SUPREME COURT OF INDIA
M.V. Karunakaran
Vs
Krishan
Appeal (Civil) 10588 of 1995
(S. B. Sinha and Markandeya Katju, JJ)
15.12.2006
S. B. SINHA, J.
Auction purchaser is the appellant before us being aggrieved by and
dissatisfied with a judgment and order dated 10.10.1988 passed by the High
Court of Kerala dismissing an appeal preferred by the appellant herein.
Three brothers, Madhavan, Bahuleyan and Karunakaran, were owners of the
property. Madhavan and Bahuleyan started a partnership under the name and style
of "The Trustful Daily Banking Company". Madhavan died on 26.10.1960,
leaving behind Defendant Nos. 3 to 5 as his legal heirs and representatives.
The partnership firm stood dissolved with his death. The legal heirs and representatives
of Madhavan by reason of a registered deed of sale dated 28.05.1963 transferred
the property in question in favour of Krishnan (since deceased) being
predecessors in interest of the respondents herein. A money suit for recovery
of a sum of Rs.312.20 was filed against the said partnership firm by a third
party. The said suit was marked as O.S. No. 523 of 1964. It was decreed.
The respondent admittedly was not a party to the said suit. The property in
question was auction sold in execution of the said decree. Appellant purchased
the same for a sum of Rs.5050/- being the highest bid. The said sale was
confirmed. The Auction Purchaser prayed for delivery of possession. Respondent
obstructed thereto. An application for removal of obstruction was filed by the
appellant. The Executing Court by a judgment and order dated 09.10.1979
dismissed the said application, directing the respondent to deposit a sum of
Rs.590.07 , inter alia, on the premise that on the death of Madhavan, the
partnership became dissolved and keeping in view the fact that the other
partner was also dealing with certain items of the partnership assets, the
legal heirs and representatives of Madhavan could sell the property. The
respondent, therefore, was the lawful owner thereof.
The appellate court, however, while dismissing the appeal also opined that the
respondent being a co-owner of the property along with the auction purchaser,
the trial court was not correct in directing the respondent to deposit a sum of
Rs.590.07. In the second appeal preferred by the appellant, the High Court
having not found any error in the said judgment, dismissed the same. It was
opined that the partnership having been dissolved, the dissolved firm cannot
have status of partnership subsequently.
Contention of Appellant is that Respondents are not the legal heirs of the
dissolved firm and they have not derived any share. Therefore, the respondents
had no right to offer resistance.
It is not in dispute that the partnership stood dissolved on the death of Madhavan.
The heirs and legal representatives, therefore, could transfer the property at
least to the extent of their own share.
A distinction exists between the right of a partner to sell a property during
subsistence of the partnership and the right of an erstwhile partner to sell
the property of the firm after it stood dissolved.
It has been found as of fact by all the three courts that after purchasing the
property from the heirs and legal representatives of Madhavan, the respondent
herein had been put in possession and they had been residing therein when the
auction sale was effected. He had caused some improvements and a new building
had also been constructed by him. As a suit was filed after the deed of sale
was executed and registered, the respondent was a necessary party. He was not
arrayed as a party in the suit. He having been found to be in possession of the
property as on the date when the delivery of possession of the property was
sought to be effected; a 'fortiori he had a right to obstruct thereto. Once the
title in respect of the property in question is found to be existing in the
obstructionist, an application for removal of the obstruction as envisaged
under Order 21 Rule 97 of the Code Of Civil Procedure, 1908
has rightly been determined in favour of the appellant. What could be
sold in the auction was the right, title and interest of the judgment-debtor in
the property. The right of the auction purchaser, if any, keeping in view of
the facts and circumstances of the case, could not have been determined in such
a proceeding. Section 29 of the Indian Partnership Act,
1932 states as to what would be the interest of transferee of a partner.
Sub-section (2) thereof determines the right of a transferee if the firm is
dissolved or if the transferring partner ceases to be a partner thereof. The
right the respective purchaser from the erstwhile partner of dissolved
partnership, therefore, was required to be worked out in an independent
proceeding.
In Addanki Narayanappa and Another v. Bhaskara Krishnappa (dead) and thereafter
his heirs and others 1966 AIR(SC) 1300, this Court opined :
"The whole concept of partnership is to embark upon a joint venture and
for that purchase 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 maybe 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 solution
or retirement after a deduction of liabilities and prior charges"
Herein we have to consider the case from altogether a different angle. It is
not a case where the partners of the firm were not the owners of the property.
It is also not a case where the property was owned by the partnership firm. The
partners as pre-existing co-owners had a definite share of the property. They
merely applied their own property for running a business in partnership. On
dissolution of the partnership, their right in the property revived. Using of a
premises for business purpose would not automatically lead to the conclusion that
the premises belonged to the partnership firm.
The terms and conditions of the partnership agreement, in any event, are not
known. It is also not the case where the partners ceased to be co- owners. If
they continued to have undivided share in the property even during subsistence
of partnership, question of their ceasing to have any interest therein on its
automatic dissolution would not arise.
Respondents were found to be in possession of the property. They were found to
have some interest therein. In that view of the matter, we do not find any
legal infirmity in the impugned judgment.
For the reasons aforementioned, we do not find any ground to interfere with the
impugned judgment. The appeal is dismissed accordingly. No costs.