Whether clauses of partnership deed will be automatically binding on legal heirs of deceased partners?

 At this stage, it is to be noticed that once the

partnership comes to an end, by virtue of death of

one of the partners, there will not be any

partnership existing in which legal representatives

of late Smt. Hashmatunnisa Begum could be taken in.

The judgment and decree obtained by late Sri Jai

Narayan Misra against late Smt. Hashmatunnisa Begum,

in pursuance of partnership deed dated 14.04.1982,

cannot bind the legal representatives of late Smt.

Hashmatunnisa Begum, as such, decree is not

executable against them. The legal representatives

of late Smt. Hashmatunnisa Begum are not the

partners of the original partnership deed dated

14.04.1982. When such legal representative are not

parties to the contract, such contract cannot confer

rights or impose obligations arising under it on any

third party, except parties to it. No one but the

parties to the contract can be entitled under it or

born by it. Such principle is known as ‘Privity of

Contract’. When the partnership stands dissolved by

operation of law under Section 42(c) of the Indian

Partnership Act, 1932, the question of execution in

pursuance of the decree does not arise. There cannot

be any contract unilaterally without acceptance and

agreement by the legal heirs of the deceased

partner. If there are any clauses in the agreement,

entered into between the original partners, against

the third parties, such clauses will not bind them,

such of the clauses in the partnership deed, which

run contrary to provisions of Indian Partnership

Act, 1932, are void and unenforceable. Such clauses

are also opposed to public policy.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3311 OF 2015

S.P. Misra Vs  Mohd. Laiquddin Khan 

Coram:

R.Subhash Reddy,J.

Dated: October 18,2019

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Whether relinquishment deed of leasehold interest in partnership firm is compulsorily registrable?

According to the Plaintiff, the ``gift`` is not valid as it is not made by registered instrument and attested by two witnesses as required by Section 123 of the Transfer of Property Act . The Defendant, on the other hand, asserts that the share in the partnership property even if it includes immovable assets is not immovable property. In view of the Supreme Court's ruling in Addanki Narayanappa v. Bhaskara Krishnappa MANU/SC/0281/1966 : [1966]3SCR400 . Followed in Commr. of Income Tax, West Bengal v. Juggilal Kamlapat MANU/SC/0130/1966 : [1967]63ITR292(SC) . I uphold the submission of Mr. Vyas, learned Counsel for the Defendant, that the interest of partners in a partnership firm, although it owns immovable property including leasehold interest, is movable property and, therefore, a document evidencing relinquishment of interest of one partner is not compulsorily registrable. 

IN THE HIGH COURT OF BOMBAY

Suit No. 756 of 1977

Decided On: 20.06.1989

Nariman Aspandiar Irani Vs. Adi Merwan Irani

Hon'ble Judges/Coram:

G.H. Guttal, J.

Citation: AIR 1989 Bom 362,1990 MHLJ 265

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Whether legal heirs of deceased partner can invoke arbitration clause after death of partner?

In my opinion, the objection on behalf of the respondent deserves to be rejected. The law as can be understood from the ratio decidendi in Ravi Prakash Goel (supra) is that the death of a partner does not bring into an end the provision pertaining to arbitration and the legal heirs would be entitled to invoke the said arbitration clause. Once there is an arbitral clause, even though the legal heirs of the deceased partner may not be entitled to be inducted as partner, nonetheless their right to pursue the remedy by invoking the arbitral clause does not cease. Invocation of the arbitration clause at the instance of the legal representatives of the deceased partner is clearly maintainable. Thus, the petitioners are right in invoking the arbitration clause and have served the notice on the respondent.

15. Considering the above, in my opinion, as the arbitration clause subsists and the arbitration clause has been invoked by the Attorney of the petitioners on the death of the original partner, i.e., Bhairon Nath Keshwarwani, the application is maintainable. The petitioners have moved through the Attorney, who is their natural mother. The attempt by the respondent to deny the petitioners from constitution an arbitral Tribunal, to my mind, cannot be justified. If there be an arbitration clause, the legal heirs of the deceased partner, in terms of the judgment of Ravi Prakash Goel (supra), are entitled to initiate and pursue the arbitration proceedings. In the case of Ravi Prakash Goel (supra), the arbitral clause was invoked by the legal representatives. There can be no hesitation in holding that in respect of a person on the death of a partner, his legal heirs would also be entitled to invoke the arbitration clause. The respondent and its partners cannot and could not have refused to agree to the appointment of an Arbitrator. In my opinion, therefore, the petitioners have made out a case by invoking the arbitration clause."

IN THE HIGH COURT OF DELHI

Arb. P. 599/2017 and I.A. 1357/2018

Decided On: 19.03.2018

Jyoti Gupta Vs. Kewalsons and Ors.

Hon'ble Judges/Coram:

Navin Chawla, J.

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Whether partners of partnership firm are proper party to eviction suit?

 Having extensively heard Shri C.U. Singh, learned senior Counsel appearing for the Appellant and Mr. Sanjeev Mahajan, learned Counsel appearing for the Respondents, we are of the view that for properly adjudicating the issue before the Rent Controller in Eviction Petition No. 18/2010, in view of the contentions taken by the parties, both the firm in the name and style of K.K. Lee and all its partners should be on the array of parties as proper party. No doubt, they are not necessary parties form the point of view of the Eviction Petitioners, but the Court has a duty to see whether the presence of the proper parties would facilitate the complete determination of the matter in dispute. 

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 1345 of 2017 (Arising from Special Leave Petition (C) No. 823/2015)

Decided On: 02.02.2017

Richard Lee Vs. Girish Soni and Ors.

