S. Saroja vs O.M.S.S. Sinnappa Nadar

V. Balasubrahmanyan, J.—One Sinnappa Nadar was the absolute owner of a non-residential building bearing door No. 127, East Masi

Street, Madurai Town. He is a partner along with three others in a partnership firm called as ''O.M.S. S. Sinnappa Nadar and Sons''. This

partnership firm is carrying on rice hulling business. One of the assets of the partnership firm is a non-residential building, which is also situate within

the Madurai City limits bearing door No. 2/2-A, Old Anuppanadi Road, Madurai.

Sinnappa Nadar had let out the non-residential building of which he was the absolute owner viz.. the building bearing '' door No. 127. East Masi

Street, to one Saroja, wherein the latter carried on a grocery business. In 1974, Sinnappa Nadar filed an application for the eviction of the tenant,

Saroja, from door No. 127, East Masi Street, on the ground that he bona fide required that building to enable him to carry on a retail business of

his own in paddy and rice.

The petition was opposed by the tenant, Saroja. The Rent Controller granted an eviction order accepting the bona fides of the landlord,

Sinnappa Nadar. On appeal, the order of eviction was confirmed by the Appellate Authority. On a revision before this Court filed by the tenant,

Saroja, which came before Varadarajan, J., in C R. P. No. 2634 of 1976, the learned Judge passed an order of remand directing the Appellate

Authority to decide the question whether the rice mill business carried on by Sinnappa Nadar in partnership was carried en in a building of his own

of whether it was carried on in a rented building and in the light of a finding on this question proved to dispose of the appeal afresh.

On remand before the Appellate Authority, Sinnappa Nadar filed two documents. One was a certificate of registration of firms dated 11th

September, 1962, in and by which O.M.S.S. Sinnappa Chettiar and Sons was registered as a partnership firm consisting of Sinnappa Nadar and

two others as partners. The other document, which was received in evidence by the Appellate Authority on remand was the registration copy of a

sale deed of the building bearing door No. 2/2-A, Old Anuppanadi Road, Madurai executed by one Raju in favour of the partnership firm of

O.M.S.S. Sinnappa Nadar and Sons. Based on these two documents the question debated before the Appellate Authority was whether it can be

said that the rice mill business being carried on by the partnership firm O.M.S.S Sinnappa Nadar and Sons in the building bearing door No. 2/2-A,

Old Anuppanadi Road, Madurai, can be equated to Sinnappa Nadar as an individual carrying on business in a building of his own within the

meaning of Section 10(3)(a) (iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. The Appellate Authority held that the building

bearing door No. 2/2 A, old Anuppanadi Road, did not belong to Sinnappa Nadar exclusively, but it belonged to the partnership firm, of which

Sinnappa Nadar was only one among three partners. The Appellate Authority observed that while Sinnappa Nadar had some kind of interest in

the property as a partner, it cannot be said that he was the full or the sole owner of the property. In the result, the Appellate Authority held that

Sinnappa Nadar was entitled to ask for eviction of the premises of the building bearing door No. 122, East Masi Street from his tenant, Saroja,

notwithstanding the fact that the partnership firm of O.M.S.S. Sinnappa Nadar and Sons was carrying on business in 2/2-A, Old Anuppanadi

Road, Madurai. He accordingly confirmed the order of eviction passed by the Rent Controller.

In this revision petition brought by the tenant Saroja, her learned Counsel. Mr. M.R. Narayanaswami urged that the decision of the Appellate

Authority was not based on a proper conception of the relationship of a partner to the assets of the partnership firm. He cited before me a ruling of

the Supreme Court reported in Addanki Narayanappa and Another Vs. Bhaskara Krishtappa and Others, . In the case before the Supreme

Court, the question was whether a release deed executed by a partner of his interest in the partnership firm to the other partners required to be

registered u/s 17 of the Registration Act, 1908, for the reason that some of the assets of the partnership included items of immovable property. The

Supreme Court held that the release deed did not require registration, in the view that the interest of a partner in a partnership firm must be held to

be movable property even though the assets of the partnership included items of immovable property. Although the point to be decided was a

narrow one in that case, turning on the applicability of Section 17(1) of the Registration Act, the Supreme Court laid down clearly that the nexus

was between a partner and the property of the firm in which he was a partner. After referring to the relevant provisions of the Partnership Act,

1932, the Supreme Court held that any property brought in by a partner as his contribution at the time when the partnership was formed or which

may be acquired subsequently in the course of the business of the partnership must be regarded as properties of the firm. During the subsistence of

the partnership, however, no partner is entitled to anything excepting his share of profits. Upon the dissolution of the partnership all that a partner is

entitled to is a share in the surplus after the payment of the creditors. During the subsistence of the partnership no partner can deal with any portion

of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His only right is to obtain such

profits, if any, as fall to his share from time to time, and, upon the dissolution of the firm, to a share in the assets of the firm which remain after

satisfying the liabilities.

Having regard to the legal position as laid down by the Supreme Court on the terms aforesaid, it seemed to me that this decision did not in any way

help the arguments of Mr. Narayanaswamy in the present case. For the building bearing door No. 2/2-A, Old Anuppanadi Road, Madurai,

belonging to the partnership firm of O.M.S.S. Sinnappa Nadar and Sons can by no means be regarded even with reference to a fractional interest

therein as being owned by Sinnappa Nadar. Mr. Narayanaswamy, however, referred to the following sentence from the judgment of the Supreme

Court:

No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in

the property of the partnership.

