MANU/KE/0194/2013

Equivalent/Neutral Citation: ILR2013(1)Kerala945, 2013 (1) KHC 767, 2013(1)KLJ770, 2013(1)KLT855

IN THE HIGH COURT OF KERALA

W.P. (C) No. 28573 of 2011
Decided On: 21.02.2013
Park Residency Vs. State of Kerala
Hon'ble Judges/Coram:
T.R. Ramachandran Nair, J.
Counsels:
For Appellant/Petitioner/Plaintiff: P.K. Babu
For Respondents/Defendant: Viju Thomas Government Pleader
Case Note:
Transfer of Registry Rules, 1966 (Kerala) - Rule 2--Partnership reconstituted--
Property of firm vesting in the reconstituted firm--Revenue Department
should effect transfer of registry of immovable property to the name of the
reconstituted firm without insisting on production of registered document
evidencing transfer of property--Partnership Act, 1932 (Central Act 9 of
1932)--Section 14.
Petitioner is a partnership firm named 'Park Residency'. Earlier it was known
as 'Maria Residency'. The partnership had purchased various plots of land.
When the partnership was reconstituted, property of the firm vested in the
reconstituted firm. When petitioner applied for transfer of registry, Tahsildar
declined to effect transfer of registry on the ground that there is no registered
document evidencing transfer of ownership of land. Revision was taken to the
District Collector who did not interfere with the impugned order. Petitioner
approached the High Court seeking direction to effect transfer of registry. The
learned Single Judge held that once the firm is reconstituted, property of the
first firm becomes property of the reconstituted firm and registered document
is not required to prove transfer of ownership. Setting aside order of the
Tahsildar and District Collector and directing Tahsildar to effect transfer of
registry, the Court;
Held:
In a matter like this, where it requires the transfer of registry in a situation
like this, the absence of a specific provision under the Transfer of Registry
Rules need not deter the authorities from accepting the application and acting
upon it. There is no prohibition under the rules also. By the operation of law,
the firm under a new name continues to be the owner of the immovable
properties. Therefore, the owner has got every right to get mutation of the
properties in its name. Otherwise, the petitioner will be left out without any
remedies in spite of the fact that the firm has been reconstituted and the
property also stands in its name.

