Narayanappa & Anr. v. Bhaskara Krishnappa, (dead) & thereafter his heirs and Ors., reported at AIR 1966 SC 1300, to argue that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership, it becomes the property of the firm and a partner is only entitled to his shares of the profit. It is submitted that once the partner offers his personal assets as his contribution to the partnership it is converted into money and the said partner loses interest on the said assets by operation of law. The whole concept of the partnership is to embark upon a joint venture and for that purpose to bring in his capital, money or even property including immovable property. Once that is accomplished, whatever a partner has brought in would cease to be his exclusive property. It would be the trading assets of the partnership and the partners who brought it thereafter, would not be able to claim or exercise, any exclusive right over the property which he has brought.

Mr. Kar has relied upon a division bench Judgement of the Andhra Pradesh High Court in Vali Pattabhirama Rao & Anr. v. Sri Ramanuja Ginning and Rice Factory (P) Ltd. & Ors., reported at AIR 1984 AP 176, for the proposition that on conversion of partnership into a registered joint stock company no separate covenant is necessary and that the property of the partnership becomes vested in the joint stock company on it’s registration. On the issue with regard to the non production of the partnership deed, Mr. Kar submits that the requirement of Section 63 of the Evidence Act for Secondary evidence was complied with. Mr. Kar has referred to the evidence of Suresh Kumar Jalan, P.W.1 and draws our attention to paragraph 19 of the evidence in chief of the said witness. Mr. Kar submits that Mr. Jalan has clearly stated that the original partnership deed was misplaced for which an FIR was lodged. The witness has also produced the certificate of registration. Mr. Kar submits that, in fact, the police officer of the concerned police station has produced the letters of complaint which would show that a G.D was lodged with the concerned police station regarding loss of the partnership deed. Mr. Kar submits that now a Photostat copy of the partnership deed has been produced along with application, and any defect if at all, thereby stands cured. Mr. Kar submits that the said documents may be taken into consideration while deciding the issue with regard to the ownership of the property by the present plaintiff.

Per contra, Mr. Bhaskar Ghosh learned Counsel appearing on behalf of the respondent has submitted that by reason of change of ownership the integrity of the lease is affected and disturbed. According to him, the transfer of the interest of the lessor to the partnership firm is, in fact, interfering with the essential terms of the lease and in any event, such transfer of interest of the joint owners in an immovable property can only be effected by a registered deed of conveyance. In this regard, Mr. Ghosh has relied upon the following decision:

1. Lalit Mohan Ghosh vs. Gopali Chuck Coal Company Ltd. reported in ILR 39 Cal 284(FB)

2. Haladhar Pathak & Ors. v Madan Mohon Singha Choudhury, reported in AIR 1937 Cal 499;

3. Sunil Kumar Roy v. Bhowra Kankanee Collieries Ltd. & Ors., reported in AIR 1971 SC 751

4. Delhi Motor Company & Ors. v. U.A. Basrurkar & Ors., reported in AIR 1968 SC 794;

Moreover, it is evident that the original lessor accepted rent till 1990, when admittedly the partnership and thereafter the company became the owner. Hence the refusal on the part of the defendant no.1 to pay the lease rent is bona fide and it cannot be construed to be a default. Mr. Ghosh submits that in spite of giving several opportunities, the plaintiff had failed to produce the original partnership deed till September 1992. The dispute arose between lessor and lessee regarding giving access to the defendant in respect of the common passage in terms of the lease deed. The defendant no.1, in fact, by a letter dated 21st August, 1992 to the lessor intimated that if no access is given to the common areas, payment of lease rent would be stopped.