Hon'ble Judges/Coram:

Kurian Joseph and A.M. Khanwilkar, JJ.

Citation:2017(4) MHLJ 48

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Whether simultaneous penalties can be imposed on partners and partnership under customs Act?

It is thus clear from the principles of law as enunciated in the above decisions of the Supreme Court, it would not be appropriate to read that only when the partners knowingly do certain acts or omissions or when only they have the prior knowledge, that their acts amount to contravention of the provisions of Section 111 of the Act which would lead to confiscation of goods, only in that case they can be held liable for penalty under Section 112(a) of the Act. Such an interpretation would lead to reading something in section 112(a) which is expressly kept away by the Legislature. The legislature has intended exclusion of mens rea into section 112(a) of the Act in dealing with contravention of Section 111 of the Act. This is clear as the Legislature does not use the words 'knowingly' or 'willfully' or 'intentionally' in Section 112(a) which can be noted in other provisions, and this is certainly not accidental. If such words which can be considered to be deliberately avoided to be used by the Legislature, if read into the provisions of Section 112(a), it would render Section 112(a) nugatory resulting in defeating what is intended by the Legislature. The firm and the partners thus can in a given case be subjected to a simultaneous penalties for the contravention of Section 111 of the Act resulting into confiscation of the goods, however the same would be subject to the either of the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention, which is a safeguard inherently provided by the Act. Thus as regards use of the word "abets" inSection 112(a) of the Act, it may be observed that same would not attract the Rule of mens rea. Further it is well settled that a penalty is imposed under the Act for such acts which are in the nature of breach of a civil obligation and by an adjudicatory proceeding, different from criminal proceedings before a Criminal Court and thus would not attract the Rule of mens rea.

Bombay High Court

M/S. Amritlakshmi Machine Works vs The Commissioner Of Customs, ... on 29 January, 2016

   ORDINARY ORIGINAL CIVIL JURISDICTION

    CUSTOMS APPEAL NO. 100 OF 2012

 CORAM:  M.S.SANKLECHA, 
         M.S.SONAK &
        G.S.KULKARNI, JJJ.
Citation:2016 CRLJ(NOC) 216 Bom(FB)
Read full judgment here:click here

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Whether executing court can execute decree against partners of firm when decree is against partnership firm?

The question is whether in such circumstances an executing Court can go behind the decree & give the relief to the appellant which was expressly denied to him in the suit. The question so posed can only have one answer. It is a well-settled principle that a Court executing a decree cannot go behind the decree: it must take the decree as it stands, for the decree is binding and conclusive between the parties to the suit. If the contention of the appellant were to be accepted, it would contravene the said principle; for, while the decree as construed by us, has directed that it should not be executed against the personal properties of the partners, the executing Court would be directing execution against the said partners. While the decree excluded persona] liability, the executing Court would be imposing the same. This cannot obviously be done.

IN THE SUPREME COURT OF INDIA

Decided On: 08.09.1959

Appellants:Topanmal Chhotamal
Vs.
Respondent:Kundomal Gangaram and Ors.

Hon'ble Judges/Coram:
B.P. Sinha, P.B. Gajendragadkar and K. Subba Rao, JJ.

Citation:AIR 1960 SC 388

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Whether award passed in reference to arbitration at instance of one of partners without specific consent of others is binding on firm?

The Division Bench of this Court, in the matter of Bhagvan Manaji Marwadi and others v. Hiraji premaji Marwadi, reported in A.I.R. 1932 Bom. 516 held that award passed in a reference to arbitration at the instance of one of the partners without specific consent of others is not binding on the firm is a well settled law. Indeed this principle of law is well settled since 19th century as is revealed from the judgment of the Division Bench in the said case which has referred to the various decisions right from 1825 onwards till the date of delivery of decision. It refers to the earlier decisions in the matters of Datoobhoy Hassum and others v. Vallu Mahomed Rahimtulla and others, reported in 1899(1) Bom.L.R. 828; Vallabhdas Narandas & Co. v. Keshavlal Himatlal, reported in A.I.R. 1927 Bom. 428 and Gopal Das v. Baij Nath and others, reported in MANU/UP/0321/1925 : AIR1926All238 as well as in the case of Stead v. Salt 1825 (3) Bing. 101 : 10 Moore 389 : 3 L.J.C.P. 175 : 28 R.R. 602. All these decisions are referred to in Bhagvan Manaji's case and considering the well established law on the point in issue, there cannot be any question of ratification or waiver of right as such of the appellant in relation to the award in question and hence the third point is to be answered in negative.

Arbitration - reference - Sections 30 and 33 of Arbitration Act, 1940, Article 119 of Limitation Act, 1963, Sections 18, 19 and 22 of Partnership Act, 1932 - appeal filed against rejection of objections filed under Section 30 and 33 to award dated 06.11.1981 - objections were filed within period of limitation - no consent by other partners to agree to refer dispute to arbitration - appellant firm had not ratified agreement of reference - mere silence on part of other partners cannot be considered or presumed to ratify an act which had no legal sanction - held, objections filed by appellants allowed.
BOMBAY HIGH COURT

J.J.L.B. Engineers and Contractors through its partner Balabeersingh Vs. Manmohan Harijinder and Associates and Anr.

Reported in : 2001(2)ALLMR149; 2001(3)BomCR577

Judge : R.M.S. Khandeparkar, J.

Decided On : Oct-03-2000

Case Number : Appeal from Order No. 16 of 1986

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