Gujarat High Court
Shah Bipinchandra Ratilal vs State Of Gujarat on 9 June, 2022
Author: A. P. Thaker
Bench: A. P. Thaker
C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20605 of 2015
With
R/SPECIAL CIVIL APPLICATION NO. 19862 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE DR. JUSTICE A. P. THAKER Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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SHAH BIPINCHANDRA RATILAL & 6 other(s)
Versus
STATE OF GUJARAT & 4 other(s)
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Appearance:
MS ARCHANA R ACHARYA(2475) for the Petitioner(s) No. 1,2,3,4,5,6,7
MS DHWANI TRIPATHI, AGP for the Respondent(s) No. 1
MR MEHUL SHARAD SHAH(773) for the Respondent(s) No. 4,5
MR SHAAN M MUNSHAW(10825) for the Respondent(s) No. 3
RULE SERVED for the Respondent(s) No. 2
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CORAM:HONOURABLE DR. JUSTICE A. P. THAKER
Date : 09/06/2022
ORAL JUDGMENT
1. Both the petitions have been filed against the impugned order passed by the learned Special Page 1 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 Secretary Revenue Department (hereinafter referred to as "the SSRD") dated 29.09.2015 in Revisions Application No.164 of 2013 as well as the order dated 21.08.2013 passed by the Collector in Revision Application No. 180 of 2012 by the respective petitioners. Since common facts are involved in the matters both the matters have been tagged together and heard together. Therefore these petitions are being disposed of by the present common order.
2. Special Civil Application No.20605 of 2015 is a leading matter, and therefore facts are referred to from it.
3. The brief facts giving rise to the petition in nutshell are as under.
3.1.Dispute pertains to the land bearing survey number 189 paiki 1, 189 paiki 2 and 189 paiki 3 admeasuring 4659 square metres of village Iyava, taluka Sanand, District Ahmedabad. In June 1984 a partnership firm in the name of Kamani Chemical Works came to be constituting of 11 family members as partners. According to the clause 7 of the partnership deed, and as per the clause 9, any partner can retire by oral notice / Page 2 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 intimation. That as per clause 10 of the deed, partnership may continue even after death or retirement of any partner or becoming insolvent. The said firm purchased the subject land by registered sale deeds from its original owners of land, namely, Solanki Bhikhabhai Ratilal on 14.10.1986, wherein one Natraj corporation signed as a confirming party. That the name of the partnership firm was mutated in the revenue records vide entry no.1331. The said firm also got it registered with the office of the Registrar of firms on 16.07.1991, wherein, the joining date of 11 partners was mentioned as 13.06.1984.
3.2. That one of the partners Mr.Nutan Kumar Ratilal Shah expired on 22.10.1992. Upon his death and some alleged oral desire of Shah Dhankunwarben Hasmukhlal and Shah Varshaben Hirankumar (respondent no.3) who retired, the partnership firm was reconstituted after inducting Shah Rushabhkumar Nutankumar as partner on 25.11.1992. The change in partnership came to be intimated to the Registrar of Firms by filing Form-E and it was requested to give effect to the same with effect from 22.10.1992. The firm has also intimated the change to the Kalupur Commercial Co-operative Bank and even in the Page 3 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 income tax return filed for the assessment year 1993-1994. The certified copy of the dissolution dated 25.11.1992 was annexed.
3.3. On 04.04.1994 a public notice was issued on behalf of Dhankunwarben Hasmukhbhai Shah and four others through their advocate calling upon public not to enter any transaction, in respect of properties of partnership firms, namely, (1) Shah Chandulal Jivanlala;(2) M/s. Shah Girdahrlal Purshottamdas and Co.;(3)M/s Shah Jivanlal Hirachand; and (4)M/s. Bipinchandra N. Kapadiya. But there was no mention of the property relating to M/s. Kamani Chemical Works.
3.4. On 23.03.1996, Dhankunwarben Hasmukhlal Shah made a Will wherein also she does not make any mention regarding the properties relating to M/s Kamani Chemical Works.
Dhankunwarben Shah had expired on
14.04.1997.
3.5. Other partner namely Kamlaben Kantilal Shah expired on 04.06.2002 and on 09.12.2006, another partner Shah Vasantbhai Ratilal expired.
