Kerala High Court
M/S.Park Residency vs State Of Kerala
Author: T.R.Ramachandran Nair
Bench: T.R.Ramachandran Nair
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR
THURSDAY, THE 21ST DAY OF FEBRUARY 2013/2ND PHALGUNA 1934
WP(C).No. 28573 of 2011 (V)
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PETITIONER :
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M/S.PARK RESIDENCY
ERNAKULAM,
REPRESENTED BY ITS MANAGING PARTNER
SHRI.KURUVILA AUGUSTINE.
BY ADV. SRI.P.K.BABU
RESPONDENT(S) :
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1. STATE OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT,
REVENUE DEPARTMENT, SECRETARIAT,
THIRUVANANTHAPURAM, PIN-695 001.
2. THE DISTRICT COLLECTOR,
ERNAKULAM, PIN-682 030.
3. THE REVENUE DIVISIONAL OFFICER,
FORT COCHIN, ERNAKULAM, PIN-682 001.
4. THE TAHSILDAR,
KANAYANNUR TALUK,
ERNAKULAM, PIN-682 011.
R1 TO R4 BY GOVT. PLEADER SRI. VIJU THOMAS
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29/01/2013,
THE COURT ON 21-02-2013 DELIVERED THE FOLLOWING:
Mn
...2/-
WP(C).No. 28573 of 2011 (V)
APPENDIX
PETITIONERS' EXHIBITS :
EXT.P1 : TRUE COPY OF THE ORDER DATED 30.12.2010 ISSUED BY THE 3RD
RESPONDENT.
EXT.P2 : TRUE COPY OF THE TAX RECEIPT DATED 2.12.09 ISSUED BY THE
VILLAGE OFFICER, KAKKANAD IN THE NAME OF M/S. MARIA RESIDENCY.
EXT.P3 : TRUE COPY OF THE NON-ATTACHMENT CERTIFICATE ISSUED BY THE
VILLAGE OFFICER ON 19.1.2010.
EXT.P4 : TRUE COPY OF THE LOCATION SKETCH OF THE PROPERTY PREPARED
BY THE VILLAGE OFFICER, KAKKANAD.
EXT.P5 : TRUE COPY OF THE THANDAPER ACCOUNT ISSUED BY THE
VILLAGE OFFICER.
EXT.P6 : TRUE COPY OF THE RE-CONSTITUTED PARTNERSHIP DEED IN THE
FAVOUR OF M/S PARK RESIDENCY.
EXT.P7 : TRUE COPY OF THE REGISTRATION NUMBER OBTAINED BY THE
PETITIONER IN THE NAME OF M/S.PARK RESIDENCY.
EXT.P8 : TRUE COPY OF THE DEED OF AMENDMENT TO THE PARTNERSHIP IN
THE NAME OF M/S.PARK RESIDENCY.
EXT.P9 : TRUE PHOTOCOPY OF THE SALE DEED NO.2155/2003 OF SRO,
THRIKKAKARA.
EXT.P10: TRUE COPY OF THE REVISION FILED BY THE PETITIONER BEFORE THE
2ND RESPONDENT ON 16.2.2011.
EXT.P11: TRUE COPY OF THE JUDGMENT DATED 17.6.2011 IN WPC NO.16237/2011
OF THIS HON'BLE COURT.
EXT.P12: TRUE COPY OF THE ORDER DAETD 12.9.2011 PASSED BY THE 2ND
RESPONDENT ON EXT.P10 REVISION PETITION.
RESPONDENTS' EXHIBITS : NIL
//TRUE COPY//
P.S. TO JUDGE
Mn
T.R.RAMACHANDRAN NAIR, J.
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W.P.(C)No. 28573 of 2011
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DATED THIS THE 21ST DAY OF FEBRUARY, 2013
JUDGMENT
The challenge is against Ext.P12 order passed by the District Collector rejecting the revision petition filed by the petitioner under the Transfer of Registry Rules.
2. The petitioner is a partnership firm represented by its Managing Partner, which is known as M/s. Park Residency. The partnership firm was initially named as M/s. Maria Residency which has been conducting hotel business. Four items of land, viz. 4.5 ares and 0.52 ares in Sy. No.339/6, 1.71 ares in Sy. No.339/7 and 0.58 ares in Sy. No.335/1 were purchased in the name of the partnership as per sale deed No.2155/03, a copy of which is produced as Ext.P9. After the purchase, mutation was effected and Thandaper No.6185 of Ernakulam Village was allotted.
