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https://www.mhc.tn.gov.in/judis  ____________ W.P. Nos.40658/2015 – 22586/2016

11. It is the further averment of the petitioner that the property, which is the subject matter of mortgage deed bearing No.8400/2013 was part of a larger extent of lands brought in as capital by V.N.Devadoss during the formation of the partnership firm and, thereafter, the property became the property of the partnership firm and later upon conversion of the same to a company, the property devolved upon the petitioner company. However, as the patta bore the name of V.N.Devadoss, which record was not mutated, the bank required the said V.N.Devadoss to be a confirming party and, therefore, for the purpose of execution of mortgage deed, the presence of V.N.Devadoss as a confirming party would not in any way alter the ownership of the property, which devolved on the petitioner company. However, misconstruing the aforesaid facts, the report of the audit has been filed resulting in the passing of the impugned order and, therefore, left with no other effective remedy, the present writ petitions have been filed.

23. Learned Addl. Advocate General, to substantiate that the property has not become the property of the partnership firm, placed heavy reliance on the documents filed in the typed set, viz., the encumbrance certificate and other materials and submitted that V.N.Devadoss had mortgaged the property in favour of Andhra Bank and Indian Overseas Bank and that the mortgage was discharged and receipt was registered only on 24.9.2010, which clearly shows that it was only V.N.Devadoss, who was dealing with the property. That being the case, it is the submission of the learned Addl. Advocate General that the property could never be termed to be the property of the partnership firm on and from 1.4.2007. Further, the firm is registered only on 16.4.2009 and the company was incorporated on 11.12.2009. Inspite of the fact that the registration of the firm and the company were prior to the discharge of the mortgage, the property, which stood in the name of V.N.Devadoss could never be termed to be the property of the partnership firm, which had, thereafter, gone on to the hands of the petitioner company. It is therefore the submission of the learned Addl. https://www.mhc.tn.gov.in/judis  ____________ W.P. Nos.40658/2015 – 22586/2016 Advocate General that it is only to circumvent the payment of stamp duty, V.N.Devadoss was brought in as a confirming party, which has been rightly pointed out in the audit report leading to the impugned notice and collection of deficit stamp duty from the petitioner company.

28. This Court gave its careful consideration to the submissions advanced by the learned counsel appearing on either side and perused the materials available on record and also the decisions relied on by the learned senior counsel for the petitioner.

29. The facts, which are undisputed are that the subject property belonged to V.N.Devadoss, who is shown as the confirming party in the Indenture of Mortgage bearing Doc. No.8400/2013, which is with respect to the mortgage deed entered into in Doc. Nos.8400/2013 and 10577/2013. The subject property was purchased by the said V.N.Devadoss, which is not disputed by either parties to the lis. The subject property, in addition to vast extent of lands, were purchased by V.N.Devadoss in the year 2004. It is also an admitted fact that the partnership firm of ‘V.Guruswamy Naidu & Co.’, was formed in the year 2007. Towards capital to the said firm, it is alleged by the petitioner that V.N.Devadoss had brought into stock of the firm the subject property along with the other extent of land purchased by him in the year 2004. However, evidencing the transfer of the said properties from the hands of V.N.Devadoss, there is no https://www.mhc.tn.gov.in/judis  ____________ W.P. Nos.40658/2015 – 22586/2016 material or registered instrument which would show that the properties were transferred in the name of the firm by V.N.Devadoss, except for the partnership deed, which also spells out that the subject properties along with other properties were brought in as the capital on behalf of V.N.Devadoss.

49. In Arm Group Enterprises Ltd. – Vs – Waldrof Restaurent (2003 (1) RCR (Rent) 594 (SC)), it has been held that the property exclusively belonging to a person does not become a property of the partnership merely because it is used for the business of the Partnership and that such property will become property https://www.mhc.tn.gov.in/judis  ____________ W.P. Nos.40658/2015 – 22586/2016 of the partnership if there is an agreement. However, in the case on hand, notwithstanding the fact that there is an partnership deed, in which there is a recital to the effect that the property is put in as capital towards the share of V.N.Devadoss, cannot be construed as transfer within the meaning of Stamp Act for the simple reason that the revenue records still stand in the name of V.N.Devadoss. Therefore, for all purposes, the property would be held to be the property of V.N.Devadoss without there being any transfer, as the recital in the partnership deed could only be deemed to mean that the property of a partner has been allowed to be used in the partnership business and that it would not be construed as partnership property, which view has been arrived at in the decision in Noor Mohd. Mir – Vs – Qadir Mir (AIR 1983 NOC 181).