Page 4 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 3.6. Meanwhile, on 27.08.2005, public notice was published by Hirankumar Hasmukhlal Shah (in the capacity of heir of deceased Shah Dhankunwarben Hasmukhlal) calling upon public not to enter into any transaction relating to the properties of four persons referred to earlier. However, there was no mention regarding the properties of the firm M/s. Kamani Chemical Works of the subject lands.
3.7. On 24.06.2008, remaining partners of the firm, M/s. Kamani Chemical Works executed a dissolution deed dissolving the partnership firm and the lands which were for the partnership firm was given to respective 7 partners as per their share in the firms and accordingly the petitioners have become owner of the subject lands.
3.8. Thereafter, on 16.07.2008 public notice was given in the news paper declaring that the firm is dissolved and the accounts have been settled and no amount is due in any manner and if anyone is having right, title or share against the firm, then, should approach within 15 days of the notice. No objection was received there upon. Therefore, the concerned advocate issued clearance Page 5 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 certificate on 01.08.2008. Accordingly, on 25.05.2009, mutation entry no.3262 came to be mutated in favour of the petitioners as owners of the subject land which are certified on 26.06.2009.
3.9. Thereafter, on 03.10.2009, the petitioners sold the subject land in favour of the Kamleshbhai Navinchandra Shah by registered sale deed and his name came to be mutated in the revenue records vide entry no.3351 dated 03.10.2009, which was certified on 27.11.2009.
3.10. The respondent nos.4 and 5 (petitioners of Special Civil Application No.19862 of 2015) intended to purchase the land, as it was adjoining to their factory premises, they sought title clearance certificate through their advocate. In that process public notice was issued on 28.12.2009, in daily newspaper "Gujarat Samachar" and "Sandesh" and as no objection or claim was raised by anyone, title clear certificate came to be issued by the advocate on 16.01.2010. On 22.01.2010, Kamlesh Navinchandra Shah sold the subject land in favour of respondent nos.4 and 5 and accordingly their names were mutated in the Page 6 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 revenue records vide entry no.3438 which was certified on 13.04.2010.
3.11. On 22.07.2010, respondent no.3 along with her husband filed Special Civil Suit No.501 of 2010 in the Civil Court, Ahmedabad against the petitioners as well as respondent nos.4 and 5 and Kamleshbhai Shah for cancellation of sale deed and also claimed 5% share in the property on the ground that the partnership firm was never dissolved and other partners have executed sale deed in favour of third party without her consent. In the said suit respondent no.3 filed application for interim injunction which was allowed by the Civil Court. Against which, respondent nos.4 and 5 filed Appeal From Order No.257 of 2014 before this Court, wherein this Court admitted the appeal and granted the interim relief against the impugned order of the Civil Court and observed that the plaintiffs might have retired in the year 1992.
3.12. On 22.10.2010, Hirankumar Hasmukhlal Shah and his wife i.e. (respondent no.3) gave written complaint with Sanand Police Station. Upon investigation, Dy.S.P. Sarkhej as well as Dy.S.P. Vigilance reported that no cognizable offence is Page 7 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 made out and hence FIR cannot be registered. Thereafter, respondent no.3 filed Criminal Complaint in the Court of J.M.F.C.Sanand on 16.11.2011 which came to be registered as Inquiry Case No.35/2011. Wherein, learned Magistrate directed the Sanand Police Station to register the FIR. The said order came to be challenged by the petitioner by preferring Special Criminal Application No.1155 of 2012 and on 26.12.2013, this Court quashed and set aside the order of learned J.M.F.C. 3.13. Thereafter, on 21.11.2011, respondent no.3 filed RTS Appeal No.955 of 2011 under Section 108(5) of the Land Revenue Code before the Deputy Collector Sanand, challenging entry no.3262 dated 26.06.2009. The Deputy Collector rejected the same vide his order dated 15.06.2012. Being aggrieved with this order, respondent no.3 filed revision application no.180 of 2012 before District Collector, Ahmedabad without joining necessary party. The same came to be allowed by the Collector vide his order dated 21.08.2013 and cancelled the entry no.3262.