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 JUDGMENT
T.R. Ramachandran Nair, J.
1. The challenge is against Ext. P12 order passed by the District Collector rejecting the
Revision Petition filed by the petitioner under the Transfer of Registry Rules. The
petitioner is a partnership firm represented by its Managing Partner, which is known as
M/s. Park Residency. The partnership firm was initially named as M/s. Maria Residency
which has been conducting hotel business. Four items of land, viz. 4.5 ares and 0.52
ares in Sy. No. 339/6, 1.71 ares in Sy. No. 339/7 and 0.58 ares in Sy. No. 335/1 were
purchased in the name of the partnership as per sale deed No. 2155/03, a copy of
which is produced as Ext. P9. After the purchase, mutation was effected and Thandaper
No. 6185 of Ernakulam Village was allotted.
2 . Two new partners were inducted and the partnership was reconstituted. After
reconstitution, the firm is known as M/s. Park Residency. Ext. P6 is the copy of the Deed
of Reconstitution of partnership and Ext. P7 is the copy of the certificate containing
registration in the name of the new partnership with effect from 17.4.2010. Ext. P8 is
the copy of the deed of amendment to the partnership.
3. The Tahsildar was approached by filing an application for mutation in favour of M/s.
Park Residency, which was rejected by Ext. P1 order. The same was challenged before
the District Collector by filing a revision petition and the final order is produced as Ext.
P12. The authorities have taken the view that the application for mutation cannot be
allowed as there is no document of conveyance of property and what is involved is the
reconstitution of the partnership by inducting two partners and change of Firm's name
and the same do not come within the purview of Transfer of Registry Rules. For
effecting transfer of registry, voluntary transfer is required.
4. Heard learned counsel for the petitioner and learned Government Pleader.
5 . Learned counsel for the petitioner submitted that it is a case where the existing
partnership was reconstituted by inducting two partners which alone is the change and
a new name was also adopted. The assets and liabilities of the old firm will now be
statutorily vested with the new firm and therefore the properties including the
immovable properties are automatically transferred in the name of the new firm. It is
therefore submitted that when there is a deed of reconstitution of the partnership and
the legal formalities required have been fulfilled and the registration number has been
allotted in the new name, mutation has to be effected. It is submitted that unless the
transfer of registry is made, the properties will remain in the old firm name which is no
longer there. Reliance is placed on R. 17 of the Transfer of Registry Rules to show that
any transfer of registry case, can be disposed of by the Tahsildar.
6 . Learned counsel for the petitioner relied upon the decision of a Full Bench of the
Andhra Pradesh High Court in Addanki Narayanappa and others v. Bhaskara Krishtappa
& Ors. (MANU/AP/0184/1959 : AIR 1959 A.P. 380) and later decisions of the Apex Court
in S.V. Chandra Pandian v. S.V. Sivalinga Nadar (MANU/SC/0450/1993 : (1993) 1 SCC
589), M Khadervali Saheb (dead) by Lrs. v. N. Gudu Sahib (dead) & Ors.
(MANU/SC/0088/2003 : (2003) 3 SCC 229) and that of this Court in Noble Kuries v.
Sebastian (MANU/KE/1112/2009 : 2009 (4) KLT 806) and George v. George(2010) 2
KLT 692) to drive home the principles relevant in the matter. It is submitted that when a
firm is dissolved, a document recording the same and relinquishing interest of partners
will not require a registration under S. 17(1)(b) of the Registration Act. It is submitted
that in the light of the declaration of law made by the Apex Court and this Court, what

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is of importance is only the intention of the parties and even in the case of
reconstitution of a partnership firm by way of deed, the reconstituted firm can maintain
an application for transfer of registry.
7. In the first of the decisions, viz. Addanki Narayanappa's case (MANU/AP/0184/1959 :
AIR 1959 A.P. 380) it was held that the interest of a partner in partnership assets
comprising of movable and immovable property cannot be regarded as a right or
interest in immovable property within the meaning of S. 17(1)(b) of the Registration
Act.
8 . In the decision of the Apex Court in S.V. Chandra Pandian's case
(MANU/SC/0450/1993 : (1993) 1 SCC 589) the question considered was whether an
arbitration award directing dissolution of partnership firm and providing for distribution
of residue or surplus properties of the dissolved firm among partners after settlement of
accounts, is required to be registered under S. 17(1) of the Registration Act. In para 18
the nature and character of the partnership property has been stated thus:
The property failing to the share of the partner on the distribution of the
residue would naturally then belong to him exclusively but so long as in the eye
of law it is money and not immovable property there is no question of
registration under S. 17 of the Registration Act.
The above legal position was reiterated in N. Khadervali Saheb's case
(MANU/SC/0088/2003 : (2003) 3 SCC 229).
9. This Court in Noble Kuries v. Sebastian (MANU/KE/1112/2009 : 2009 (4) KLT 806)
examined the question whether after reconstitution of a firm, it requires a fresh
registration under the Registration Act. In para 10 it was held as follows:
Section 59 of the Act deals with registration of the partnership. There is no
provision in the Act which states that when there is reconstitution of a firm
which is already registered, a further registration is required after such
reconstitution. What is required is only intimation to the Registrar of Firms
about the reconstitution/change as provided under Ss. 60 to 63 of the Act. No
separate registration is necessary where there is reconstitution of a continuing
firm.
Therefore, it is clear that no separate registration is required where there is
reconstitution of a continuing firm.
1 0 . In George's case (2010 (2) KLT 692), the question came up for consideration
before this Court was whether a deed of release of his share in the partnership by a
partner, though the partnership owns immovable property, is required to be registered
under S. 17(1)(b) of the Registration Act. It was held that the same is not required. It
was also held that all that is relevant in the conversion of individual partner's property
into that of the partnership or vice versa, is the intention of the parties and no
document registered or otherwise, is necessary. In paragraphs 6 and 7 the legal
position has been explained thus, after considering various decisions of the Apex Court
and the principles contained in the Partnership Act:
Partners may convert which was property of the partnership, movable or
immovable into separate property of the individual partner or property of the
individual partners into property of the firm by agreement which may be
express or implied. What is relevant is the intention of the partners. For such