3. Two new partners were inducted and the partnership was reconstituted. After reconstitution, the firm is known as M/s. Park Residency. Ext.P6 is the copy of the Deed of Reconstitution of partnership and Ext.P7 is the copy of the certificate containing registration in the name W.P.(C).No. 28573/2011 -2- of the new partnership with effect from 17.4.2010. Ext.P8 is the copy of the deed of amendment to the partnership.
4. The Tahsildar was approached by filing an application for mutation in favour of M/s. Park Residency, which was rejected by Ext.P1 order. The same was challenged before the District Collector by filing a revision petition and the final order is produced as Ext.P12. The authorities have taken the view that the application for mutation cannot be allowed as there is no document of conveyance of property and what is involved is the reconstitution of the partnership by inducting two partners and change of Firm's name and the same do not come within the purview of Transfer of Registry Rules. For effecting transfer of registry, voluntary transfer is required.
5. Heard learned counsel for the petitioner and learned Government Pleader.
6. Learned counsel for the petitioner submitted that it is a case where the existing partnership was reconstituted by inducting two partners which alone is the change and a new name was also adopted. The assets and liabilities of the old firm will now be statutorily vested with the new firm and therefore the properties including the immovable properties are W.P.(C).No. 28573/2011 -3- automatically transferred in the name of the new firm. It is therefore submitted that when there is a deed of reconstitution of the partnership and the legal formalities required have been fulfilled and the registration number has been allotted in the new name, mutation has to be effected. It is submitted that unless the transfer of registry is made, the properties will remain in the old firm name which is no longer there. Reliance is placed on Rule 17 of the Transfer of Registry Rules to show that any transfer of registry case, can be disposed of by the Tahsildar.
7. Learned counsel for the petitioner relied upon the decision of a Full Bench of the Andhra Pradesh High Court in Addanki Narayanappa and others v. Bhaskara Krishtappa and others (1959 A.P. 380) and later decisions of the Apex Court in S.V. Chandra Pandian v. S.V. Sivalinga Nadar {(1993) 1 SCC 589}, N. Khadervali Saheb (dead) by Lrs. v. N. Gudu Sahib (dead) and others {(2003) 3 SCC 229) and that of this Court in Noble Kuries v. Sebastian (2009 (4) KLT 806) and George v. George (2010) 2 KLT 682) to drive home the principles relevant in the matter. It is submitted that when a firm is dissolved, a document recording the same and relinquishing interest of partners will not require a registration under Section 17(1)(b) of the Registration Act. It is submitted that in the light of W.P.(C).No. 28573/2011 -4- the declaration of law made by the Apex Court and this Court, what is of importance is only the intention of the parties and even in the case of reconstitution of a partnership firm by way of deed, the reconstituted firm can maintain an application for transfer of registry.
8. In the first of the decisions, viz. Addanki Narayanappa's case (1959 AP 380) it was held that the interest of a partner in partnership assets comprising of movable and immovable property cannot be regarded as a right or interest in immovable property within the meaning of Section 17(1)
(b) of the Registration Act.
9. In the decision of the Apex Court in S.V. Chandra Pandian's case {(1993) 1 SCC 589} the question considered was whether an arbitration award directing dissolution of partnership firm and providing for distribution of residue or surplus properties of the dissolved firm among partners after settlement of accounts, is required to be registered under Section 17(1) of the Registration Act. In para 18 the nature and character of the partnership property has been stated thus:
"The property falling to the share of the partner on the distribution of the residue would naturally then belong to him exclusively but so long as in the eye of law it is money and not W.P.(C).No. 28573/2011 -5- immovable property there is no question of registration under Section 17 of the Registration Act."
The above legal position was reiterated in N. Khadervali Saheb's case {(2003) 3 SCC 229}.
10. This Court in Noble Kuries v. Sebastian (2009 (4) KLT 806) examined the question whether after reconstitution of a firm, it requires a fresh registration under the Registration Act. In para 10 it was held as follows:
" S.59 of the Act deals with registration of the partnership. There is no provision in the Act which states that when there is reconstitution of a firm which is already registered, a further registration is required after such reconstitution. What is required is only intimation to the Registrar of Firms about the reconstitution/change as provided under Ss. 60 to 63 of the Act. No separate registration is necessary where there is reconstitution of a continuing firm."