3.14. Being aggrieved with the order of learned Page 8 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 Collector, the petitioner herein have preferred the Revision Application No.164 of 2013 before the learned SSRD. In the said petition, respondent nos. 4 and 5 filed an application for impleading them as party which came to be allowed. Learned SSRD has rejected said revision filed by the petitioners and confirmed the order of the Collector cancelling the revenue entry no.3262. This order of the learned SSRD and Collector have been challenged by the petitioner by filing this petition and by the respondent nos.4 and 5 by filing Special Civil Application No.19862 of 2015.
4. In both the petitions, the contesting respondent no.3 has filed her affidavit in reply and has vehemently contested both the petitions. The main contention of the respondent no.3 is that there was actually no dissolution of partnership at any point of time and all the documents showing dissolution of the partnership firm is fabricated one. According to her contention, on expiry of Nutankumar Shah on 25.11.1992, he was acting as an HUF and therefore, upon his death, karta of the said HUF was automatically replaced as a partner and therefore, there is no dissolution of the partnership firm. Regarding Page 9 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 the issuance of the public notice by Dhankunwarben Shah and others in relation to other partnership firms, it is contended by respondent no.3 that the dispute was relating to those partnership firms only. She has also contended that the petitioners have made false claim that Dhankunwarben Shah and present respondent no.3 has orally shown their desire to retire from the partnership firm. According to her version, even the dissolution of the firm has been signed by only 7 partners whereas actually there were 9 partners. She has also contended that false dissolution deed has been created by the petitioners and with the corrupt practice adopted by the Government Officials, impugned entriy was mutated in the revenue records. She has also contended that for the said action on the part of the revenue officials necessary inquiry has been vitiated against those officials. She has also contended that the Registrar of Firms has also sought for the copy of the so called copy of the evidence showing the relinquishment of their share by Dhankunwarben and herself. However, no documentary evidence has been submitted to the Registrar of Firms by the petitioners and thus the factum of dissolution of firm on the death of one of the partner Nutankumar is fraud Page 10 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 committed by the petitioners. She has also contended that since there was transfer of right and interest in the immovable property from the partnership firm in favour of the partners, necessary stamp duty needs to be paid before any entry being made in the revenue records. She has also contended that the orders passed by the learned Collector and the learned SSRD are proper and present petitions be dismissed.
5. In both the petitions, the original petitioner have filed rejoinder affidavit negativing the contention of fraud etc. as raised by the respondent no.3 and reiterating their contentions raised in the petitions. The petitioners have reiterated the facts that there was dissolution of the partnership as it was partnership at will and there was no need of any registration of the deed of dissolution of the partnership.
6. Heard learned counsel Ms.Archana Acharya for the petitioners of Special Civil Application No.20605 of 2015, Ms.Dhwani Tripathi learned AGP for respondent State, learned senior counsel Mr.I.H.Saiyed with Mr.Shawn M. Munshaw for respondent no.3 and learned counsel Mr.Mehul Sharad Shah for the petitioner of Special Civil Page 11 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 Application No.19862 of 2015 (who are also respondent no.4 and 5 in Special Civil Application No.20605 of 2015) at length. Perused the material placed on record as wells as decisions cited at bar.
7. Learned counsel Mr.Shah for the petitioner of Special Civil Application No.19862 of 2015 has vehemently referred to the averments made in both the petitions which are already referred to hereinabove and has submitted that the partnership firm was already dissolved and the petitioners have purchased the land in question after inviting objections and after getting necessary title clearance from the advocate. Mr.Shah has vehemently submitted that the contention raised by the private respondent no.3 and the observations of the revenue authority that there is no registered document showing the dissolution of partnership firm is concerned, are devoid of merit as according to the Registration Act, there is no need of any registration in respect of dissolution deed of partnership firm. He has submitted that when the partnership firm was already dissolved and no objection was raised by anyone in respect of the public notice, the petitioners have acted bonafidely and have Page 12 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 purchased the land in question after paying due consideration. He has submitted that the revenue authority have completely ignored the facts of the case and the legal position and has materially erred in cancelling the mutation entry no.3262. He has prayed to allow both the petitions and quash and set aside the impugned order of the learned Collector a well as learned SSRD and to confirm the order of the learned Deputy Collector rejecting the RTS Appeal filed by the respondent no.3 against entry no.3262. He has relied upon the following decisions.
