SUPREME COURT OF INDIA
Shreedhar Govind Kamerkar
Vs
Yesahwant Govind Kamerkar and Another
Appeal (Civil) 5720 of 2006 (Arising Out of Slp (Civil) No.8368 of 2005)
(S. B. Sinha and Markandeya Katju, JJ)
12.12.2006
S. B. SINHA, J.
Leave granted.
Parties herein are brothers. The dispute between them is tenancy right in
respect of a premises known as 'Navalkar Building' situate at N.C. Kelkar Road,
Dadar in the town of Mumbai. Appellant herein allegedly acquired the said
tenancy right in terms of a deed of assignment entered into by and between him
and one Saraswati Balkrishna Pawar and three others. One Krishna Tatoba Pawar
alias Balkrishna Tatoba Pawar was the original tenant of the said premises. He
was running a hair cutting saloon therein under the name and style of 'Anant
Hair Dressing Saloon'. He died leaving behind him the assignors of the said
deed of assignment dated 18.01.1966. The business as also the tenanted premises
was assigned for valuable consideration. He was allegedly carrying on business
therein. Leave and licence agreement was executed by him in relation to the
self-same premises in favour of one Shri Walke on 01.02.1970. The said Walke
was running a business in the said premises under the name and style of 'Deepak
Provisional Store'. A dispute arose between the parties resulting in initiation
of a proceeding under Section 145 of the Code Of Criminal
Procedure, 1973. The properties were attached. The said Walke also filed
a suit. The said suit is said to have been compromised. Appellant herein is
said to have obtained possession of the said premises on 23.03.1978, whereafter
he started a business under the name and style of 'Shree Medico'.
The parties hereto i.e. the three brothers, entered into a partnership on 01.04.1971.
The same was dissolved on 31.03.1977, inter alia, on the premise that the
appellant had been claiming full ownership in relation to the said tenanted
premises as also the business in Shree Medico. A suit was filed by Respondent
No.1 in the City Civil Court, Mumbai, which was registered as S.C. Suit No.5903
of 1981 wherein, inter alia, the following prayers were made :
(a) It be declared that the Plaintiff and the Defendants Nos. 1 and 2 have 1/3
shares in the suit business of Medical and General Store carried on Navalkar
Building on the ground floor, N.C. Kelkar Road, Dadar, Bombay 400 028 as also
the tenancy rights in the presmises as also the premises on the ground floor of
Navalkar Building, N.C. Kelkar Road, Dadar, Bombay-400 028.
(b) It may be declared that the partnership business of Medical and General
Stores carried on in Navalkar Building on the ground floor, N.C. Kelkar Road,
Dadar, Bombay-400 028, stood dissolved as from the date of the suit or from
such other date as this Hon'ble Court may deem fit.
(c) The accounts of the partnership business of Medical and General Stores be
made up and the Plaintiff be awarded the amount found due to his share at the
foot of the account."
Although in the said suit allegedly no relief was claimed in respect of the
business of the Deepak Provisional Store, at the hearing, the plaintiff made
his claim in respect of the business running under the name and style of 'Shree
Medico' and claimed interest in the said 'Deepak Provisional Store'. The
appellant in his written statement did not raise any question as regards
legality or otherwise of the said tenancy right in the partnership in terms of
Section 15 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947
(for short, 'the Bombay Act').
In the said suit, inter alia, the following issues were framed :
"1. Whether the Plaintiff proves that the partnership firm of M/s
Shreedhar Govind Kamerkar was/is registered under the Indian Partnership Act?
2. Is the answer to the above issue is in the affirmative, whether the
Plaintiff proves that the business known as Deepak Provision Centre and the
shop premises on the Ground Floor, Navalkar Building, N.C. Kelkar Road, Dadar,
Bombay-400 028 ?
3. If the answer of the above issues in the affirmative, whether the Plaintiff
proves that on 31st March, 1977 the said business of Deepak Provision Centre
was in existence ?
