Judgment:
ORDER
K.A. Swami, J.
1. When the writ appeal 1355 of 1993 came up for orders,we directed the Writ Petition 10903 of 1993 be also posted along with it for hearing.Accordingly,the writ appeal and writ petition are posted for hearing.We have heard both sides.
2. The writ appeal is preferred against the interim order passed in the writ petition, therefore the result of it would depend upon the decision in the writ petition.Accordingly,we first take up the writ petition for consideration.
3. The petitioners have sought for issue of a writ in the nature of certiorari quashing the orders dated 30-5-1990 and 3-5-1991,passed in 1. No.1/A1/90 and Ra.Mu.57774/E3/9 by the 1st and 2nd respondent respectively.
4. The contention of the learned counsel for the appellants is that the document dated 12-3-1990 produced at page 1 of the typed set of records does not warrant payment of stamp duty as demanded by 2nd respondent,in as much as the said document cannot at all be considered to be a document of conveyance.
5. On the contrary, it is contended by learned Government Advocate that the documents in question transfers interest of the outgoing partners to the partners who continue in the partnership,therefore there is conveyance of property from one living person to another and as such,the document attracts art.23(b) of the Stamp Act,hence the demand made by the 2nd respondent is justified in law.
6. We may point out here that the 1st respondent considered the document as a document of conveyance and demanded deficit stamp duty of Rs.32,400/- and a penalty of Rs.100/- paid by the petitioners for registration of the document.
7. Aggrieved by the aforesaid order,the petitioners went up in revision before the 2nd respondent.The 2nd respondent agreed with the conclusion of the 1st respondent,but nevertheless, demanded stamp duty on Rs. 6,27,750/- whereas the 1st respondent had demanded stamp duty on a sum of Rs.3,60,000/-.
8. The fact necessary for the purpose of deciding the contentions urged on behalf of the petitioners and the respondents ares as follows:--
There was a partnership knows as Raja Raja Textiles consisting of some of the parties to the document in question dated 12-3-1990 formed on 28-8-1989.It consisted of six persons, viz., V.Vaidhia Pillai,R.Chinnasamy,P.V. Palanisamy,A.Murugesan,V.Arumugham and S.Kamalam.This partnership on 6-1-1990 came to be reconstituted by another deed of partnership of the same date.As per the reconstitution,all the parties to the deed dated 12-3-1990 became the partners of Raja Raja Textiles.Thereafter,on 12-3-1990,the petitioners retired from the partnership and executed the deed styled as release deed on 12-3-1990.It is necessary to re-produced the said deed,because the questions involved are as to the nature of the deed and whether it attracts payment of stamp duty as per Art.23(b) of the Stamp Act.Therefore,we reproduce the said document:--
'The deed of release executed on the 12th day of March, 1990 executed in favour of Smt. T.T. Meenakshi Achi, wife of Sri T. Thennappan,aged about 66 years, residing at T.N.T.House, T.N.Street,Kulipirai,Pudukottai District 622402;(2) Smt.T.Mekalla, wife of T.N.Thenappan, aged about 40 years,residing at C/5,Chemplast Colony,Raman Nagar,Mettur Dam 636403;(3) Smt.M.Visalakshi,wife of Sri Km.No. Meiyappan,aged about 39 years,residing at 64,Valipalayam Road, Tirupur,Coimbatore District 638604;(4) Sri T.Ramanathan,son of Sri T.Thenappan,aged about 35 years, residing at T.N.T.House,T.N.Street,Kulipirai (Page....2) Pudukottai District 622402;and(5) Sri T.Nachiappan,son of Sri T.Thenappan,aged about 32 years,residing at No.105,3rd Street,Gandhipuram,Coimbator 641012.(The aforesaid five parties hereinafter referred to as the `releasees'which expression shall wherever the context admits include their heirs, successor, legal representatives and assigns).
By (1)Sri V.Vaithiapillai,son of Sri Velupillai, aged about 51 years,residing at 32, Aruna Nagar,West Govidapuram,Dindugal 6244008;(2) Sri R. Chinnasamy,son of Sri Ramaya Gounder,aged about 52 years,residing at 5/4B (Page....3)Pappampatty 641016;(3)Sri P.V.Palaniswamy,son of Velu Pillai aged about 36 years,residing at 32,Aruna Nagar,West Govindapuram,Dindugal 624008;(4)Sri A.Murugesan,son of Andia Pillai,aged about 31 years,residing at Sennamanickanpatty Post,Dindigul;(5) Sri V. Arumugam, B.E., son of Sri Vaithia Pillai,aged about 23 years, residing at 32, Aruna Nagar, West Govindapuram,Dindigul 624008;and (6)Smt.S. Swaminathan aged about 58 years,residing at E.Vadugapalayam Elavandhi P.O.Palladam (Page....4)Taluk the aforesaid the aforesaid six parties hereinafter referred to as the `releassors' which expression shall wherever the context admits their heirs, successors,legal representatives and assigns;
Witnesseth:
Whereas the property more fully described in the schedule hereunder belongs to the firm of M/s. Raja Textiles.