(i) Order of this Court passed on 02.02.1996 in Special Civil Application No.5724 of 1987 in the case of Anil Engineering Works V.s Competent Authority and Deputy Collector, ULC and Another, especially in para 5, wherein it is observed as under:-
"5. No ruling is needed in support of the aforesaid settled principle of law. As rightly relied on by learned Advocate Shri Nanavaty for the petitioner, a reference deserves to be made to the binding ruling of the Supreme Court in the case of S.V. Chandra Pandian and others v. S.V. Sivalinga Nadar and others reported in JT 1993(1) Supreme Page 13 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 Court 278. It has clearly been held therein that when dissolution of a partnership firm takes place and the residue is distributed among partners, there is no partition, transfer or extinguishment of interest attracting sec. 17 of the Registration Act, 1908. It thus becomes clear that dissolution of a partnership firm does not involve any transfer of interest in any property including any immovable property and the document of dissolution does not require registration under the law of registration."
(ii) He has also relied upon the decision in case of M/s.Samyuktha Cotton Trading Co. Appellant V. Bheemineni Venkata Subbaiah and Others reported in AIR 2005 AP 1.
(iii) In case of S.V.Chandra Pandian and Others V.s S.V.Sivalinga Nadar and Others reported in (1993) 1 SCC 589, in para no.16 has observed as under:-
"16. From the foregoing discussion it seems clear to us that regardless of its character the property brought into stock of the firm or acquired by the firm during its subsistence for the purposes and in the course of the business of the firm shall constitute the property of the firm unless the contract between the partners Page 14 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 provides otherwise. On the dissolution of the firm each partner becomes entitled to his share in the profits, if any, after the accounts are settled in accordance with section 48 of the Partnership Act. Thus in the entire asset of the firm all the partners have an interest albeit in proportion to their share and the residue, if any, after the settlement of accounts on dissolution would have to be divided among the partners in the same proportion in which they were entitled to a share in the profit. Thus during the subsistence of the partnership a partner would be entitled to a share in the profits and after its dissolution to a share in the residue, if any, on settlement of accounts. The mode of settlement of accounts sat out in section 48 clearly indicates that the partnership asset in its entirety must be converted into money and from the pool the disbursement has to be made as set out in clause (a) and sub-clauses (i), (fi) and (iii) of clause (b) and thereafter if there is any residue that has to be divided among the partners in the proportions in which they were entitled to a share in the profits of the firm. So viewed, it becomes obvious that the residue would in the eye of law be moveable property i.e. cash, and hence distribution of the residue among the partners in proportion to their shares in the profits would not attract section 17 of the Registration Act. Viewed from Page 15 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 another angle it must be reaslised that since a partnership is not a legal entity but is only a compendious name each and every partner has a beneficial interest in the property of the firm even though he cannot lay a claim on any earmarked portion thereof as the same cannot be predicated. Therefore, when any property is allocated to him from the residue it cannot be said that he had only a definite limited interest in that property and that there is a transfer of the remaining interest in his favour within the meaning of section 17 of the Registration Act. Each and every partner of a firm has an undefined interest in each and every property of the firm and it is not possible to say unless the accounts are settled and the residue of surplus determined what would be the extent of the interest of each partner in the property. It is, however, clear that since no partner can claim a definite or earmarked interest in one or all of the properties of the firm because the interest is a fluctuating one depending on various factors, such as, the losses incurred by the firm, the advances made by the partners as distinguished from the capital brought in the firm, etc, it cannot be said, unless the accounts are settled in the manner indicated by section 48 of the partnership Act, what would be the residue which would ultimately be allocable to the partners. In that residue, Page 16 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 which becomes divisible among the partners, every partner has an interest and when a particular property is allocated to a partner in proportion to his share in the profits of the firm, there is no partition or transfer taking place nor is there any extinguishment of interest of other partners in the allocated property in the sense of a transfer or extinguishment of interest under section 17 of the Registration Act. Therefore, viewed from this angle also it seems clear to us that when a dissolution of the partnership takes place and the residue is distributed among the partners after settlement of accounts there is no partition, transfer or extinguishment of interest attracting section 17 of the Registration Act."