4. If the answer to the above issues is in the affirmative, whether the
Plaintiff proves that the said business of Deepak Provision Centre and the said
premises were excluded from the dissolution of the said firm of M/s Shreedhar
Govind Kamerkar ?
5. Whether the Plaintiff proves that the business of M/s Shree Medico carried
on by the Defendant No.1 in the said premises is a partnership business of the
parties to the suit ?
8. Whether the Plaintiff proves that he is entitled to 1/3rd share in the said
business of the 1st Defendant and in the tenancy rights in the said premises ?
9. Whether the Plaintiff proves that he is entitled to the dissolution and
accounts of the said business of the 1st Defendant and the tenancy rights of
the said premises ?"
Issue Nos. 2, 8 and 9 were answered in the negative, whereas Issue Nos.3, 4 and
5 were held to be not surviving. The learned Trial Judge, inter alia, on the
aforementioned findings dismissed the suit. On an appeal preferred by the
respondents herein, a learned Single Judge of the High Court, however, allowed
the appeal directing :
"a) It is declared that the plaintiff and defendant Nos.1 and 2 have
1/3rd share each in the business of Deepak General Stores carried on the ground
floor in Navalkar building at N.C. Kelkar Road, Dadar, Mumbai-400 028 and also
equal tenancy rights in the premises where Deepak General Stores business was
being carried out.
b) It is declared that partnership business of Deepak General Stores at the
aforesaid premises stood dissolved as from July 1981.
c) The accounts of the partnership business of Deepak General Stores shall be
made and the plaintiff and the defendants will be entitled to amount found due
to their share at the foot of the account.
d) Partnership premises where Deepak General Stores was being run shall be
partitioned by metes and bounds and they will be entitled to possession of
1/3rd share and will be placed in possession.
e) There will be an enquiry into the mesne profits from the date of the suit
till delivery of possession in respect of Deepak General Stores and that of the
premises.
Plaintiff will be entitled to costs of this suit as well as of the
Appeal."
The High Court in its judgment, inter alia, relied upon the admission of the
appellant herein that the royalty received in respect of the said tenanted
premises used to be deposited in the partnership account.
The deed of dissolution dated 31.03.1977 clearly postulated that the said
tenancy was a part of the assets of the partnership (Ex.P-3) and agreement
dated 01.02.1977 (Ex. P-4), whereby and whereunder the parties thereto agreed
that the partnership should be dissolved.
Mr. U.U. Lalit, the learned Senior Counsel appearing on behalf of the
appellant, would inter alia submit :
1) Having regard to the stand taken by the learned counsel for the respondents
before the City Civil Court as also before the High Court to the effect that no
share was being claimed in respect of the business of 'Shree Medico', and the
said claim having been kept confined only to 'Deepak Provisional Store', the
High Court committed a manifest error in passing the impugned judgment.
2) Having regard to the finding of fact arrived at by the City Civil Court that
the tenancy right in respect of the premises in question had been acquired by
the appellant in his individual capacity and he having obtained possession
thereof from the licensee only in the year 1978, prior whereto the partnership
was dissolved, the question of the said property being an asset of the
partnership did not and could not arise.
3) The plaintiff-respondent, in his deposition having clearly admitted that he
had no concern with the said tenanted premises, the impugned judgment cannot be
sustained.
4) In any event having regard to the provisions contained in Section 15 of the
Bombay Act, the tenancy right could not have been assigned.
5) Partnership having been dissolved on 31.03.1977 and the suit having been
filed on 16.10. 1981, the same was clearly barred by limitation.
Mr. Shekhar Napadhe, the learned Senior Counsel appearing on behalf of the
respondents, on the other hand, would contend :
1. It is not a fit case where this Court should exercise its discretionary
jurisdiction under Article 136 of the Constitution Of
India, 1950.
2. Having regard to the provisions contained in Section 17 of the Indian Partnership Act, 1932, the suit was not barred by
limitation.
