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Appeal (civil) 5720 of 2006
Shreedhar Govind Kamerkar
Yesahwant Govind Kamerkar and Anr
DATE OF JUDGMENT: 12/12/2006
S.B. Sinha & Markandey Katju
J U D G M E N T
[Arising out of SLP (Civil) No.8368 of 2005]
S.B. SINHA, J :
Parties herein are brothers. The dispute between them is tenancy right
in respect of a premises known as 'Navalkar Building' situate at N.C.
Kelkar Road, Dadar in the town of Mumbai. Appellant herein allegedly
acquired the said tenancy right in terms of a deed of assignment entered into
by and between him and one Saraswati Balkrishna Pawar and three others.
One Krishna Tatoba Pawar alias Balkrishna Tatoba Pawar was the original
tenant of the said premises. He was running a hair cutting saloon therein
under the name and style of 'Anant Hair Dressing Saloon'. He died leaving
behind him the assignors of the said deed of assignment dated 18.01.1966.
The business as also the tenanted premises was assigned for valuable
consideration. He was allegedly carrying on business therein. Leave and
licence agreement was executed by him in relation to the self-same premises
in favour of one Shri Walke on 01.02.1970. The said Walke was running a
business in the said premises under the name and style of 'Deepak
Provisional Store'. A dispute arose between the parties resulting in initiation
of a proceeding under Section 145 of the Code of Criminal Procedure. The
properties were attached. The said Walke also filed a suit. The said suit is
said to have been compromised. Appellant herein is said to have obtained
possession of the said premises on 23.03.1978, whereafter he started a
business under the name and style of 'Shree Medico'.
The parties hereto i.e. the three brothers, entered into a partnership on
01.04.1971. The same was dissolved on 31.03.1977, inter alia, on the
premise that the appellant had been claiming full ownership in relation to the
said tenanted premises as also the business in Shree Medico. A suit was
filed by Respondent No.1 in the City Civil Court, Mumbai, which was
registered as S.C. Suit No.5903 of 1981 wherein, inter alia, the following
prayers were made :
(a) It be declared that the Plaintiff and the Defendants
Nos. 1 and 2 have 1/3 shares in the suit business of
Medical and General Store carried on Navalkar
Building on the ground floor, N.C. Kelkar Road,
Dadar, Bombay 400 028 as also the tenancy rights
in the presmises as also the premises on the ground
floor of Navalkar Building, N.C. Kelkar Road,
Dadar, Bombay-400 028.
(b) It may be declared that the partnership business of
Medical and General Stores carried on in Navalkar
Building on the ground floor, N.C. Kelkar Road,
Dadar, Bombay-400 028, stood dissolved as from
the date of the suit or from such other date as this
Hon'ble Court may deem fit.
(c) The accounts of the partnership business of
Medical and General Stores be made up and the
Plaintiff be awarded the amount found due to his
share at the foot of the account."
Although in the said suit allegedly no relief was claimed in respect of
the business of the Deepak Provisional Store, at the hearing, the plaintiff
made his claim in respect of the business running under the name and style
of 'Shree Medico' and claimed interest in the said 'Deepak Provisional
Store'. The appellant in his written statement did not raise any question as
regards legality or otherwise of the said tenancy right in the partnership in
terms of Section 15 of the Bombay Rents, Hotel and Lodging House Rates
Control Act, 1947 (for short, 'the Bombay Act').
In the said suit, inter alia, the following issues were framed :
"1. Whether the Plaintiff proves that the partnership
firm of M/s Shreedhar Govind Kamerkar was/is
registered under the Indian Partnership Act?
2. Is the answer to the above issue is in the
affirmative, whether the Plaintiff proves that the
business known as Deepak Provision Centre and
the shop premises on the Ground Floor, Navalkar
Building, N.C. Kelkar Road, Dadar, Bombay-400
3. If the answer of the above issues in the affirmative,
whether the Plaintiff proves that on 31st March,
1977 the said business of Deepak Provision Centre
was in existence ?