8. Learned counsel Ms.Archana Acharya for the petitioner in Special Civil Application No.20605 of 2015 has also submitted that partnership firm was dissolved earlier and necessary entries were mutated on the basis of the dissolution deed. She has submitted that even the present respondent no.3 or Dhankunwarben never raised any objection against such entry. She has also referred to the documentary evidence on record and has submitted that when earlier public notice was issued by Dhankunwarben and others in respect of properties of other firms, the Page 17 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 subject land was never included in those public notices, as they were knowing that they had already retired from the partnership firm. She has supported the submissions of learned counsel Mr.Shah and has submitted that the order of the learned Deputy Collector was proper one, whereas, the order of the Collector and learned SSRD are not sustainable in the eyes of law. She has prayed to allow the petitions and set aside the impugned order of the Collector and learned SSRD and to restore the order of the Deputy Collector.
9. Learned AGP Ms.Dhwani Tripathi for the respondent State has submitted that the real contesting party is a private respondent no.3. She has submitted that the order of the Collector as well as learned SSRD are proper one and therefore both the petitions needs to be rejected. She has prayed to reject both the petitions and to confirm the order of the learned SSRD and that of the learned Collector.
10. Learned Senior Counsel Mr.Saiyad assisted by the learned advocate Mr.Munshaw for contesting respondent no.3 has vehemently submitted that the partnership came into Page 18 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 existence with the name of Kamani Chemical Works having 11 partners on 30.06.1984 and the partnership firm has purchased the suit land in the year 1986 and the firm was registered with the Registrar of Firms in the year 1991. He has vehemently submitted that there is no any amended partnership deed or retirement deed produced by the petitioner for their stand that respondent no.3 and Dhankunwarben have consented to retire from firms. He has submitted that the new partnership agreement alleged to be entered into on 03.08.1993, cannot be taken into consideration as there was no consent letter given by the respondent no.3 and Dhankunwarben and there was no any retirement deed executed by deceased Dhankunwarben and the respondent no.3. He has also submitted that this new firm was never registered with the Registrar of Firms since the petitioners could not produce any documentary evidence regarding the certified copy of the retirement deeds of the retiring partners. He has submitted that therefore, there would be a two partnership firms, Kamani 1 and Kamani 2. While referring to the material on records, he has submitted that partnership firm Kamani 1 had 11 partners and Kamani 2 had 9 partners, wherein 8 Page 19 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 partners were common in both the firms. According to him, the notice was published by Kamani 2 and as it was pertaining to other firms the private respondent has no reason to object. According to him, at that point of time, the land in question was peacefully held by original partnership firm (Kamani 1) and therefore, there was no case of any objection by the respondent no.3.
10.1. Mr.Saiyed has vehemently submitted that the original firm was never dissolved. He has also submitted that notice for mutation of the entry no.3262 was never issued to the respondent no.3. He has also submitted that issuance of the public notice by the respondent nos.4 and 5 is concerned, the respondent no.3 was unaware. He has also vehemently submitted that the title clearance issued by the advocate of the respondent nos.4 and 5 is not in accordance with the rules and he has not given a clear picture about the past partners of firms Kamani 1 and Kamani 2. He has submitted that thereafter the property was purchased by the respondent nos.4 and 5 and at that point of time, contesting respondent became aware of this entire illegality committed by the petitioners herein. He has also Page 20 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 submitted that the contesting respondent has already filed Civil Suit which is pending and rights of the parties are yet to be decided. He has also submitted that necessary Criminal Complaint has already been filed and the Magistrate has issued summons. He has vehemently submitted that the Deputy Collector had committed error of facts and law in rejecting the RTS Appeal filed by the contesting respondent. According to him, therefore the contesting respondent had carried the matter before the learned Collector who has rightly passed the impugned order cancelling the revenue entry no.3262, which has been confirmed by the learned SSRD. He has submitted that considering the facts and circumstances of the case, the impugned orders passed by the learned Collector and the learned SSRD are in consonance with the facts and law applicable in the matter. He has prayed to dismiss both the petitions.