3. No question as regards applicability of Section 15 of the Bombay Act having
been raised in the written statement, nor any issue having been framed in that
behalf, the same should not be permitted to be raised for the first time before
this Court.
The deed of partnership admittedly has not been produced. The parties, however,
had entered into a formal deed of partnership. Non production of the said
document has, however, not been taken serious note of by the High Court. What was
produced was extract from the certificate of registration issued by the
Registrar of Firms.
In absence of the deed of partnership, it might not be possible for us to
arrive at a finding that the partnership was originally brought in the stock of
the firm.
We will, therefore, have to proceed to determine the said question on the basis
of the materials which are available on records.
We may at the outset notice the admission of the appellant in his deposition
before the learned Civil Court, which is in the following terms :
"Q. You have stated that the business of M/s Shridhar Govind Kamerkar
was carried on at Navalkar Bldg. So what was this premises at Navalkar Bldg.
used ?
Ans. The said premises were given for running the business to one Shri Walke and
the royalty was received therefrom was credited to the accounts of M/s Shridhar
Govind Kamerkar a partnership firm.
Q. I put it to you that prior to giving the premises in Navalkar Bldg. to Shri
Walke Deepak Provision Centre was being run therefrom. What have you to say?
Ans. I started the said business of M/s Deepak Provision Centre in the said
premises."
Indisputably, a deed of dissolution was entered into by and between the
parties. The said instrument was executed on 31.03.1977, the relevant portions
whereof are as under :
"WHEREAS the parties above named were partners in a partnership, a will
for carrying on the business of Bidis, Tobacco, Cigarette and other sundry
articles under the name and style of M/S SHREEDHAR GOVIND KAMERKAR, at 203/205,
Haji Habib Chawl, N.M. Joshi Marg, Bombay 13 and the tobacco shop at Harharwala
Building, Delisle Road, (N.M. Joshi Marg), Bombay and Deepak Provision Centre,
Navalkar Bldg. N.C. Kelkar Road, Dadar, Bombay-28, and a tobacco godown at
Rangari Chawl, Maidan, Patra Shed, N.M. Joshi Marg, Bombay 13, under the terms
and the conditions of a deed of partnership duly executed on the day of
January, 1971, Between the Party of First Part, Second Part & Third
Part."
xxx................xxx............xxx
1. The parties hereby agreed that the partnership between them to carry on the
said business in the name and style of Messers SHREEDHAR, GOVIND KAMERKAR and
other sundry articles at 203/205 Haji Babib Chawl, N.M. Joshi Marg, Bombay 13
and a tobacco shop at Harharwala Building, N.M. Joshi Marg, known as Ganesh Tea
House and Deepak Provision Centre, Navalkar Building, N.C. Kelkar Road, Dadar,
Bombay 28 and tobacco godown at Rangari Chawl Maidan, Patra Shed, N.M. Joshi
Marg, Bombay 13 and Mor Brand Chuna (Lime) and the parties had agreed the terms
under which the said partnership was dissolved on the further terms and
conditions.
xxx.............xxx................xxx
3. In respect of Bidi shop at Harharwala Bldg., N.M. Joshi Marg, Bombay-13, known
as Hotel Ganesh Tea House which is given on royalty shall remain with the party
of the Third Part Shri P.G. Kamerkar and he shall be responsible to repay the
deposit amount received.
4. In respect of Deepak Provision Centre at N.C. Kelkar Road, Dadar, Bombay 28
the case is pending in court of the said shop and after the court decision the
decision will be taken with the mutual consent of all the partners. and
secondly in respect of Mor Brand Chuna (Lime) the matter is under dispute with
other parties and that matter will be decided with the mutual consent of these
partners."