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 conversion no document, registered or otherwise is necessary. There must be
some evidence to prove that intention. Such intention may even be proved by a
course of conduct, for e.g., by entries in the partnership books. The term
'partnership property' is generally used to denote everything to which the firm,
i.e., all the partners qua the partners can be considered to be entitled. The
partners may be entitled jointly or in common to some property, and the same
persons may happen to be partners, yet the property may not be partnership
property. Even when conversion of individual immovable property of the
partner into property of the partnership is made as per a written instrument, it
does not require registration compulsorily. A deed of release of his share in the
partnership by a partner even though the partnership owns immovable property
is not required to be registered as an instrument under S. 17(1)(b) of the
Registration Act. That is because even though a partner may be a co-owner of
partnership property, he has no right to ask for a share in that property, but
only that the partnership business be wound up including sale of the immovable
property and to ask for his share in the resultant assets. That interest of a
partner in the partnership assets, of movable or immovable property is not a
right, title or interest in immovable property within the meaning of S. 17(1)(b)
of the Registration Act.
This Court also examined the effect of S. 14 of the Partnership Act which reads as
follows:
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.
The above provision will show that 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. After examining the legal effect of S. 14 of
the Partnership Act, it was held that registration is required only in a case where the
retired partners convey their individual immovable property to the partnership or the
continuing partners in their individual capacity. The same is not the situation herein.
Herein, the firm M/s. Maria Residency was granted registration on 9.10.2003 as evident
from Ext. P7. Ext. P9 is dated 14.10.2003. Hence, the property is one acquired by the
firm. In the above judgment, in George's case (supra), in para 6 this Court held that
"the Act does not prescribe any particular mode by which property whether movable or
immovable is to be brought into the common stock of the partnership..........By virtue of
S. 14 of the Act it becomes property of partnership. Conversion takes place by operation
of law under S. 14 of the Act once the intention is expressed and the property is treated
as such. Therefore, it can be seen that the partnership property which stood in the name
of M/s. Maria Residency is statutorily transferred in the name of M/s. Park Residency
after reconstitution and change of name. They have completed all the formalities
including getting registration in the new name as evident from Ext. P7 and executing a
deed of amendment of partnership Ext. P8. In clause 3(a) reads as follows:
3(a) The property extending to 04 Acres 05 sqmts in Re. Sy. No. 339/6, 0.52
Sqmts in Re. Sy. No. 339/6, in 1.71 Sqmts in Re. Sy. 339/7 and 0.58 Sqmts in
Re. Sy. No. 335/1 Thandaper No. 6185 of Kakkanadu Village acquired in the
name of Mr. Kuruvila Augustine as the Managing Partner of The Mariya
Residency as per Sale deed No. 2155/2003 of Thrikkakara Sub Registry dated