11. In rejoinder, learned counsel Mr.Shah has submitted that the Criminal Complaint has already been quashed by this Court. He has submitted that the only question before the Revenue Authority was as to whether any Page 21 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 mutation entry would be made on the basis of the dissolution deed or not. He has submitted that when the dissolution deed was produced and the firm was dissolved, the exercise undertaken by the subordinate authority in mutating the revenue entry no.3262 cannot be said to be illegal act. He has submitted that if the department has taken any action against the Revenue Officers, that facts does not affect the right of the petitioner of having mutation entry made in the revenue records on the basis of the dissolution deed. He has prayed to allow the petitions.
12. Having considered the submissions made on behalf of both the sides coupled with the material placed on record and the decisions cited at bar, it reveals that there is no dispute regarding the constitution of the partnership firm in the name of M/s Kamani Chemical Works initially in the year 1984 with 11 partners. There is also no dispute regarding the death of Nutankumar Ratilal Shah in the year 1992. The question regarding reconstitution of the firm after his death having 9 partners and subsequent dissolution of the firm by remaining 7 partners is the bone of contention between the petitioners Page 22 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 and private respondent no.3. At this stage, it is pertinent to note that private respondent no.3 has already filed Civil Suit for cancellation of the sale deed as well as for her alleged share in the land in question on the basis of the partnership firm. It is also admitted facts that at present the land in question has already been sold by the petitioner to the respondent nos.4 and 5 (who are petitioners in Special Civil Application No.19862 of 2015).
13. The limited question is regarding the making of revenue entry on the basis of the dissolution deed and the observations of the learned Collector as well as learned SSRD as to necessity of registration of the dissolution deed. In this regard, it is worth while to refer the observations of this Court in the case of Anil Engineering Works V.s Competent Authority and Deputy Collector, ULC and Another, wherein while relying upon the decision of the Supreme Court in the case of S.V.Chandra Pandian and Others V.s S.V.Shivalinga Nadar and Others, wherein this Court has observed that when dissolution of the partnership firm takes place and the residue is distributed Page 23 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 amongst the partners, there is no partition, transfer or extinguishment of interest attracting Section 17 of the Registration Act. It was further observed that the dissolution of the partnership firm does not involve any transfer of interest in any property including any immovable property and document of dissolution does not require registration under the law of Registration.
14. The Andhra Pradesh High Court in the case of M/s.Samyuktha Cotton Trading Co. (Supra) was dealing with question as to whether the registration of an instrument is needed either by the contributing an item of immovable property towards the share of an individual while joining a firm, or for relinquishing it at the time of retirement from it, it has observed that any instrument relinquishing right in an immovable property belonging to the firm need not be registered. To arrive at this conclusion, the Andhra Pradesh High Court has specifically observed in para 13 and 14 as under:-
"13. In A. Narayanappa v. B. Krishtappa, , it was held that once a partnership firm is constituted, the assets held by it merge into one unit, and that no partner can claim any exclusive rights as regards an identified Page 24 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 property comprised in the assets of the firm. The principle was summed up as under :
"In determining whether transfer of shares of partnerships which hold immovable property among other assets, require registration the Court must be influenced by the policy of the Partnership Act. The legal conception of the share of a partner in a partnership cannot be assessed in our opinion, by reference to the possibility of his getting a share in the immovable property possessed by the partnership, for his getting a share in the immovable property is only an uncertain factor.
A Full Bench of the Lahore High Court in the case of Ajudhia Pershad v. Shamsunder, ILR (1947) Lah 417 = AIR 1947 Lah. 13, held that the interest of a partner in partnership assets comprising of movable and immovable property would be treated as movable property. We are in agreement with the view expressed in the above.
Our answer to the question referred to is that the interest of a partner in partnership assets cannot be regarded as a right or interest in immovable property within the meaning of Section 17(1)(b) of the Registration Act."
14. The same decision became the subject- matter of appeal before the Supreme Court reported in Addanki Narayanappa and another v. Bhaskara Krishnappa (dead) and Ors., and it was approved. Similar view was expressed by the decisions rendered in Commissioner of Income-Tax v. Amber Corporation, ; and in .