Although the agreement dated 01.02.1977 is a disputed document, but having
regard to the fact that the High Court had placed reliance thereupon, we may
also notice clause 8 thereof which is in the following terms :
8) The closed shop viz. Deepak Provisional Stores with the room situated at
Nawalkar Building, N.C. Kelkar Road, Dadar, Mumbai-400028 is of the ownership
of all the three partners and all the three shall bear the expenditure to be
incurred therefor. Further, all the three shall equally bear the entire
expenditure viz. its rent etc."
We may also notice that although a claim was made by the plaintiff that the
tenancy had been acquired by the partnership from the beginning, from the
deposition of the plaintiff-respondent no.1, it appears that the following
facts have been elicited : (i) Deepak Provisional Store (Centre) was not run by
the partners (page 61); (ii) All licences of Shree Medico were standing in the
name of defendant no.1. He had never signed on any document pertaining to Shree
Medico (page 62); (iii) He had no source of income in 1966 (page 71); (iv)
There is no documentary evidence to show that the said premises were acquired
out of the funds of partnership firm (page 72); (v) No documentary evidence
exists to show that the business of partnership was carried out at the same
premises (page 82); (vi) The property was under attachment from 1969 to 1978
(page 82); (vii) The possession of the property was obtained in 1978 (page 84);
and (viii) Plaintiff claimed a share in the business which was running under
the name and style of 'Shree Medico' and not of 'Deepak Provisional Store'
(page 94).
However despite a claim having been made by the plaintiff in respect of 'Shree
Medico', it appears, a statement was made at the Bar by the learned counsel for
the plaintiff on 17.03.1994, which had been recorded by the learned Trial Judge
as under : "(1) That the Plaintiff is not claiming any right in the
business of 'Shree Medico'. (2) The Plaintiff is claiming the right only in
respect of the business of 'Deepak Provision Centre". (3) The tenancy
rights in respect of the shop premises being Shop No.1."
The High Court also in para 6 of its judgment noticed the said statements in
the following terms :
"Counsel for the appellants however fairly conceded that the
plaintiffs-appellants are not making any claim in respect of Shree
Medico."
The learned Senior Counsel appearing on behalf of the appellant may, thus, be
right in his submission that keeping in view the pleadings of the parties as
also the statements of the plaintiff in his deposition before the learned City
Civil Court, the respondent could not lay any claim in respect of any business
which was being carried in the premises in question under the name and style of
'Deepak Provisional Store, but the same, in our opinion, may not be decisive to
arrive at a conclusion that the right in respect of the tenanted premises in
question never formed the part of the assets of the partnership.
We have noticed hereinbefore that either there was no deed of partnership, or
in any event the same had not been produced. What, therefore, formed 'the
assets' of the partnership must be gathered from the admission of the parties
as also the other materials available on records.
What forms the property of the firm is stated in Section 14 of the Indian Partnership Act, 1932 (for short, 'the Act'). It
reads as under :
"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
required for the firm."
With a view to determine the said question, we may notice some other provisions
of the Act as well.
"17. Rights and duties of partners. - Subject to contract between the
partners - after a change in the firm
(a) - where a change occurs in the constitution of a firm, the mutual rights
and duties of the partners in the reconstituted firm remain the same as they
were immediately before the change, as far as may be; after the expiry of the
term of the firm, and
(b) - where a firm constituted for a fixed term continues to carry on business
after the expiry of that term, the mutual rights and duties of the partners
remain the same as they were before the expiry, so far as they may be
consistent with the incidents of partners at will; and where additional
undertakings are carried out,
(c) where a firm constituted to carry out one or more adventures or
undertakings carries out other adventures or undertakings, the mutual rights
and duties of the partners in respect of the other adventures or undertakings
are the same as those in respect of the original adventures or
undertakings."
"50. Personal profits earned after dissolution.- Subject to contract
between the partners, the provisions of clause (a) of section 16 shall apply to
transactions by any surviving partner or by the representatives of a deceased
partner, undertaken after the firm is dissolved on account of the death of a
partner and before its affairs have been completely wound up :
Provided that where any partner or his representative has bought the goodwill
of the firm, nothing in this section shall affect his right to use the firm
name."