4. If the answer to the above issues is in the
affirmative, whether the Plaintiff proves that the
said business of Deepak Provision Centre and the
said premises were excluded from the dissolution
of the said firm of M/s Shreedhar Govind
5. Whether the Plaintiff proves that the business of
M/s Shree Medico carried on by the Defendant
No.1 in the said premises is a partnership business
of the parties to the suit ?
8. Whether the Plaintiff proves that he is entitled to
1/3rd share in the said business of the 1st Defendant
and in the tenancy rights in the said premises ?
9. Whether the Plaintiff proves that he is entitled to
the dissolution and accounts of the said business of
the 1st Defendant and the tenancy rights of the said
Issue Nos. 2, 8 and 9 were answered in the negative, whereas Issue
Nos.3, 4 and 5 were held to be not surviving. The learned Trial Judge, inter
alia, on the aforementioned findings dismissed the suit. On an appeal
preferred by the respondents herein, a learned Single Judge of the High
Court, however, allowed the appeal directing :
"a) It is declared that the plaintiff and defendant Nos.1
and 2 have 1/3rd share each in the business of
Deepak General Stores carried on the ground floor
in Navalkar building at N.C. Kelkar Road, Dadar,
Mumbai-400 028 and also equal tenancy rights in
the premises where Deepak General Stores
business was being carried out.
b) It is declared that partnership business of Deepak
General Stores at the aforesaid premises stood
dissolved as from July 1981.
c) The accounts of the partnership business of
Deepak General Stores shall be made and the
plaintiff and the defendants will be entitled to
amount found due to their share at the foot of the
d) Partnership premises where Deepak General Stores
was being run shall be partitioned by metes and
bounds and they will be entitled to possession of
1/3rd share and will be placed in possession.
e) There will be an enquiry into the mesne profits
from the date of the suit till delivery of possession
in respect of Deepak General Stores and that of the
Plaintiff will be entitled to costs of this suit as well
as of the Appeal."
The High Court in its judgment, inter alia, relied upon the admission
of the appellant herein that the royalty received in respect of the said
tenanted premises used to be deposited in the partnership account.
The deed of dissolution dated 31.03.1977 clearly postulated that the
said tenancy was a part of the assets of the partnership (Ex.P-3) and
agreement dated 01.02.1977 (Ex. P-4), whereby and whereunder the parties
thereto agreed that the partnership should be dissolved.
Mr. U.U. Lalit, the learned Senior Counsel appearing on behalf of the
appellant, would inter alia submit :
1) Having regard to the stand taken by the learned counsel for the
respondents before the City Civil Court as also before the High Court
to the effect that no share was being claimed in respect of the business
of 'Shree Medico', and the said claim having been kept confined only
to 'Deepak Provisional Store', the High Court committed a manifest
error in passing the impugned judgment.
2) Having regard to the finding of fact arrived at by the City Civil Court
that the tenancy right in respect of the premises in question had been
acquired by the appellant in his individual capacity and he having
obtained possession thereof from the licensee only in the year 1978,
prior whereto the partnership was dissolved, the question of the said
property being an asset of the partnership did not and could not arise.
3) The plaintiff-respondent, in his deposition having clearly admitted
that he had no concern with the said tenanted premises, the
impugned judgment cannot be sustained.
4) In any event having regard to the provisions contained in Section 15
of the Bombay Act, the tenancy right could not have been assigned.
5) Partnership having been dissolved on 31.03.1977 and the suit
having been filed on 16.10. 1981, the same was clearly barred by
Mr. Shekhar Napadhe, the learned Senior Counsel appearing on
behalf of the respondents, on the other hand, would contend :
1. It is not a fit case where this Court should exercise its discretionary
jurisdiction under Article 136 of the Constitution of India.
2. Having regard to the provisions contained in Section 17 of the
Partnership Act, the suit was not barred by limitation.
