Equivalent citations:

1993 SCR (1) 58, 1993 SCC (1) 589







Date Of Judgment –


Acts –

Arbitration Act, Registration Act, Indian Partnership Act


A business was run in collaboration consisting of 6 brothers namely four appellants and respondents 1 and 2.in due time, conflicts arose among the 6 brothers regarding the business run by them. By addressing the disputes to three arbitrators, they entered into a negotiable agreement that would serve their purposes. After lending an attentive ear to the parties, they entered upon the reference and circulated a draft award. After contemplating the reaction of the squabblers, a final award was drafted by the arbitrators where each one of the 6 brothers got their fair proportion of the valuables and worldly riches. Some of the disputants filed a petition pleading for a direction to the arbitrators to lodge their award in court; a petition requesting the court to pass a decree in terms of the award was also submitted to the court. 

Two other squabblers filed a petition under section 30 of the arbitration act to set aside the award. All these matters were given an ear to by a single judge. It was contended before him that having regard to the allotment of partnership properties including immovable objects under the award. Registration of the award was obligatory under section 17(1) of the registration act and since it lacked registration the court had no jurisdiction to consider it as the rule of the court and grant a decree in terms thereof. 

Ratio Of The Court:

SC. Addanki Narayanappa V. Bhaskara Krishnappa –  

The members of the two joint families, the Addanki family, and the Bhaskara family had thrown themselves into a partnership for running a business of hulling rice. Each family was given half share in that venture. The capital required for the business consisted of certain lands possessed by the two families. In the course of business, the firm attained more lands. Differences arose and a suit for dissolution was filed by the members of the two families. All the members were made parties to the suit either as plaintiffs or as defendants. The Bhaskara family grappled within the boundaries of defense that the partnership was disintegrated back in 1936 and the matter was brought to an end between the two families under a karat executed in favor of Bhaskara Gurappa Setty, the head of the Bhaskara family, by 5 members of the Addanki family representing that family. The defendants argued that the plaintiffs had no cause of action and the suit for dissolution of partnership and accounts was not maintainable.

In Commissioner of Income – Tax, West Bengal, Calcutta v. JUggilal Kamlapat

This court pointed out that the deed by one in which one person releases his legal right to the property – the deed of relinquishment, was to serve the interest of the three brothers in the assets of the partnership firm in favor of the Trust and consequently did not require registration even though the assets of the partnership included immobile objects.

Madhya Pradesh v. Dawes Cine Corporation – 

After the dissolution, a pact was decided between the farmers that the theaters should be returned to their actual owners.

U.P. v. Bankey Lal Vaidya – 

This court pointed out that on the dissolution of the partnership, the assets of the firm are valued and the partner is paid a certain amount in lieu of the share of his assets. The transaction is not a sale, exchange, or transfer of the firm and the amount received by the partner cannot be considered as capital gains.

Malabar fisheries co. Calicut v CIT

No separate rights were given to the firm as such and the partners jointly own the assets of the partnership. The distribution, division, and allotment of the assets are a resulting factor of the mutual adjustments between the partners and there is no chance of the abolition of the firm’s rights in the partnership assets amounting to the transfer of assets within the meaning of s. 2(47) of the act.

Decision Of The Court: 

The Supreme Court held that the stock of property acquired by the firm in the course of business shall constitute the property of the firm unless the firm provides otherwise. It further held that since the partnership is not a legal entity and is only a succinct part,  where each partner has beneficial interest and he can never claim any earmarked portion. Therefore when he receives any property from the residue it cannot be evaluated that he had a definite limited interest in the property and there is the transfer of the remaining interest in his goodwill within the meaning of section 17 of the Registration Act.

The case analysis has been done by Shruti Bose, a student at Christ (Deemed to be University), Lavasa.

The case analysis has been edited by Shubham Yadav, a 4th-year law student at Banasthali Vidyapith,

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