"53. Right to restrain from use of firm name or firm property.- After a
firm is dissolved, every partner or his representative may, in the absence of a
contract between the partners to the contrary, restrain any other partner or
his representative from carrying on a similar business in the firm name or from
using any of the property of the firm for his own benefit, until the affairs of
the firm have been completely wound up :
Provided that where any partner or his representative has bought the goodwill
of the firm, nothing in this section shall affect his right to use the firm
name."
The parties have entered into the deed of dissolution voluntarily. The
appellant herein is not an illiterate. He has been carrying on business. He had
acquired tenancy right on his own showing. He had acquired the tenancy right in
his own name. He had also been fighting litigation with the said Walke for a
long time.
We have also noticed hereinbefore clause (8) of the agreement dated 01.02.1977.
From the preamble of the deed of dissolution dated 31.03.1977, it is evident
that the partnership had been carrying on business inter alia in Bidis,
Tobacco, Cigarettes etc. under the name and style of 'M/s Shreedhar Govind Kamerkar'
situated Haji Habib Chawl, N.M. Joshi Marg, Bombay and a tobacco shop at
Harharwala Building, Delisle Road and a tobacco godown at Rangari Chawl,
Maidan, Patra Shed, N.M. Joshi Marg, Bombay but also 'Deepak Provisional
Store', Navalkar Building.
Clause (1) of the said deed of dissolution also refers to 'Deepak Provisional
Store'. In clause (3) of the said instrument, royalty in relation to a hotel,
namely, Hotel Ganesh Tea House was assigned to P.G. Kamerkar, Respondent No.2
herein. In relation to the 'Deepak Provisional Store', it was categorically
stated that the matter was pending in the court. Clause (4) of the said deed of
dissolution suggests that the parties intentionally left out division of their
properties in respect of 'Deepak Provisional Store' as also 'Mor Brand Chuna
(Lime)', as litigations were pending.
The very fact that the parties had referred to the business carried out under
the name and style of 'Deepak Provisional Centre' at N.C. Kelkar Road, Dadar,
Mumbai, which was not and could not be the subject-matter of the partnership as
the same was entered into in the year 1971 and dissolved in 1977, the admission
of the appellant herein that the royalty received from the said tenanted
premises was being deposited in the partnership account assumes significance.
If the said property was the exclusive property of the appellant, and he had
been dealing therewith as the sole owner thereof, the question of any reference
being made thereto in the deed of dissolution would not have arisen. It may be
true that in absence of the original deed of partnership dated 01.04.1971
having been brought on records, it is difficult for the court to arrive at a
finding that the same had been originally brought in the stock of the firm.
There is also no direct evidence that the appellant had brought the same as his
investment in the partnership at the initial stage thereof but it is evident
that the same was done at a latter point of time. An inference in relation
thereto must be drawn for the other materials on records. The said agreement
dated 01.04.1971 having been in dispute, we may not be decisive. In a case of
this nature, the conduct of the parties assumes significance. Admission, as is
well-known, is the best proof of a claim. Section 58 of the Indian Evidence Act, 1872 states that the facts admitted
need not be proved. The very fact that the royalty received in respect of the
said premises was being deposited in the partnership account is a clear pointer
to show that the same was the property of the partnership.
We may at this juncture also consider the submission of Mr. Lalit, in regard to
the applicability of the provisions of Section 15 of the Bombay Act, which
reads as under :
"In absence of contract to the contrary, tenant not to sub-let or transfer
or to give on licence.
(1) Notwithstanding anything contained in any law but subject to any contract
to the contrary, it shall not be lawful after the coming into operation of this
Act for any tenant to sub-let the whole or any part of the premises let to him
or to assign or transfer in any other manner his interest therein and after the
date of commencement of the Bombay Rents, Hotel and Lodging House Rates Control
(Amendment) Act, 1973, for any tenant to give on licence the whole or part of
such premises.