3. No question as regards applicability of Section 15 of the Bombay Act
having been raised in the written statement, nor any issue having been
framed in that behalf, the same should not be permitted to be raised
for the first time before this Court.
The deed of partnership admittedly has not been produced. The
parties, however, had entered into a formal deed of partnership. Non
production of the said document has, however, not been taken serious note
of by the High Court. What was produced was extract from the certificate of
registration issued by the Registrar of Firms.
In absence of the deed of partnership, it might not be possible for us
to arrive at a finding that the partnership was originally brought in the stock
of the firm.
We will, therefore, have to proceed to determine the said question on
the basis of the materials which are available on records.
We may at the outset notice the admission of the appellant in his
deposition before the learned Civil Court, which is in the following terms :
"Q. You have stated that the business of M/s Shridhar
Govind Kamerkar was carried on at Navalkar
Bldg. So what was this premises at Navalkar
Bldg. used ?
Ans. The said premises were given for running the
business to one Shri Walke and the royalty was
received therefrom was credited to the accounts of
M/s Shridhar Govind Kamerkar a partnership firm.
Q. I put it to you that prior to giving the premises in
Navalkar Bldg. to Shri Walke Deepak Provision
Centre was being run therefrom. What have you to
Ans. I started the said business of M/s Deepak Provision
Centre in the said premises."
Indisputably, a deed of dissolution was entered into by and between
the parties. The said instrument was executed on 31.03.1977, the relevant
portions whereof are as under :
"WHEREAS the parties above named were partners in a
partnership, a will for carrying on the business of Bidis,
Tobacco, Cigarette and other sundry articles under the
name and style of M/S SHREEDHAR GOVIND
KAMERKAR, at 203/205, Haji Habib Chawl, N.M.
Joshi Marg, Bombay 13 and the tobacco shop at
Harharwala Building, Delisle Road, (N.M. Joshi Marg),
Bombay and Deepak Provision Centre, Navalkar Bldg.
N.C. Kelkar Road, Dadar, Bombay-28, and a tobacco
godown at Rangari Chawl, Maidan, Patra Shed, N.M.
Joshi Marg, Bombay 13, under the terms and the
conditions of a deed of partnership duly executed on the
day of January, 1971, Between the Party of First Part,
Second Part & Third Part."
xxx xxx xxx
1. The parties hereby agreed that the partnership
between them to carry on the said business in the name
and style of Messers SHREEDHAR, GOVIND
KAMERKAR and other sundry articles at 203/205 Haji
Babib Chawl, N.M. Joshi Marg, Bombay 13 and a
tobacco shop at Harharwala Building, N.M. Joshi Marg,
known as Ganesh Tea House and Deepak Provision
Centre, Navalkar Building, N.C. Kelkar Road, Dadar,
Bombay 28 and tobacco godown at Rangari Chawl
Maidan, Patra Shed, N.M. Joshi Marg, Bombay 13 and
Mor Brand Chuna (Lime) and the parties had agreed the
terms under which the said partnership was dissolved on
the further terms and conditions.
xxx xxx xxx
3. In respect of Bidi shop at Harharwala Bldg., N.M.
Joshi Marg, Bombay-13, known as Hotel Ganesh Tea
House which is given on royalty shall remain with the
party of the Third Part Shri P.G. Kamerkar and he shall
be responsible to repay the deposit amount received.
4. In respect of Deepak Provision Centre at N.C. Kelkar
Road, Dadar, Bombay 28 the case is pending in court of
the said shop and after the court decision the decision
will be taken with the mutual consent of all the partners.
And secondly in respect of Mor Brand Chuna (Lime) the
matter is under dispute with other parties and that matter
will be decided with the mutual consent of these
Although the agreement dated 01.02.1977 is a disputed document,
but having regard to the fact that the High Court had placed reliance
thereupon, we may also notice clause 8 thereof which is in the following
8) The closed shop viz. Deepak Provisional Stores
with the room situated at Nawalkar Building, N.C.
