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Appeal (civil) 10588 of 1995
M.V. Karunakaran Appellant
DATE OF JUDGMENT: 15/12/2006
S.B. Sinha & Markandey Katju
J U D G M E N T
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 has rightly been determined in favour of
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
In Addanki Narayanappa and Another v. Bhaskara Krishnappa (dead)
and thereafter his heirs and others [AIR 1966 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
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.