Page 25 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 Hence, the contentions of the 1st respondent cannot be accepted."
15. Thus, so far as the contentions raised by the private respondent no.3 and the observations of the Collector and the learned SSRD regarding necessity of registration of the dissolution deed is concerned, same is not sustainable in the eyes of law.
16. It also appears from the record that as per the original partnership deed, page no.42, the partnership firm was to continue at will and any partner can retire from the firm by giving notice or even by oral expression. There was also clause that in case of retirement of any partner, the partnership firm may be continued. It also reveals from the records that earlier some notices were issued by the Dhankunwarben and four others wherein there is no mention of the property relating the M/s Kamani Chemical Works. It also reveals that on reconstitution of the partnership firm, necessary intimation was given to the Kalupur Bank and it was also intimated to the Registrar of Firms at the relevant time. The documentary evidence also suggests that the firm was dissolved by the deed Page 26 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 which does not require any registration. It also reveals that the on the basis of that deed, mutation entry was made and confirmed. It also reveals that the said firm has also issued public notice inviting public at large to approach the firm within 15 days if anybody has any right, title or interest against the firm. This factum does suggest that public notice was issued and none has filed any objection including the respondent no.3. At this juncture, it is pertinent to note that during the course of argument, the respondent no.3 has tried to show that there were two firms Kamani 1 and Kamani 2. However, the submissions that there were two firms are not pleaded in the Civil Suit itself which has been filed by the respondent no.3 before the Civil Court. Even in the affidavit in reply, the respondent no.3, has not put forward the defense that there are two firms Kamani 1 and Kamani 2. From the documentary evidence produced in the matter, it clearly appears that there was only one firm and due to death of one of the partners in 1992, the firm was reconstituted inducting one partner and retiring two partners as per their oral wish and thereafter, out of 9 partners two partners have died and therefore remaining 7 partners had dissolved the firm and necessary Page 27 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 mutation entry giving shares in individual partners, according to their shares, in the partnership firm was made. This action of the revenue authority cannot be said to be illegal one.
17. It is submitted by the respondent no.3 that these entries had been made due to corrupt practice adopted by the Revenue Officers and for that inquiry has been initiated against the concerned Revenue Officers and therefore, the entry needs to be cancelled on that basis only. The initiation of any departmental proceeding against Erring Government Officer has nothing to do with the right of a person based on a documentary evidence. Initiation of the proceedings against the concerned revenue authority does not ipso facto suggest that the dissolution of the firm as alleged by the petitioners is illegal. Therefore the submissions on this count made on behalf of respondent no.3 is not acceptable.
18. Thus, considering the facts and circumstances of this case, it is clearly found that the Deputy Collector has rightly rejected the RTS Appeal filed by the respondent no.3 against the Page 28 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 challenge of entry no.3262. The learned Collector as well as the learned SSRD has misdirected themselves for insistence of registration of the dissolution deed and has committed error of facts and law in setting aside the order of the learned Deputy Collector. The orders of the learned Collector as well as learned SSRD are not sustainable in the eyes of law and therefore both the orders deserves to be quashed and set aside and the order of the learned Deputy Collector needs to be restored of course with the observation that the entry would be subject to the outcome of the Civil Suit pending between the parties and the Civil Court shall decide the suit in accordance with law.
19. In view of the above, both the petitions deserves to be allowed. Accordingly, both the petitions are allowed with the aforesaid observations. The impugned orders dated 29.09.2015 in Revisions Application No.164 of 2013 as well as the order dated 21.08.2013 passed by the Collector in Revision Application No. 180 of 2012 are quashed and set aside and the order of the learned Deputy Collector and Mutation Entry no.3262 dated 26.06.2009 is hereby restored to its number, which will be Page 29 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022 C/SCA/20605/2015 JUDGMENT DATED: 09/06/2022 subject to the ultimate outcome of the result of Civil Suit pending before the concerned Civil Court. The Civil Court shall decide the lis between the parties pending before it, in accordance with law.
Rule is made absolute to the aforesaid extent. No order as to costs. Direct service is permitted.
Sd/-
(DR. A. P. THAKER, J) URIL RANA Page 30 of 30 Downloaded on : Fri Jun 10 21:03:32 IST 2022