Kelkar Road, Dadar, Mumbai-400028 is of the
ownership of all the three partners and all the three
shall bear the expenditure to be incurred therefor.
Further, all the three shall equally bear the entire
expenditure viz. its rent etc."
We may also notice that although a claim was made by the plaintiff
that the tenancy had been acquired by the partnership from the beginning,
from the deposition of the plaintiff-respondent no.1, it appears that the
following facts have been elicited : (i) Deepak Provisional Store (Centre)
was not run by the partners (page 61); (ii) All licences of Shree Medico
were standing in the name of defendant no.1. He had never signed on any
document pertaining to Shree Medico (page 62); (iii) He had no source of
income in 1966 (page 71); (iv) There is no documentary evidence to show
that the said premises were acquired out of the funds of partnership firm
(page 72); (v) No documentary evidence exists to show that the business of
partnership was carried out at the same premises (page 82); (vi) The
property was under attachment from 1969 to 1978 (page 82); (vii) The
possession of the property was obtained in 1978 (page 84); and (viii)
Plaintiff claimed a share in the business which was running under the name
and style of 'Shree Medico' and not of 'Deepak Provisional Store' (page
However despite a claim having been made by the plaintiff in respect
of 'Shree Medico', it appears, a statement was made at the Bar by the
learned counsel for the plaintiff on 17.03.1994, which had been recorded by
the learned Trial Judge as under :
"(1) That the Plaintiff is not claiming any right in the
business of 'Shree Medico'.
(2) The Plaintiff is claiming the right only in respect
of the business of 'Deepak Provision Centre".
(3) The tenancy rights in respect of the shop premises
being Shop No.1."
The High Court also in para 6 of its judgment noticed the said
statements in the following terms :
"Counsel for the appellants however fairly conceded
that the plaintiffs-appellants are not making any claim in
respect of Shree Medico."
The learned Senior Counsel appearing on behalf of the appellant may,
thus, be right in his submission that keeping in view the pleadings of the
parties as also the statements of the plaintiff in his deposition before the
learned City Civil Court, the respondent could not lay any claim in respect
of any business which was being carried in the premises in question under
the name and style of 'Deepak Provisional Store, but the same, in our
opinion, may not be decisive to arrive at a conclusion that the right in
respect of the tenanted premises in question never formed the part of the
assets of the partnership.
We have noticed hereinbefore that either there was no deed of
partnership, or in any event the same had not been produced. What,
therefore, formed 'the assets' of the partnership must be gathered from the
admission of the parties as also the other materials available on records.
What forms the property of the firm is stated in Section 14 of the
Indian Partnership Act, 1932 (for short, 'the Act'). It reads as under :
"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.
Unless the contrary intention appears, property and
rights and interests in property acquired with money
belonging to the firm are deemed to have been required
for the firm."
With a view to determine the said question, we may notice some
other provisions of the Act as well.
"17. Rights and duties of partners. - Subject to contract
between the partners -
after a change in the firm
(a) - where a change occurs in the constitution of a firm,
the mutual rights and duties of the partners in the
reconstituted firm remain the same as they were
immediately before the change, as far as may be;
after the expiry of the term of the firm, and
(b) - where a firm constituted for a fixed term continues
to carry on business after the expiry of that term, the
mutual rights and duties of the partners remain the same
as they were before the expiry, so far as they may be
consistent with the incidents of partners at will; and
where additional undertakings are carried out,
(c) where a firm constituted to carry out one or more
adventures or undertakings carries out other adventures
or undertakings, the mutual rights and duties of the
partners in respect of the other adventures or
undertakings are the same as those in respect of the
original adventures or undertakings."