Whereas the property was contributed as capital by No.2 of the releassors under deed of Partnership dated (Page....5) 28-8-1989. duly registered as document No.2010 of 1989 with Sub-Registrar, Singanallur.
Whereas subsequently under the deed of reconstitution dated 6-1-1990 and under a deed of retirement-cum-reconstitution dated 12-3-1990,the firm was reconstituted and in pursuance whereof,the releassors retired from the firm and the releassees have taken over the assets and liabilities of the firm and are continuing the business.
Now This Deed Witnesseth:
That in pursuance of the reconstitution dated 12-3-1990,the releassors are hereby releasing all their rights, title and interest over the scheduled property in favour of the releasees to further affirm and confirm the factum of their retirement and the release of rights.The releasees may enjoy the property henceforth as absolute owners thereof without let or hindrance.The releassors or their heirs have no further right over or title to the scheduled property.
Schedule of Property
Coimbator District, Palladam Taluk,Pappampatti Village,Singanallur Sub-Registration District,S.F. No. 241/1 and 242/5,land measuring 24.75 cents and building bearing door No. 5/4A(Page....6)
Boundaries
North of Chettipalayam-Palladam Road South of R. Chinnasamy's agriculture land East of R.Chinnasamy's agriculture land West of R.Chinnasamy's residential building with building constructed with asbestors tiles and wooden parts measuring about 6114 sq.ft.more fully shown in the attached plan together with approach Road.The market value of the property is Rs.3,60,000/-.In witness whereof the releassors and releasees have singed this instrument of this day,the month and the year first above mentioned at Coimbator before the following witnesses:--
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
Releassees Releassors
Witnessees:--
1. Mr. Arumugham,
S/o Peria Ramia Gounder
Kannampalayam
Sulur(via)Coimbator(Dt.).
2. T.Thenappan,
S/o T.Thenappan Chettair,
TNT House,Kulipirai,
Pin Code.622402.
Prepared by:P.R.Ramakrishnnan,B.Com.,
B.L.,Advocate, Ram Prasad,
2.Kamar Koil Street.
9. As already pointed out,both the authorities have construed it as a document of conveyance.The 2nd respondent appears to have taken a view that as no document dated 6-1-1990 reconstituting the partnership firm and the release deed are produced,the deed in question having taken place on the same date,it cannot be construed as a document adjusting the interests of the partners among themselves.It may be relevant to notice that neither the 1st respondent nor the 2nd respondent directed the petitioners to produce the reconstituted deed of partnership dated 6-1-1990,even though it was specifically stated in the document dated 12-3-1990 in question.Before us,the reconstituted deed dated 6-1-1990 has been produced.It is a registered document.As per that document,all the parties to the deed in question dated 12-3-1990 are also the partners of the partnership known as Raja Raja Textiles.Therefore,on 12-3-1990 when the petitioners executed the document in question releasing their interests in favour of the partnership,they were the partners of Raja Textiles. Respondents 1 and 2 on ignoring the document dated 6-1-1990 have arrived at the conclusion that only on 12-3-1990,the petitioners became the partners and also retired from the partnership,therefore, it cannot be construed to be a release deed.