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 14/10/2003 is also included in the reconstituted firm 'M/s. PARK RESIDENCY'.
Therefore, the immovable property continues to be the property of the reconstituted
firm. The intention is clear from the said clause. Ext. P8(3) is the resolution adopted by
the partners, resolving that the item of properties acquired in the name of M/s. Maria
Residency will be landed property owned by the reconstituted firm M/s. Park Residency.
The petitioner has also produced Exts. P13 to P15 alongwith LA. No. 15834/2012. Ext.
P13 is the deed of amendment dated 6.10.2012 incorporating various terms and clause
8 reads as follows:
8. The Clause No. 3(a) added by deed of amendment dated 29.08.2004 shall be
substituted for the following clause: 3(a) In the ownership documents of all the
properties of the firm including the property admeasuring 04 Acres 05 sqmts in
Re. Sy. No. 339/6, 0.52 Sqmts in Re. Sy. No. 339/6, in 1.71 Sqmts in Re. Sy.
339/7 and 0.58 Sqmts in Re. Sy. No. 335/1 of Kakkanadu Village in Thandaper
No. 6185 purchased as per Sale Deed 2155/2003 dated 14.10.2003 of
Thrikkakara Sub Registry, the name of the firm shall be substituted and read as
M/s. PARK RESIDENCY instead of M/s. The Mariya Residency wherever
applicable.
The effect of the same is that the name of the firm shall be substituted and read as M/s.
Park Residency instead of M/s. Mariya Residency wherever applicable. Ext. P14 is the
certificate issued by the Chartered Accountant showing that the said immovable assets
form part of the financial statement which is recorded in page No. 9 of the fixed assets
register and Ext. P15 is the copy of the relevant page of the stock register duly
maintained by M/s. Park Residency and attested by the Chartered Accountant.
1 1 . The stand taken by the respondents in the counter affidavit is that transfer of
registry as per R. 2 of the Transfer of Registry Rules, takes place either by (i) voluntary
action or will, (ii) by virtue of decree of civil courts or by revenue sales and (iii) by
succession. The change of name of the firm as Park Residency from M/s. Mariya
Residency will not in any way effect transfer of the land. Learned Government Pleader
therefore submits that the Transfer of Registry Rules will not apply here.
1 2 . Of course, the plain terms of the Transfer of Registry Rules do not envisage a
situation like this, where the properties of the partnership after reconstitution is
statutorily vested in the reconstituted partnership under a new name. There are no other
procedures prescribed apart from the Transfer of Registry Rules to effect mutation.
When we consider the effect of S. 14 of the Partnership Act, it can be seen that the
property herein belongs to the reconstituted partnership firm. It is by operation of law.
All the legal formalities before the Registrar of Firms have been completed also. In a
matter like this, when the firm is reconstituted, there need not be a registered document
for the properties to be held in the name of the partnership. Going by the decision of
this Court in George's case (2010 (2) KLT 692), registration is required only in a case
where the retired partners convey their individual immovable property to the
partnership or the continuing partners in their individual capacity. Such is not the case
here. Therein, this Court had also held that even in the case of conversion of individual
partner's property into that of the partnership or vice versa, it is only the intention of
the parties which is relevant and no document registered or otherwise, is necessary.
This will also support the case of the petitioner herein that no registered document is
required for earmarking the properties owned by M/s. Maria Residency in the name of
M/s. Park Residency. The deed of amendment itself contains various clauses in that
regard which brings out the intention of the parties and the same will therefore be

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sufficient.
13. In a matter like this, where it requires the transfer of registry in a situation like
this, the absence of a specific provision under the Transfer of Registry Rules need not
deter the authorities from accepting the application and acting upon it. There is no
prohibition under the rules also. By the operation of law, the firm under a new name
continues to be the owner of the immovable properties. Therefore, the owner has got
every right to get mutation of the properties in its name. Otherwise, the petitioner will
be left out without any remedies in spite of the fact that the firm has been reconstituted
and the property also stands in its name. Therefore, the Writ Petition is allowed. It is
declared that the petitioner firm is the owner of the properties covered by clause 3(a) in
Ext. P8 and substituted by clause 8 in Ext. P13 after reconstitution of the firm. The
items of properties described therein, being held by M/s. Park Residency, they are
entitled for effecting mutation. Accordingly, Exts. P1 and P12 are quashed. In the light
of the declaration made as above, there will be a direction to the Tahsildar to grant
mutation in the name of the petitioner firm in respect of the properties within a period
of one month from the date of production of a certified copy of this judgment and the
changes will be effected in the Thandaper account accordingly. No costs.
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