"50. Personal profits earned after dissolution.-
Subject to contract between the partners, the provisions
of clause (a) of section 16 shall apply to transactions by
any surviving partner or by the representatives of a
deceased partner, undertaken after the firm is dissolved
on account of the death of a partner and before its affairs
have been completely wound up :
Provided that where any partner or his
representative has bought the goodwill of the firm,
nothing in this section shall affect his right to use the firm
"53. Right to restrain from use of firm name or firm
property.- After a firm is dissolved, every partner or his
representative may, in the absence of a contract between
the partners to the contrary, restrain any other partner or
his representative from carrying on a similar business in
the firm name or from using any of the property of the
firm for his own benefit, until the affairs of the firm have
been completely wound up :
Provided that where any partner or his
representative has bought the goodwill of the firm,
nothing in this section shall affect his right to use the firm
The parties have entered into the deed of dissolution voluntarily. The
appellant herein is not an illiterate. He has been carrying on business. He
had acquired tenancy right on his own showing. He had acquired the
tenancy right in his own name. He had also been fighting litigation with the
said Walke for a long time.
We have also noticed hereinbefore clause (8) of the agreement dated
01.02.1977. From the preamble of the deed of dissolution dated 31.03.1977,
it is evident that the partnership had been carrying on business inter alia in
Bidis, Tobacco, Cigarettes etc. under the name and style of 'M/s Shreedhar
Govind Kamerkar' situated Haji Habib Chawl, N.M. Joshi Marg, Bombay
and a tobacco shop at Harharwala Building, Delisle Road and a tobacco
godown at Rangari Chawl, Maidan, Patra Shed, N.M. Joshi Marg, Bombay
but also 'Deepak Provisional Store', Navalkar Building.
Clause (1) of the said deed of dissolution also refers to 'Deepak
Provisional Store'. In clause (3) of the said instrument, royalty in relation to
a hotel, namely, Hotel Ganesh Tea House was assigned to P.G. Kamerkar,
Respondent No.2 herein. In relation to the 'Deepak Provisional Store', it
was categorically stated that the matter was pending in the court. Clause (4)
of the said deed of dissolution suggests that the parties intentionally left out
division of their properties in respect of 'Deepak Provisional Store' as also
'Mor Brand Chuna (Lime)', as litigations were pending.
The very fact that the parties had referred to the business carried out
under the name and style of 'Deepak Provisional Centre' at N.C. Kelkar
Road, Dadar, Mumbai, which was not and could not be the subject-matter of
the partnership as the same was entered into in the year 1971 and dissolved
in 1977, the admission of the appellant herein that the royalty received from
the said tenanted premises was being deposited in the partnership account
assumes significance. If the said property was the exclusive property of the
appellant, and he had been dealing therewith as the sole owner thereof, the
question of any reference being made thereto in the deed of dissolution
would not have arisen. It may be true that in absence of the original deed of
partnership dated 01.04.1971 having been brought on records, it is difficult
for the court to arrive at a finding that the same had been originally brought
in the stock of the firm. There is also no direct evidence that the appellant
had brought the same as his investment in the partnership at the initial stage
thereof but it is evident that the same was done at a latter point of time. An
inference in relation thereto must be drawn for the other materials on
records. The said agreement dated 01.04.1971 having been in dispute, we
may not be decisive. In a case of this nature, the conduct of the parties
assumes significance. Admission, as is well-known, is the best proof of a
claim. Section 58 of the Indian Evidence Act states that the facts admitted
need not be proved. The very fact that the royalty received in respect of the
said premises was being deposited in the partnership account is a clear
pointer to show that the same was the property of the partnership.
We may at this juncture also consider the submission of Mr. Lalit, in
regard to the applicability of the provisions of Section 15 of the Bombay
Act, which reads as under :
"In absence of contract to the contrary, tenant not
to sub-let or transfer or to give on licence.
(1) Notwithstanding anything contained in any law
but subject to any contract to the contrary, it shall not be
lawful after the coming into operation of this Act for any
tenant to sub-let the whole or any part of the premises let
to him or to assign or transfer in any other manner his
interest therein and after the date of commencement of
the Bombay Rents, Hotel and Lodging House Rates
Control (Amendment) Act, 1973, for any tenant to give
on licence the whole or part of such premises.
