N.K. Jeeju v. Baiju, Shaju & Latheesha

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **&** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN THURSDAY, THE 12[TH] DAY OF JANUARY 2023 / 22ND POUSHA, 1944 RFA NO.201 OF 2022** **AGAINST THE JUDGMENT IN O.S.NO.40/2019 OF SUB COURT,** ## **VADAKARA** **-------** ## **APPELLANT/PLAINTIFF:** **N.K.JEEJU, AGED 53 YEARS, S/O.LATE N.LAKSHMANAN, ESSAR CITY QUEEN, FLAT NO.IE, NARAYANA NAGARAM, VADAKARA, KOZHIKODE DISTRICT–673101.** **BY ADVS. BIJU ABRAHAM B.G.BHASKAR** ## **RESPONDENTS/RESPONDENTS:** 1 **BAIJU, AGED 52 YEARS, S/O.N.LAKSHMANAN, NARIKKALATHIL HOUSE, PALAYADNADA, VADAKARA–673101.** - 2 **SHAIJU, AGED ABOUT 50, S/O. N.LAKSHMANAN, NARIKKALATHIL HOUSE, PALAYADNADA, VADAKARA–673101.** 3 **LATHEESHA, AGED ABOUT 48, D/O.LAKSHMANAN, MOOPIL HOUSE, MANGATTERY P.O., THIRUR TALUK, MALAPPURAM – 676105.** **BY ADVS. R.PARTHASARATHY SEEMA(K/893/2000)** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 04.01.2023, THE COURT ON 12.01.2023 DELIVERED THE FOLLOWING:** RFA No.201/2022 2 ## **A.MUHAMED MUSTAQUE & SHOBA ANNAMMA EAPEN, JJ. ---------------------------------------------RFA No.201 of 2022** **---------------------------------------------Dated this the 12[th] day of January, 2023** ## **JUDGMENT** ## **A.Muhamed Mustaque, J.** The dispute in this appeal and the suit is in respect of the land where Hotel Sree Krishna International of Vadakara Taluk is housed. The plaintiff and defendants are the children of late Lakshmanan. The plaint schedule property wherein the Sree Krishna International Hotel was built, originally held by the plaintiff and defendants and their parents. They formed a partnership firm in the year 2001 to run Sree Krishna International Hotel. The father and mother were partners of the firm and they are no more. Finally, the partnership was reconstituted with the plaintiff and defendants after the RFA No.201/2022 3 demise of the mother in the year 2007. In the year 2010, the plaintiff and the second defendant retired from the partnership firm with effect from 31.3.2010. Defendants 1 and 3 are the present partners of the firm. The plaintiff and second defendant claimed that the immovable property is not an asset of the partnership firm though it is being used for partnership business. Defendants 1 and 3 contended that it was an asset of the firm and by a family arrangement, the plaintiff and second defendant retired from the partnership firm, and also released all their rights, interest and share in the partnership business including over its asset in favour of defendants 1 and 3. Accepting the contention of defendants 1 and 3, the trial court dismissed the suit. Accordingly, the appeal was laid by the plaintiff. RFA No.201/2022 4 2. The learned counsel for the appellant argued that the mere use of immovable property by a partnership firm will not make the property as the asset or capital of the firm. The learned counsel pointed out that the partnership deed does not indicate bringing the immovable property as the asset of the firm. 3. The plaintiff was not examined and no document was produced on his side. The plaintiff summoned X1, a Will executed by his parents from a bank to buttress the claim that as per the Will, all the properties belonging to his parents were equally divided by among the children. The Will was executed in the year 2003. The bequeath includes the immovable property wherein Sree Krishna International Hotel is being run. The Will was relied on to claim that the property was never treated as the asset of the firm but as the individual property RFA No.201/2022 5 of the partners. 4. The learned counsel for the respondents placed reliance on the documents produced on the side of the respondents. Ext.B6 is the original partnership agreement. Clause 4 and 17 in Ext.B6, according to the learned counsel for the respondents, would go to show that the immovable property is the asset of the partnership firm. The learned counsel also referred to Ext.B7 agreement of release executed by the father of the plaintiff and defendants, namely, Lakshmanan. In that, it is specifically mentioned that all the assets and liabilities of the partnership firm would continue with existing partners who will continue the partnership business. Placing reliance on the family arrangement referred in Ext.B10 settlement agreement, the learned counsel argued that the entire Sree Krishna International Hotel RFA No.201/2022 6 has been allotted to defendants 1 and 3. In the release deed, produced as Ext.B11, it was stipulated that the assets and liabilities of the firm would be with continuing parties. 