10. A reading of the document which has been re-produced above, would clearly show that the document cannot at all be construed as conveyance.It is nothing but a document releasing the interests of the petitioners as Partners in favour of other partners who continued the partnership.In the case of Settlement of interest among the partners, it settled position of law that there is no transfer of interest,nor there is conveyance. it is held by the Supreme Court in the decision reported in Narayanappa, A.v.Bhaskara Krishnappa : [1966]3SCR400 :--
'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 cases to be the exclusive property of the person who brought it in.It would be the trading assets of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of the 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 or retirement after as deduction of liability and prior charges.It is true that even during the subsistence of the partnership a partner amy assign his share to another.In that case what the assignees would get would be only that which is permitted by S. 29(1) that is to say, the right to receive the share of profits of the assignor and accept the account of profits agreed to by the partners.There are not many decisions of the High Court on the point.In the few that there are the preponderating view is in support of the position which we have stated.In Joharmaly v.Tejkam Jaglup, ILR(1893) 17 Bom 235 which was decide by Jardine and Telang, JJ.the latter took the view that though a partners' share does not include any specific part of any specific item of partnership is entitled to immovable property,such share does not include in interest in immovable property and,therefore,every instrument operating to create or transfer a right to such share requires to be registered under the Registration Act.In coming to this conclusion he mainly purported to rely upon an observation is not to be found in the present edition of Lindley's Partnership nor in the 9th or 10th editions which were brought to out notice.The 5th edition, however,is not available the learned Judge after quoting an earlier statement which is that the 'doctrine merely amounts to this that on the death of a partner his share in the partnership property is to be treated as money,not as land' says: 'This obviously would not affect matters either during the lifetime of a partner--Lindley, L.N.,says in so many words that it has no practical operation till his death (P.348)--or as against parties strangers to partnership,e.g.the firm's debaters.' While it is true that the position so far as third persons are concerned would be different it may be pointed out that in Forbes v.Seten,(1870) 10 EQ 178,James V.C.,has,as quoted by the learned Judge,said: 'It has long been the settled law of this Court that real estate bought or acquired by a partnership for partnership purpose (in the absence of some controlling agreement or direction to the contrary)is as, between the partners and as between the real and personal property, and devolves and is distributable and applicable as personal estate and as legal assets.' Telang J.,seems to have overlooked, and we say so with great respect,the words 'as between the partners' which precede the words 'and as between the real and personal representative of the partner deceased' and to have confined his attention solely to the latter.We have not found in any of the editions of Lindley's Partnership an adverse criticism of the view of the Vice-Chancellor.But on the contrary, as already stated, the view expressed is full accord with these observations Jardine J.,has discussed the English authorities at length and after referring to the documents upon which reliance was placed on behalf of the defendant stated his opinion thus:
'To lay down that the three letters in question,which deal generally with the assets, moveable and immoveable,without specifying any particular mortgage or other interest in real property require registration,would,I incline to think,in the present state of the authorities,go too far.It may be argued that such letters are not `instruments of gift of immovable property' but rather disposals of share in a partnership of which the business is money lending, and the mortgage securities merely incidental thereto.' The view of Telang J., was not accepted by the Madras High Court in Venkataratnam v.Subba Rao, ILR49 Mad 738: AIR 1926 Mad 1040 . The learned Judges there discussed all the English decisions as also the decision in Sudarsanam Maistri v. Narasinhulu Maistri, ILR(1902) Mad 149 and Gopal Chetty v. Vijayvaraghava Chartai, ILR Mad 378: 1922 I AC 488: AIR 1922 PC 115 and the opinion of Jardine J.,in Jaharmal's case, ILR (1883) 17 Bom 235 held that an unregistered deed of release by a partner of his share in the partnership business is admissible in evidence, even where the partnership owns immovable property.The learned may be co-owner in the partnership property he has no right to ask for a share in the property but only that the partnership business should be wound up including therein the sale of immoveable property and to ask for his share in the resulting assets.This decision was not accepted as laying down the correct law by a Division Bench of the same High Court in Samevier v.Ramasubier, ILR Mad 72:AIR 1931 Mad 580.The learned Judges there relied upon the decision in Ashworth v.Munn,(1880) 15 Ch D 363 in addition to the opinion of Telang,J., and also referred to the decision in Glay v.Smith,(1889) 43 Ch D 208 in coming to a conclusion contrary to the one in the earlier case.It may be pointed out that the learned Judge have made no reference to the decision of the Privy Council in Gopala Chetty's case, ILR Mad 378 : (1922) 1 AC 488 : AIR 1922 PC 115 though that was one of the decisions relied upon by Phillips,J.,in the earlier case.In so far as Ashworth's case,(1880) 15 Ch D 363 is concerned that was case which turned on the provisions of the Mortmain Act and is not quite pertinent for the decision on the point which was before them and which is now before us.In (1889) 43 Ch D 208 Kekewich,J.,held that an agreement by one of the partners to retire and to assign his share in the partnership assets including immovable property, is an agreement to assign an interest in land and falls within the Stature of Frauds. The view of Kekwich, J.seems to have received the approval of Cotton L.J. one of the Judges of the Court of Appeal, though no argument was raised before it challenging its correctness.it may,however,be observed that even according to Kekewich,J,the authorities(1800) 5 Ves 308 and (1846) 5 Hare 369 on appeal to (1847) 2 PH 266 established that one may have an agreement of partnership is to deal with land. He, however,went on to observe:
'But it does not seem to me to follow that an agreement for the dissolution of such partnership need not be expressed in writing, or rather that there need not be a memorandum of the agreement for dissolution,when one of the terms of the agreement, either expressly or by necessary implication is that the party sought to be charged must part with and assign to others an interest in land.That seems to me to give rise to entire different consideration.In one case you prove the partnership by parol: you prove the object,the terms of the partnership,and soon.But in the other case it is one of the essential terms of the agreement that the party to be charged shall convey an interest in land and that seems therefore to bring it necessarily within the 4th section of the Statute of Fraud.'