Mr. Ghosh submits that even if it is assumed that the partnership firm became the owner of the property, the said fact could not be established as the original partnership deed was not produced. There is no existence of previous partnership between the Saraogis and Nina Devi Gangwal, Sanjay Kumar Jain, Alka Jain and Illa Jain. In any event, the interest of the lessor in the property of the alleged partnership firm could not have been transferred without a registered instrument as required under Section 17(1)(b) of the Registration Act. Reliance was placed in this regard upon the judgment of the Hon’ble Supreme Court in Lachhman Dass vs. Ram Lal & Ors reported in AIR 1989 SC 1923 (paragraphs 12 to 16)

It is submitted that the photocopy of the partnership deed which is unregistered is not admissible in evidence, not even as secondary evidence. The sole witness of the plaintiff in his evidence as well as in crossexamination nowhere stated that the photocopy of the alleged partnership deed has been made from the original and as such it does not satisfy the requirement of Section 63 or 65 of the Evidence Act. Reliance in this regard, has placed upon the Division Bench judgment of our court in Parekh Brothers v Kartick Chandra Saha, reported at AIR 1968 Cal 532.

It is submitted that the plaintiff has failed to prove service of notice under Section 114A of the Transfer of Property Act. The application for additional evidence is not in conformity with the requirement as contemplated under Order 41 Rule 47 of the Code of Civil Procedure. In this regard, Mr. Ghosh has relied upon the decision of the Hon’ble Supreme Court in Union of India (UOI) vs. Ibrahim Uddin and Ors. reported in 2012 (8) SCC 148. It is further submitted that the decision in Addanki (supra) does not assist the plaintiff/appellant in establishing title and ownership in respect of the suit property.

The only issue that needs to be decided is whether it was at all necessary for the Trial Court to pronounce the judgment on the ownership of the plaintiff and in doing so whether the trial court has taken into consideration the relevant provisions of law and evidence on record.

We have already summarised the facts. To begin with we may refer to Section 14 of the Partnership Act, 1932. The said section reads:

“14. The property of the firm.—Subject to contract between the partners, 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 business of the firm, and includes also the goodwill of the business.

Unless the contrary intention appears, property and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm.”

(emphasis supplied)

The section clearly enumerates property which is to be deemed as the property of the firm in the absence of any agreement between the parties showing a contrary intention. In determining whether a property belongs to the firm the real intention and agreement of the parties are to be assessed. However, in absence of any agreement to the contrary the property of the firm is deemed to include:

(a) all property rights and interests which partners may have brought into the common stock as their contribution to the common business.

(b) all property rights and interests acquired or purchased by or for the firm, or for the purposes and in the course of the business of the firm,

(c) and the goodwill of the business.

Lord Lindley formulated the following proposition on this aspect:

“whatever at the commencement of a partnership is thrown into the common stock, and whatever has from time to time during the continuance of the partnership been added thereto or obtained by means thereof, whether directly, by purchase or circuitously by employment in trade, belong to the firm, unless the contrary can be shown.” [Crawshay v Colling (1826) 15 Ves Jr 218].

The determination of the assets of the partnership firm in absence of an original deed of partnership can also be gathered from the admission of the parties and other materials available on records. The certificate of Registration of the partnership firm was exhibited. It has to be remembered that the original lessors were the partners of the partnership firm and shareholders of the plaintiff company. It is not a dispute between the partners inter se. The intention of the co-owners to treat the property as their contributions of capital is obvious. The original lessors have not disputed the existence of the partnership nor the recitals in the partnership deed. The certificate of registration of the partnership along with a Photostat copy of the partnership deed now produced would conclusively establish that the partnership firm becomes the owner of the property. The sufficient foundation for the existence of the partnership has been laid in evidence both before the trial court and the appellate court. Now that the Photostat copy has been produced the said document read with the Certificate of Registration conclusively proves the existence of the partnership. The Memorandum of Association of the plaintiff also refers to the existence of the partnerships. The co-owners who became partners also are the subscribers to the Memorandum of Association of the plaintiff.

The existence of the partnership firm is also conclusively established from the information supplied by the Registrar of Firms dated 21st August, 2019 which reads:

“Sub: Information sought for under RTI Act 2005

Sir,

In response to RTI query dated 23/7/2019 and received at this end on 26/07/2019 the undersigned is directed to intimate you that as per our available digitised records Bahubali Estates is a registered partnership Firm vide registration no.L37922 and the firm registered on 12/11/1987.

(emphasis supplied)

In this connection it may also be intimated that this office only issues Form-VIII of a registered firm after application in prescribed format and receipt of payment of requisite amount through GRIPS.

This is for your information please.