5. The simple point to be considered in this case is whether the plaint schedule immovable property belongs to the partnership firm or not. 6. Section 14 of the Indian Partnership Act 1932, states that the property of the firm includes all property and rights and interests in the property originally brought into the stock of the firm. 7. The learned counsel for the appellant Sri.B.G.Bhaskar, placing reliance on the judgments of this Court in **Commissioner of Gift Tax v. M.A.Unnerrikutty [2007 KHC 5085]** , **George V.J. and Others v. V.V.George and Others [2010** **(2) KHC 674]** and the judgment of the Apex Court in **Gannmani Anasuya and Others v. Parvatini** RFA No.201/2022 7 ## **Amarendra Chowdhary and Others [2007 KHC 4343]** , argued that if the partners have no intention to convert individual property as a property of the firm, mere usage of immovable property of individual partners is of no consequence to hold that the property belongs to the firm. 8. The partnership firm business is a hotel business. They have constructed the hotel building in the immovable property belonging to all partners. There is no requirement of a formal conveyance of the right and interest of the partners to convert it as the asset of the firm. It is to be noted that the firm has no assets other than the hotel building and immovable property as appurtenant land. In Ext.B6 partnership agreement, the partners agreed to put up a building in the plaint schedule land (See Clause 4). Clause 17 in Ext.B6 is the reproduction of the statutory RFA No.201/2022 8 provision as referrable under Section 14 of the Indian Partnership Act. The stipulation clearly indicates the intention of the parties to hold the property as that of partnership. The family arrangement was arrived at on 18.6.2010 consequent upon the disputes among siblings. There were mediators to resolve the disputes. It was in the mediation, the disputes were resolved. Consequent to the resolution of the mediation a formal family arrangement was executed between the parties. In that family arrangement, Sree Krishna International Hotel in entirety was allotted to defendants 1 and 3. It is also to be noted that the plaintiff and second defendant were also reciprocally given assets and right in Bharat Gas Agency etc. commonly belonging to them. This reciprocal arrangement clearly indicates that tangible benefits have been received by both parties as RFA No.201/2022 9 well. The family arrangement as reflected in Ext.B10 itself did not create any new interest or title but was reduced to writing, reflecting the family arrangement orally settled in the mediation. In **Tek Bahadur Bhujil v. Debi Singh Bhujil and others [AIR 1966 SC 292]** , the Apex Court held as follows: ' _Family arrangement as such can be arrived at orally. Its terms may be recorded in writing as a memorandum of what had been agreed upon between the parties. The memorandum need not be prepared for the purpose of being used as a document on which future title of the parties be founded. It is usually prepared as a record of what had been agreed upon so that there be no hazy notions about it in future. It is only when the parties reduce the family arrangement in writing with the purpose of using that writing as proof of what they had arranged and, where the arrangement is brought about by the document as such, that the document would require registration as it is then that it would be a document of title_ RFA No.201/2022 10 _declaring for future what rights in what properties the parties possess.'_ 9. Ext.B11 release deed executed by the plaintiff and the second defendant would go to show that it was executed to honour the family arrangement and acknowledging that the assets and liabilities of Sree Krishna International Hotel are taken over by defendants 1 and 3. The reliance placed by the learned counsel for the appellant/plaintiff in the Will may not have much significance in view of the fact that the immovable property referred in the Will was already vested with the firm. It is to be noted that Ext.B10 is the settlement agreement executed between the plaintiff and defendants based on settlement in mediation. The law does not cast obligation to register such family arrangement. The Apex Court in **Addanki Narayanappa v. Bhaskara Krishnappa [1966 KHC** RFA No.201/2022 11 **601]** opined that such document is not compulsorily registerable. In the light of the above discussions, we find no reason to interfere with the impugned judgment. Therefore, the appeal fails and it is dismissed. The parties are directed to suffer their respective costs. **Sd/A.MUHAMED MUSTAQUE, JUDGE** **Sd/SHOBA ANNAMMA EAPEN, JUDGE** **ln**