While this observation in isolation might lead to the impression that the Supreme Court had regarded each and everyone of the partners in a firm as

the owner of a fractional interest in everyone of the assets of the properties, a reading of the entire passage in which the observation occurs, would

not support the view urged by the learned Counsel. Far from holding that a partner in a firm has a fractional share in each and everyone of the

assets of the partnership what the Supreme Court laid down was that the partner had only a right to share in the profits during the subsistence of

the firm and to a share in the surplus assets after the payment of the creditors at the time of the dissolution. It is, no doubt, true that in the strictest

legal sense a partnership firm has no personality of its own. But even so, a provision, such as Section 14 cannot be understood in the light of the

pure theory of the partnership law that a firm can have no legal existence. Section 14 of the Partnership Act reads as under:

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 purpose, and in the course of the 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 acquired for the firm.

This section also has been considered by the Supreme Court in the decision cited above and their decision is that the assets of the firm whether

brought in at the inception of the partnership or acquired by the partnership, as such, in the course of carrying on its business, all must be regarded

as assets of the firm. The only right that the partners have is a share in the profits so long as the partnership runs, and a share in the surplus assets in

the winding up of the partnership business. In the present case, there can be no doubt whatever that the building in 2/2-A, old Anuppanadi Road,

Madurai, is the asset of the partnership. The partnership had already come into being in September, 1962, and this building was acquired by the

partnership only later in November of the same year under a registered sale deed executed by the vendor in favour of the firm as such. I am,

therefore, satisfied that by no stretch of law can the building be regarded as property of Sinnappa Nadar, who was one of the three partners.

Mr. Narayanaswamy then relied on the phraseology of Section 10(?) (a) (iii) of the Act to press home the argument that even the peculiar

interest of a partner in the property of the firm would really bring the building belonging to the firm of O.M.S.S. Sinnappa Nadar and Sons within

the mischief of this provision. This contention bears consideration on an examination of Section 10(3)(a) (iii). The clause reads as under:

10-3(a). A landlord may, subject to. the provisions of Clause (d), apply to the controller for an order directing the tenant to put the landlord in

possession of the building

(i) ...

(ii) ....

(iii) in case it is any other non-residential building, if the landlord or any member of his family is not occupying for purposes of a business which he

or any member of his family is carrying on, a non-residential building in the city, town or village concerned which is his own.

Mr. Narayanaswamy submitted that the requirement of this clause was that the landlord should not have a building, which is his own, within the

city, town or village concerned. His submission was that since Sinnappa Nadar as a partner, had interest in the building in 2/2-A, Old Anuppanadi

Road, Madurai, it must be regarded as a building of his own.

The phrase ''his own'' has been the subject of an interpretation in previous decisions of this Court. In S.S. Purushotham Chettiar Vs. S.

Parasumal Sowcar, , Ramaprasada Rao, J., had to construe a similar expression occurring in Section 10(3)(a)(i) of the Act which contained more

or less the same words as in Section 16(3)(a)(iii),but with reference to a residential building. The learned Judge observed as under at page 277:

It appears to me therefore that the expression ''is not occupying a residential building of his own'' appearing in Section 10(3)(a) (0 should be limited

to the situation where the landlord is not occupying a residential building of which he is the sole owner thereof.

The learned Judge referred to certain earlier rulings of this Court to the same effect. I respectfully agree with the interpretation put on the phrase

building of his own"" by the learned Judge. The true test in this case, on the authorities, must be, whether Sinnappa Nadar can call the building

bearing door No. 2/2-A, Old Anuppanadi Road, Madurai as his own. The answer is that he cannot.

Mr. Narayanaswamy next relied on a judgment of mine briefly reported in Vasudevan v. Ramachandran (1980) 1 MLJ 22(S.N.), in support of

the proposition that all the partners of the firm must be held to be joint owners of the partnership assets and in that sense each partner must be held

to be an owner of those assets. The very basic assumption of this submission is in my judgment, quite erroneous. There is a vast difference

between joint ownership of a property by a number of co-owners, on the one hand, and the ownership of assets by a partnership firm consisting of

a number of partners, on the other. Explanation 1 to Section 6 of the Indian Partnership Act clearly says that the sharing of profits or of gross

return arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners. This

provision is an indication to show that a partner cannot, even though he might, in some remote sense be held to have a fractional interest in the

partnership assets along with other partners, be equated to the position of a co-owner. In my judgment briefly reported in Vasudevan v.

Ramachandran (1980) 1 M.L.J. 22(S.N.), it was observed that one co-owner is by no means the agent of the other co -owner in respect of any

interest in the property. By way of contrasting the jural relationship between co-owners, it may be observed that one partner is always the agent of

the other partners. Indeed, it is often stated that the whole law of partnership is but one facet of the law of agency. The position of the partners

inter se amongst themselves cannot, therefore be equated to that of co-owners for the purpose of holding that where a house belongs to the

partnership as its asset, a partner can be regarded as a co-owner of that property and in that sense he should be held to be a full owner thereof,

within the meaning of the Rent Control Legislation.

For the reasons stated above, the civil revision petition has no merits and is hereby dismissed. While dismissing the petition, I have however to

consider the request made by Mr. Narayanaswamy on behalf of the tenant towards the end of his argument. He urged that some reasonable time

to his client may be granted to vacate the premises. The learned Counsel for the landlord is not adverse to granting time provided it is within

reasonable limits. I think four months would afford adequate time for the tenant to enable him to vacate the premises. I accordingly direct that the

landlord will not execute the eviction order for a period of four months from to-day. No costs.