SPIO & additional Registrar of Firms,

Societies and Non Trading Corporations, West Bengal.”

The appellant petitioner filed an application for production of additional evidence.

The explanations offered for production of additional evidence at the appellate stage are:

a) The Management of the company had undergone a change once in the year 1993 when the entire shareholding of the company held by Saraogi family being the promoters of the company was acquired by the Jalan Family. The proceeding of the instant suit were filed and continued by the members of the Jalan family who were then in control of the plaintiff company. In or about 2017 the present management have acquired the entire shareholding of Jalan family at the time when the filing of the documents in the learned Court was already over. The present management practically had no role to play in the conduct of the case as the matter was at the stage of argument being taken care of by the learned Advocates engaged in the matter. There was no scope at that stage to review the documents disclosed on behalf of the plaintiff.

b) It was only after delivery of judgment and during consultation with the learned Advocate in course of preparing the appeal to be filed from the impugned judgment and decree that the petitioner was appraised of the fact that the documents showing ownership of the company in respect of the suit property was required to be disclosed by way of additional documents as such documents does not appear from the impugned order to have been disclosed before the learned Trial Court.

c) The petitioner upon receiving such advice thereafter made frantic efforts to search out all documents pertaining to the title of the predecessor in interest of the company in respect of the suit property. However, all such documents were not readily available and substantial time was being consumed to trace out such old documents. In view of the above, the petitioner thought it prudent to file the memorandum of appeal as the time thereof had already expired in the meantime. Accordingly on 1st October, 2019 the petitioner filed the instant appeal being FAT 476 of 2019 before this Hon’ble Court. Subsequent thereto on 19th March, 2020 your petitioner also filed an application for condonation of delay of 24 days delay in filing the appeal along with the application praying for certain interim orders in respect of the said property which was being enjoyed by the respondents without paying any rents.

The Hon’ble Division Bench by order dated 25th June, 2021 was pleased to condone the delay in filing the instant appeal. The other application being CAN no. 2 of 2020 was disposed of by directing the respondents to deposit the current occupational charges which was fixed by the Hon’ble Division Bench at Rs.20,000/- per month with the Joint Receivers appointed by the Hon’ble Division Bench.

d) It is only recently on or about the 7th and 8th July, 2021, while the representatives of the petitioner, in the course of cataloguing the old documents for the purpose of efficient administration of the business came across several old documents some of which are pertinent to the disputes between the petitioner and the respondent, and in particular to the file of the petitioner in respect of the said property.

The documents that are now sought to be relied upon, inter alia, include:

i) Deed of partnership dated 16th October, 1987.

The signatories to the said deed were Chamandi Lal Saraogi, Kamala Devi Saraogi, Kamal Kumar Gangwal, Neena Devi Gangwal, Sanjay Kumar Jain, Alka Jain and Ila Jain. Copy of the said deed dated 16th October, 1987.

ii) Application for Registration of the firm on 7th November, 1987 for the assessment year 1988-89. Copy of the balance sheet of the firm for the year ending 31st March, 1988.

iii) Letter dated 21st August, 2019 from the Registrar of Firms in reply to RTI query made by the petitioner.

iv) Balance Sheet of the petitioner company for the period 1988-89 onwards showing the said property as an asset of the company and the company had been assessed on such basis.

e) Copy of the mutation fee paying receipt for Rs.16,964/- issued on 24th November, 1995 and also the copy of the up to date property tax receipts in the name of the plaintiff/appellant.

The name of the respondent no.1 has also been recorded in the books of the Kolkata Municipal Corporation in respect of the portion leased out to the then defendants bearing assessee no. 110632701354, and the same had been apportioned separately showing the name of the respondent as “Person liable to pay tax M/s. Shib Narayan Khubchand”.

The aforesaid documents are relevant, vital and are necessary for proper adjudication of the dispute.

The explanations offered for production of additional evidence in paragraphs 4 to 8 of the appellate stage are accepted.

Since the original lessors had included their individual property in the corpus of the partnership firm’s property, which is clearly recorded in recital of the partnership deed more particularly in clause 2 and 6(a) and corroborated from the balance sheet of the partnership firm, the property in question no more remains the property of the original lessors and in absence of any dispute being raised by the original lessors with regard to the manner in which their interest as lessors in the suit property has been dealt with and forms assets of the partnership, it is no more open for a lessee to question the ownership of the partnership firm.