Provided that the State Government may by notification in the Official Gazette,
permit in any area the transfer of interest in premises held under such leases
or class of leases or the giving on licence may premises or class of premises
and no such extent as may be specified in the notification.
It is not in dispute that the State of Maharashtra had issued a notification in
terms of the proviso appended to Section 15 of the Bombay Act, in terms whereof
assignment of a business together with tenancy right was permissible.
Furthermore, Section 15 does not contain an absolute bar. It is subject to a
contract to the contrary between the landlord and the tenant. A landlord may
also in a given situation by reason of acceptance of rent or otherwise from the
sub-tenant or assignee may acknowledge the sub-tenancy or assignment and thus
accept him to be his tenant. It is not a case where a landlord has brought any
suit for eviction of the tenant on the ground that he had wrongfully assigned
his right, title and interest in the tenanted premises in contravention of
Section 15 of the Bombay Act and, thus, liable for eviction. We are concerned
with a partnership. Assisgnment of tenancy having regard to the statutory provision
would not attract Section 23 of the Indian Contract Act,
1872. Even otherwise in a case of this nature, the said question does
not arise.
In any event, a transaction may be void so far as landlord is concerned. Such a
void transaction may not have any effect on the application of the property
towards partnership. To some extent, the point appears to have been covered by
this Court in Arm Group Enterprises Ltd. v. Waldorf Restaurant and Others
, wherein this Court opined :
"Mere carrying on by the tenant a partnership business as partner in
the leased premises, no doubt, does not per se amount to sub-letting unless it
is shown that he withdrew his control of the leased premises and parted with
the possession of the property and thereby surrendered his individual tenancy
rights in favour of the partnership firm"
We may, in this connection, usefully notice that in 'Lindley & Banks on
Partnership', 18th Edn., it is stated :
"8-13 Lord Lindley observed that "a partnership may be illegal upon
the general ground that it is formed for a purpose forbidden by the current
notions of morality, religion, or public policy". On that ground, he
considered that a partnership formed for the purpose of deriving profit from
the sale of obscene or blasphemous prints or books, or for the procurement of
marriages or of public offices of trust, would be "undoubtedly
illegal."
8-14 It has already been seen that a partnership between a resident British
citizen or a resident alien and an alien enemy is illegal and incapable of
creation or continuation; on the same basis, a partnership formed in order to
trade with an enemy nation would clearly be illegal. However, since a neutral
may lawfully trade with one of the belligerent nations, a partnership formed
for that purpose would be unobjectionable."
8-16 Equally, although a statute may appear to prohibit certain activities and
impose a penalty for failure to observe its provisions, it does not follow that
conduct which would attract the penalty is necessarily illegal. If the statute
can genuine be classed as prohibitory, as will be the case if the penalty is
imposed for the protection of the public, then such conduct will be illegal Per
contra if, on a true construction of the statute, the penalty merely represents,
as Lord Lindley put it, "the price of a licence for doing that the statute
apparently forbids". Thus, in Brown v. Duncan, it was held that a
partnership of distillers was not illegal, even though one partner carried on
business as a retail dealer in spirits within two miles of the distillery
(contrary to the Duties on Sprits Act 1823, ss. 132, 133) and was not
registered as a member of the firm in the excise books (as required by the
Excise Licences Act 1825, s. 7). Lord Lindley did, however, doubt whether the
statutes in question were properly construed by the court.
The following alphabetical
list of businesses and professions contains the most important example of
partnership whose legality is or may be affected by statute."
8-31 By virtue of the Financial Services and Markets Act 2000, no person may
carry on, or purport to carry on, a regulated activity in the United Kingdom
unless he is duly authorized so to do or is exempt from the provisions of the
Act in relation to that activity. Contravention of this general prohibition
constitutes an offence and any agreement made by a person whilst carrying on a
regulated activity in breach of the prohibition will be unenforceable against
the other party.