Provided that the State Government may by
notification in the Official Gazette, permit in any area the
transfer of interest in premises held under such leases or
class of leases or the giving on licence may premises or
class of premises and no such extent as may be specified
in the notification.
It is not in dispute that the State of Maharashtra had issued a
notification in terms of the proviso appended to Section 15 of the Bombay
Act, in terms whereof assignment of a business together with tenancy right
was permissible. Furthermore, Section 15 does not contain an absolute bar.
It is subject to a contract to the contrary between the landlord and the tenant.
A landlord may also in a given situation by reason of acceptance of rent or
otherwise from the sub-tenant or assignee may acknowledge the sub-tenancy
or assignment and thus accept him to be his tenant. It is not a case where a
landlord has brought any suit for eviction of the tenant on the ground that he
had wrongfully assigned his right, title and interest in the tenanted premises
in contravention of Section 15 of the Bombay Act and, thus, liable for
eviction. We are concerned with a partnership. Assisgnment of tenancy
having regard to the statutory provision would not attract Section 23 of the
Indian Contract Act. Even otherwise in a case of this nature, the said
question does not arise.
In any event, a transaction may be void so far as landlord is
concerned. Such a void transaction may not have any effect on the
application of the property towards partnership. To some extent, the point
appears to have been covered by this Court in Arm Group Enterprises Ltd. v.
Waldorf Restaurant and Others [(2003) 6 SCC 423], wherein this Court
"Mere carrying on by the tenant a partnership business
as partner in the leased premises, no doubt, does not per
se amount to sub-letting unless it is shown that he
withdrew his control of the leased premises and parted
with the possession of the property and thereby
surrendered his individual tenancy rights in favour of the
We may, in this connection, usefully notice that in 'Lindley & Banks
on Partnership', 18th Edn., it is stated :
"8-13 Lord Lindley observed that "a partnership may be
illegal upon the general ground that it is formed for
a purpose forbidden by the current notions of
morality, religion, or public policy". On that
ground, he considered that a partnership formed
for the purpose of deriving profit from the sale of
obscene or blasphemous prints or books, or for the
procurement of marriages or of public offices of
trust, would be "undoubtedly illegal."
8-14 It has already been seen that a partnership between
a resident British citizen or a resident alien and an
alien enemy is illegal and incapable of creation or
continuation; on the same basis, a partnership
formed in order to trade with an enemy nation
would clearly be illegal. However, since a neutral
may lawfully trade with one of the belligerent
nations, a partnership formed for that purpose
would be unobjectionable."
8-16 Equally, although a statute may appear to prohibit
certain activities and impose a penalty for failure
to observe its provisions, it does not follow that
conduct which would attract the penalty is
necessarily illegal. If the statute can genuine be
classed as prohibitory, as will be the case if the
penalty is imposed for the protection of the public,
then such conduct will be illegal Per contra if, on
a true construction of the statute, the penalty
merely represents, as Lord Lindley put it, "the
price of a licence for doing that the statute
apparently forbids". Thus, in Brown v. Duncan, it
was held that a partnership of distillers was not
illegal, even though one partner carried on
business as a retail dealer in spirits within two
miles of the distillery (contrary to the Duties on
Sprits Act 1823, ss. 132, 133) and was not
registered as a member of the firm in the excise
books (as required by the Excise Licences Act
1825, s. 7). Lord Lindley did, however, doubt
whether the statutes in question were properly
construed by the court.
The following alphabetical list of businesses
and professions contains the most important
example of partnership whose legality is or may be
affected by statute."
8-31 By virtue of the Financial Services and Markets
Act 2000, no person may carry on, or purport to
carry on, a regulated activity in the United
Kingdom unless he is duly authorized so to do or is
exempt from the provisions of the Act in relation
to that activity. Contravention of this general
prohibition constitutes an offence and any
agreement made by a person whilst carrying on a
regulated activity in breach of the prohibition will
be unenforceable against the other party.