Therefore, it is clear that no separate registration is required where there is reconstitution of a continuing firm.
11. In George's case (2010 (2) KLT 682), the question came up for consideration before this Court was whether a deed of release of his share in the partnership by a partner, though the partnership owns immovable W.P.(C).No. 28573/2011 -6- property, is required to be registered under Section 17(1)(b) of the Registration Act. It was held that the same is not required. It was also held that all that is relevant in the conversion of individual partner's property into that of the partnership or vice versa, is the intention of the parties and no document registered or otherwise, is necessary. In paragraphs 6 and 7 the legal position has been explained thus, after considering various decisions of the Apex Court and the principles contained in the Partnership Act:
" Partners may convert which was property of the partnership, movable or immovable into separate property of the individual partner or property of the individual partners into property of the firm by agreement which may be express or implied. What is relevant is the intention of the partners. For such conversion no document, registered or otherwise is necessary. There must be some evidence to prove that intention. Such intention may even be proved by a course of conduct, for eg., by entries in the partnership books. The term 'partnership property' is generally used to denote everything to which the firm, i.e., all the partners qua the partners can be considered to be entitled. The partners may be entitled jointly or in common to some property, and the same persons may happen to be partners, yet the property may not be partnership property. Even when conversion of individual immovable property of the partner into property of the partnership is made as per a written instrument, it does not require registration compulsorily. A W.P.(C).No. 28573/2011 -7- deed of release of his share in the partnership by a partner even though the partnership owns immovable property is not required to be registered as an instrument under S.17(1)(b) of the Registration Act. That is because even though a partner may be a co-owner of partnership property, he has no right to ask for a share in that property, but only that the partnership business be wound up including sale of the immovable property and to ask for his share in the resultant assets. That interest of a partner in the partnership assets, of movable or immovable property is not a right, title or interest in immovable property within the meaning of S.17(1)(b) of the Registration Act."
This Court also examined the effect of Section 14 of the Partnership Act which reads as follows:
"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."
The above provision will show that 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. W.P.(C).No. 28573/2011 -8- After examining the legal effect of Section 14 of the Partnership Act, it was held that registration is required only in a case where the retired partners convey their individual immovable property to the partnership or the continuing partners in their individual capacity. The same is not the situation herein. Herein, the firm M/s. Maria Residency was granted registration on 9.10.2003 as evident from Ext.P7. Ext.P9 is dated 14.10.2003. Hence, the property is one acquired by the firm. In the above judgment, in George's case (supra), in para 6 this Court held that "the Act does not prescribe any particular mode by which property whether movable or immovable is to be brought into the common stock of the partnership. ......... By virtue of Section 14 of the Act it becomes property of partnership. Conversion takes place by operation of law under Section 14 of the Act once the intention is expressed and the property is treated as such. Therefore, it can be seen that the partnership property which stood in the name of M/s. Maria Residency is statutorily transferred in the name of M/s. Park Residency after reconstitution and change of name. They have completed all the formalities including getting registration in the new name as evident from Ext.P7 and executing a deed of amendment of partnership Ext.P8. In clause 3(a) reads as follows:
W.P.(C).No. 28573/2011 -9-
"3(a) The property extending to 04 Acres 05 sqmts in Re.Sy.No.339/6, 0.52 Sqmts in Re.Sy.No.339/6, in 1.71 Sqmts in Re.Sy.339/7 and 0.58 Sqmts in Re.Sy.No.335/1 Thandaper No.6185 of Kakkanadu Village acquired in the name of Mr. Kuruvila Augustine as the Managing Partner of The Mariya Residency as per Sale deed No.2155/2003 of Thrikkakara Sub Registry dated 14/10/2003 is also included in the reconstituted firm 'M/s. PARK RESIDENCY'."