For the sake of convenience Clause 2 and 6(a) of the partnership deed is reproduced below:

“(2) The parties hereto have decided to carry on business in partnership and the parties of the First, Second and Third parts have agreed to bring the Joint Property with all their rights therein as their respective contribution to the Capital of the partnership firm hereby constituted at the value, terms and conditions appearing hereinafter and save as hereafter provided to treat the Joint Property as an asset of the partnership constituted herein and the parties of the Fourth, Fifth, Sixth and Seventh parts have agreed to bring in cash as their contribution to the capital of the partnership.”

“6(a)The Joint Property being land and building at premises no.9C-Lord Sinha Road, Calcutta-700 071 owned and held by the parties hereto of the First, Second and Third Parts, fully described in the Schedule-‘A’ hereinafter, with all their rights, therein is hereby brought in the partnership business by them as their contribution to the capital of the partnership hereby constituted and save as hereafter provided the Joint Property will be treated as belonging to the partnership and vest with it free from all encumbrances but subject to the existing tenancies as stated in the Schedule-‘B’ hereafter and dues of corporation of Calcutta against municipal taxes which will be payable by the partnership. Capital account of the parties hereto of the First, Second and Third parts will be credited in the books of accounts of the partnership firm by Rs.6,40,000/- (Rupees six lacs forty thousand) being the value at which the joint property was acquired by them by crediting Rs.3,20,000/- to the credit of capital account of Sri Kamal Kumar Gangwal (Party of the Third part) and Rs.1,60,000/- to the capital accounts of each of the parties hereto of the First and Second Parts.”

The specific intention of the joint owners of the suit property to treat their property as that of the firm is well established from the evidence on record. It was not a sale per se by a partner to the partnership firm. The deed of partnership clearly shows that the original co-owners lessees had thrown the property into the common stock of the partnership firm. There could not be any doubt that such property became the property of the partnership firm. The lessee cannot question the consent and/or intention of the lessors to bestow upon the partnership firm the right to treat their shares in the property as that of the partnership firm’s property. The law in this regard is well settled by the decision in Addakni (supra) and Vali Pattabhirama Rao v. Sri Ramanuja Ginning & Rice Factory (P) Ltd. reported in (1986) 60 Comp. Cas. 568 (AP).

In Addanki (supra) the Hon’ble Supreme Court explained the concept of the interest of a partner in the property which he contributed as his capital in the partnership in the following words:

“3....whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing, to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in Clause (a) and Sub clauses (i), (ii) and (iii) of Clause (b) of Section 48.

5......The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated, his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution of retirement after a deduction of liabilities and prior charges.”

Under the Partnership Act, 1932, partners are entitled to contribute capital in varied forms to their partnership firm. This view is reiterated in Sunil Siddharthbhai & Ors. v Commissioner of Income Tax, Ahmedabad, Gujarat reported in AIR 1986 SC 368; 1985 (4) SCC 519 which recognised that an individual can transfer his personal assets to the partnership firm as his contribution of capital. While he does not lose his right in the asset altogether what he enjoys now “is an abridged right which cannot be identified with the fullness of the right which he enjoyed in the asset before it entered the partnership capital”. The judgment quoted with approval the passage from Addanki (supra) alluded to above. The judgment reaffirms “that when a partner brings in his personal asset into a partnership firm as his contribution to its capital, an asset which originally was subject to the entire ownership of the partner becomes now subject to the rights of other partners in it.”