10.44 What is of greater importance is to ensure that the
occupation rights of the firm are clearly
established where the premises are to remain in the
sole ownership of one or more of the partners.
If a lease in favour of the firm is to be
granted, then it must be in writing. The
termination of such a lease may, however, not be
without difficulty and its existence may
conceivably have adverse inheritance tax
If the agreement omits any reference to such
occupation rights then, in the absence of any other
evidence, it will not be assumed, merely because
the premises are indispensable to the partnership
business, that they belong to the firm or are subject
to the firm's right to (i) a lease or tenancy or,
where that is still relevant, (ii) an exclusive licence
to occupy within the meaning of the Agricultural
Holdings Act 1986. It will rather be inferred that
each individual partner who is not beneficially
interested in the premises has been granted a non-
exclusive licence to enter them in order to carry on
the partnership business. Such licence would seem
to be contractual in nature and might, as a matter
of implication, not be terminable during the
currency of the partnership, particularly if it can be
shown that the partnership business can only be
carried on from those premises and that the
termination of the licences would strike at the
substratum of the partnership agreement. In such
circumstances the only effective way of
determining the licence would be to dissolve the
partnership but, even then, they would prima facie
continue until the winding up is complete."
We are not oblivious that all properties of the owner may not be
partnership property and each case, thus, must be determined on the basis
of fact materials on record.
In Dwijendra Nath Mullick and Another v. Rabindra Nath Chatterjee
and Others [AIR 1987 Cal 289], it is stated :
"18. It is for the partners to determine by agreement
amongst themselves what shall be the property of the
firm and the quantum of their beneficial interests therein
inter se and what shall be the separate property of one or
more of them. If there is no express agreement, then the
source from which the property was obtained, the
purpose for which it was acquired, and the mode in
which it has been dealt with, are to be considered to
ascertain such intention."
In Jayalakshmi v. Shanmugham and Others [AIR 1988 Ker 128], it is
"It is not necessary that every partnership for the
purpose of its business should own and utilize its own
partnership property. Therefore mere user of a shop for
the business will not make the shop or the tenancy right
in it a partnership asset. Something more is required. It
was so held by the Supreme Court in Arjun Kanoji
Tankar v. Santaram Kanoji Tanker (1969) 3 SCC 555
We, however, in this case are of the opinion that as the usufruct of his
lease hold was to be deposited in the partnership account, the same formed
the part of the assets of the partnership.
The question as to whether the suit was barred by limitation or not
also must be judged from the aforementioned context. The cause of action
for the suit was said to have been arisen, as stated by the plaintiff in his
plaint in the following terms :
"The plaintiff says that the cause of action arose at the
end of July, 1981 when the Defendant No.1 refused to
render accounts and started claiming the partnership
business and the partnership premises as his own."
The question which would, therefore, arise is as to whether running of
'Shree Medico' without complying with clause 4 of the deed of dissolution
would give rise to a continuous cause of action. Mere execution of deed of
dissolution did not discharge the parties thereto from their rights and
liabilities. The rights and liabilities of the partners in respect of the
partnership property would be discharged only when the firm is finally
wound up and the properties of the firm are distributed.
Sections 50 and 53 of the Act indicate to the said effect. The partner
of a dissolved firm can not only exercise his right under Section 50, he may
also restrain the use of the firm's name and firm's property in terms of
Section 53 of the Partnership Act. Section 37 of the Partnership Act
determines the rights of the outgoing partner in certain cases to avoid shares
to subsequent profits. If the tenancy right was being subjected to any profit
by one of the partners, the cause of action arose. The cause of action for the
suit, therefore, did not perish with the execution of the deed of dissolution on
For the reasons aforementioned, there is no merit in this appeal. It is
dismissed accordingly. The parties shall pay and bear their own costs.