Therefore, the immovable property continues to be the property of the reconstituted firm. The intention is clear from the said clause. Ext.P8(3) is the resolution adopted by the partners, resolving that the item of properties acquired in the name of M/s. Maria Residency will be landed property owned by the reconstituted firm M/s. Park Residency. The petitioner has also produced Exts.P13 to P15 along with I.A. No.15834/2012. Ext.P13 is the deed of amendment dated 6.10.2012 incorporating various terms and clause 8 reads as follows:
"8. The Clause No.3(a) added by deed of amendment dated 29.08.2004 shall be substituted for the following clause:
3(a) In the ownership documents of all the properties of the firm including the property admeasuring 04 Acres 05 sqmts in Re.Sy.No.339/6, 0.52 Sqmts in Re.Sy.No.339/6, in 1.71 Sqmts in Re.Sy.339/7 and 0.58 Sqmts in Re.Sy.No.335/1 of Kakkanadu W.P.(C).No. 28573/2011 -10- Village in Thandaper No.6185 purchased as per Sale Deed 2155/2003 dated 14.10.2003 of Thrikkakara Sub Registry, the name of the firm shall be substituted and read as M/s. PARK RESIDENCY instead of M/s. The Mariya Residency wherever applicable."
The effect of the same is that the name of the firm shall be substituted and read as M/s. Park Residency instead of M/s. Mariya Residency wherever applicable. Ext.P14 is the certificate issued by the Chartered Accountant showing that the said immovable assets form part of the financial statement which is recorded in page No.9 of the fixed assets register and Ext.P15 is the copy of the relevant page of the stock register duly maintained by M/s. Park Residency and attested by the Chartered Accountant.
12. The stand taken by the respondents in the counter affidavit is that transfer of registry as per Rule 2 of the Transfer of Registry Rules, takes place either by (i) voluntary action or will, (ii) by virtue of decree of civil courts or by revenue sales and (iii) by succession. The change of name of the firm as Park Residency from M/s. Mariya Residency will not in any way effect transfer of the land. Learned Government Pleader therefore submits that the Transfer of Registry Rules will not apply here. W.P.(C).No. 28573/2011 -11-
13. Of course, the plain terms of the Transfer of Registry Rules do not envisage a situation like this, where the properties of the partnership after reconstitution is statutorily vested in the reconstituted partnership under a new name. There are no other procedures prescribed apart from the Transfer of Registry Rules to effect mutation. When we consider the effect of Section 14 of the Partnership Act, it can be seen that the property herein belongs to the reconstituted partnership firm. It is by operation of law. All the legal formalities before the Registrar of Firms have been completed also. In a matter like this, when the firm is reconstituted, there need not be a registered document for the properties to be held in the name of the partnership. Going by the decision of this Court in George's case (2010 (2) KLT 692), registration is required only in a case where the retired partners convey their individual immovable property to the partnership or the continuing partners in their individual capacity. Such is not the case here. Therein, this Court had also held that even in the case of conversion of individual partner's property into that of the partnership or vice versa, it is only the intention of the parties which is relevant and no document registered or otherwise, is necessary. This will also support the case of the petitioner herein that no registered document is required for earmarking the W.P.(C).No. 28573/2011 -12- properties owned by M/s.Maria Residency in the name of M/s. Park Residency. The deed of amendment itself contains various clauses in that regard which brings out the intention of the parties and the same will therefore be sufficient.
14. In a matter like this, where it requires the transfer of registry in a situation like this, the absence of a specific provision under the Transfer of Registry Rules need not deter the authorities from accepting the application and acting upon it. There is no prohibition under the rules also. By the operation of law, the firm under a new name continues to be the owner of the immovable properties. Therefore, the owner has got every right to get mutation of the properties in its name. Otherwise, the petitioner will be left out without any remedies in spite of the fact that the firm has been reconstituted and the property also stands in its name.
15. Therefore, the writ petition is allowed. It is declared that the petitioner firm is the owner of the properties covered by clause 3(a) in Ext.P8 and substituted by clause 8 in Ext.P13 after reconstitution of the firm. The items of properties described therein, being held by M/s. Park Residency, they are entitled for effecting mutation. Accordingly, Exts.P1 and P12 are quashed. In the light of the declaration made as above, there W.P.(C).No. 28573/2011 -13- will be a direction to the Tahsildar to grant mutation in the name of the petitioner firm in respect of the properties within a period of one month from the date of production of a certified copy of this judgment and the changes will be effected in the Thandaper account accordingly. No costs.
(T.R.RAMACHANDRAN NAIR, JUDGE) kav/