In the case before us,as also in Samuvier's case, ILR Mad 72 : AIR 1931 Mad 580 the document cannot be said to convey any immovable property by a partner to another expressly or by necessary implication.If we may recall,the document executed by the Addanki Partners in favour of the Bhaskara Partners records the fact that the partnership business has come to an end and that the latter have given up their share in 'the machine etc., and in the business'and that they have 'made over same to you alone completely by way of adjustment.' There is no express reference to any immovable property herein.No doubt,the document does recite the fact that the Bhaskara family has given to the Addanki family certain property.This however is merely a recital of a fact which had taken place earlier.To cases of this type the observations of Kekewich,J.which we have quoted do not apply.The view taken in Samuvier's case, ILR 55 Mad 72 : AIR 1931 Mad 580 seemed to commend itself to Varadachariar, J. in Thirumalappa V.Ramappa AIR 1938 Mad 133 but it was reversed in Ramappa V. Thirumalappa, AIR 1939 Mad 884.'
Therefore,it is clear that the deed of the nature in question cannot at all be construed to be a deed of conveyance.I fact,a Division Bench of this Court in T.K.Subramaniam v. C.C.Revenue Authority(Stamps) : AIR1987Mad260 has also held thus (at pp. 260-261):--
'We have perused the deed of dissolution as well as the release deed. We find that the immovable properties have been allotted in the deed of dissolution to the appellants.The deed of release is only a sort of acknowledgement of the title of the appellants to the immovable properties which was conferred on them by the deed of dissolution.It cannot by any stretch of imagination be treated as a conveyance of the properties because the releasers had no right to the properties at the time of the release.In that view, the document cannot be treated as a conveyance and stamp cannot be demanded on that basis.The view taken by the Chief Controlling Revenue Authority and the District Registrar that the document in question is a document of conveyance is not correct.Hence, we accept the contention of the appellants that the document is release deed.'
Much earlier to this, a Full Bench of this Court in the Board of Revenue v. V.M.Murugesa Mudaliar of Gudiyatham : AIR1955Mad641 took a view that(at pp. 642, 643):
'Where property is owned by a number of persons as co-owners each co-owner is in theory entitled to enjoy the entire property in part and whole.A document by which one co-owner purports to abandon or relinquish his claim to the share to which he would be entitled,would be in the nature of a release within the Article 44 of the Stamp Act.In such a case there need be no conveyance as such by the co-owner in favour of the other co-owners.A document under which a Hindu co-parcener purports to give up his rights to the family property in favour of remaining co-parceners would not be a deed of conveyance but a deed of release.There is no difference in principle between such a document as between members of a coparcenary and one between co-owners.
As per clause (10) of S. 2 of Stamp Act, conveyance includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I.As already pointed out,as regards the deed of the nature in question releasing the interests of some of the partners in favour of other who continue the partnership, there is no transfer inter vivos and there is no fresh right or interest being conveyed to others.This aspect is already pointed out, while referring to the aforesaid decision of the Supreme Court.Article 23(b) is attracted only if the document is a conveyance as defined under S. 2(10) of the Act. Therefore, we are of the view that the order passed by respondents 1 and 2 cannot be sustained.
11. It is, however, contended by learned Government Advocate that as the reconstituted partnership deed dated 6-1-1990 was not produced before respondents 1 and 2, the matter may be remitted to the 1st respondent to reconsider the same in the light of the reconstituted document of partnership dated 6-1-1990.As the document is a registered deed and as the Respondents had full opportunity before this Court to state the case and as the legal position is very well settled as just and appropriate to remit the matter to the 1st respondent as contended by learned Government Advocate.Accordingly, the contention is rejected.
12. For the reasons stated above,the writ petition is allowed.The impugned orders dated 30-5-90 and 3-5-91 passed by respondents 1 and 2 are quashed.The 1st respondent is no directed to register the document dated 12-3-1990 treating it as a release deed.
13. In the light of the order passed in the writ petition,the writ appeal does not survive. It is,accordingly,dismissed as having become infructuous.There will be no order as to costs.
14. Order accordingly.