Whatever property is brought into the firm by the partners, or acquired on behalf of the firm becomes the property of the firm and no single partner can lay exclusive claim over it. The Apex Court in paragraph 15 of Sunil (supra) has clearly held that when a person brings in his immovable property as his contribution to the capital of the firm no written document or registration is required does not spring from the considerations that there is no transfer. The view is that no document of transfer is required as the personal assets introduced by a partner into the firm as his contribution to its capital becomes the property of the firm by reason the intention and agreement of the parties and therefore registration under Section 17(1)(b) of the Registration Act is unnecessary. This position is clearly stated in the following words:

“Our attention has also been invited to Clause (b) of Sub-section (1) of Section 17 of the Registration Act which requires the registration of no testamentary instruments which purport or operate "to create declare assign limit or extinguish whether in present or in future, any right, title or interest whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property," and to the view taken by the courts in this country that when a person brings in even his immovable property as his contribution to the capital of the firm no written document or registration is required under that clause. That view was expressed in Firm Ram Sahay Mall Rameshwar Dayal and Ors. v. Bishwanath Prasad MANU/BH/0066/1963 : AIR1963Pat221 . The learned Judges relied on the English law that the personal assets introduced by a partner into the firm as his contribution to its capital becomes the property of the firm by reason of the intention and agreement of the parties. The view does not spring from the consideration that there is no transfer. The view is that no document of transfer is required and that, therefore, registration is unnecessary. The Patna High Court reiterated that view in Sudhansu Kanta v. Manindra Nath”.

In Prem Raj Brahmin v. Bhani Ram Brahmin reported in [1946] ILR 1946 1 Cal 191, a Division Bench of the Calcutta High Court referred to Section 239 of the Indian Contract Act and Section 14 of the Indian Partnership Act and held that under the provisions of those two Acts for the purpose of bringing the separate properties of a partner int

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o the stock of the firm it is not necessary to have recourse to any written document at all, that as soon as a partner intends that his separate properties should become partnership properties and they are treated as such, then by virtue of the provisions of the Contract Act and the Partnership Act, the properties become the properties of the firm and that this kind of contribution is not prohibited by the Transfer of Property Act or the Registration Act. [See also Firm Ram Sahay Mall Rameshwar Dayal & Ors. Vs. Bishwanath Prasad reported in AIR 1963 Pat 221 and Sudhansu Kanta v. Manindra Nath reported in AIR 1965 Pat 144] Furthermore, according to Section 575 of the Companies Act, 1956, “All property, movable and immovable (including actionable claims), belonging to or vested in a company at the date of its registration in pursuance of this Part, shall, on such registration, pass to and vest in the company as incorporated under this Act for all the estate and interest of the company therein. As the vesting of property is under statutory provisions, no instrument of transfer is necessary.” In Vali Pattabhirama Rao (supra) it has been clearly stated “If the constitution of the partnership firm is changed into that of a company by registering it under Part IX of this Act, there shall be statutory vesting of the title of all the property of the previous firm in the newly incorporated company without any need for a separate conveyance.” We are unable to agree with the submission of Mr. Ghosh that the transfer of ownership from the Saraogi’s to the partnership firm and thereafter to the company has violated the essential terms of the lease. The terms and conditions of the original lease have not been impaired or its integrity has not been disturbed by reason of change of ownership. None of the decisions cited by Mr. Ghosh have addressed the said issues. All the said decisions show there had been a modification or alteration of the essential terms of the lease either by reason of increase in rent or reducing the terms of the lease or registration of an award declaring, creating or extinguishing any right present or future in an immovable property of the value of Rs.100/- or upwards and in the instant case there is none. On the aforesaid basis it can be safely concluded that by reason of vesting of the property in the company by operation of law, the company has become the owner of the suit property and landlord of the defendant. In view of the fact that the defendant no.1 has categorically stated that they are willing to pay rent to the rightful owner and as it appears that the municipal rates and taxes payable by the defendant in respect of the operation of the premises under their occupation have not been paid, we direct the defendant to pay arrear rents till March, 2022, if not paid, by 30th April, 2022 and the municipal rates and taxes in terms of the lease agreement within 15th May, 2022. The decree of the trial court is partly set aside. CAN 3 of 2021 is allowed. The appeal is allowed in part. The Joint Receivers after retaining Rs.50,000/- each towards their final remuneration shall disburse the remaining amounts collected so far to the plaintiff within 10 days from date and shall file final accounts within the aforesaid period. Upon compliance of the aforesaid direction they shall stand discharged. There shall be no order as to costs. I agree. Ajoy Kumar Mukherjee, J.
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