10.44 What is of greater importance is to ensure that the occupation rights of
the firm are clearly established where the premises are to remain in the sole
ownership of one or more of the partners.
If a lease in favour of the firm is to be granted, then it must be in writing.
The termination of such a lease may, however, not be without difficulty and its
existence may conceivably have adverse inheritance tax consequences.
If the agreement omits any reference to such occupation rights then, in the
absence of any other evidence, it will not be assumed, merely because the
premises are indispensable to the partnership business, that they belong to the
firm or are subject to the firm's right to (i) a lease or tenancy or, where
that is still relevant, (ii) an exclusive licence to occupy within the meaning
of the Agricultural Holdings Act 1986. It will rather be inferred that each
individual partner who is not beneficially interested in the premises has been
granted a non- exclusive licence to enter them in order to carry on the
partnership business. Such licence would seem to be contractual in nature and
might, as a matter of implication, not be terminable during the currency of the
partnership, particularly if it can be shown that the partnership business can
only be carried on from those premises and that the termination of the licences
would strike at the substratum of the partnership agreement. In such
circumstances the only effective way of determining the licence would be to
dissolve the partnership but, even then, they would prima facie continue until
the winding up is complete."
We are not oblivious that all properties of the owner may not be partnership
property and each case, thus, must be determined on the basis of fact materials
on record.
In Dwijendra Nath Mullick and Another v. Rabindra Nath Chatterjee and Others
1987 AIR(Cal) 289, it is stated :
"18. It is for the partners to determine by agreement amongst
themselves what shall be the property of the firm and the quantum of their
beneficial interests therein inter se and what shall be the separate property
of one or more of them. If there is no express agreement, then the source from
which the property was obtained, the purpose for which it was acquired, and the
mode in which it has been dealt with, are to be considered to ascertain such
intention."
In Jayalakshmi v. Shanmugham and Others 1987 Indlaw
KER 291, it is stated :
"It is not necessary that every partnership for the purpose of its
business should own and utilize its own partnership property. Therefore mere
user of a shop for the business will not make the shop or the tenancy right in
it a partnership asset. Something more is required. It was so held by the
Supreme Court in Arjun Kanoji Tankar v. Santaram Kanoji Tanker
also."
We, however, in this case are of the opinion that as the usufruct of his lease
hold was to be deposited in the partnership account, the same formed the part
of the assets of the partnership.
The question as to whether the suit was barred by limitation or not also must
be judged from the aforementioned context. The cause of action for the suit was
said to have been arisen, as stated by the plaintiff in his plaint in the
following terms :
"The plaintiff says that the cause of action arose at the end of July,
1981 when the Defendant No.1 refused to render accounts and started claiming
the partnership business and the partnership premises as his own."
The question which would, therefore, arise is as to whether running of 'Shree
Medico' without complying with clause 4 of the deed of dissolution would give
rise to a continuous cause of action. Mere execution of deed of dissolution did
not discharge the parties thereto from their rights and liabilities. The rights
and liabilities of the partners in respect of the partnership property would be
discharged only when the firm is finally wound up and the properties of the
firm are distributed.
Sections 50 and 53 of the Act indicate to the said effect. The partner of a
dissolved firm can not only exercise his right under Section 50, he may also
restrain the use of the firm's name and firm's property in terms of Section 53
of the Indian Partnership Act, 1932. Section 37 of
the Indian Partnership Act, 1932 determines the
rights of the outgoing partner in certain cases to avoid shares to subsequent
profits. If the tenancy right was being subjected to any profit by one of the
partners, the cause of action arose. The cause of action for the suit,
therefore, did not perish with the execution of the deed of dissolution on
31.03.1977.
For the reasons aforementioned, there is no merit in this appeal. It is
dismissed accordingly. The parties shall pay and bear their own costs.