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TMI Blog1972 (2) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the Appellate Tribunal was right in holding that the amount of Rs, 3 lakhs transferred by the deceased to his grand-nephews was includible in the estate of the deceased that passed on his death ?" The deceased, Bankatlal Lahoti, was a partner in the firm of M/s. Dayaram Surajmal, which was carrying on business as bankers. On October 4, 1952, he transferred a sum of Rs. 1 lakh each to the three minor grandsons of his deceased brother. The procedure adopted for the transfer was as follows : The deceased drew a cheque for Rs. 3 lakhs against his account with M/s. Dayaram Surajmal. The cheque was in favour of M/s. Dayaram Surajmal. The account of the deceased with the said firm was debited with the sum of Rs. 3 lakhs and on the same day simultaneously the three accounts with the said firm of the minor donees were credited with a sum of Rs. 1 lakh each. The Tribunal had presumed that the transfer was effected in the name of the minor donees as a result of the oral instructions given by the deceased to the firm. The sum of Rs. 3 lakhs thus transferred to the grandsons continued to stand in their names in the accounts of M/s. Dayaram Surajmal till the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 64(1) of the Estate Duty Act. Though the accountable person was all along urging before the estate duty authorities and the Tribunal that there was a valid gift of an actionable claim, the learned counsel for the accountable person argued in this reference that the transaction amounted to a mere gift of money and it did not involve any transfer of an actionable claim. He contended that a partner is not a creditor of the firm in which he is a partner in respect of the amount standing to his credit and there is no jural relationship of a creditor and debtor between the partner and the firm. In support of his contention the learned counsel relied strongly on the decision in Mohammed Kassim v. Controller of Estate Duty. Section 3 of the Transfer of Property Act defines an "actionable claim" to mean a claim to any debt, which the civil courts recognise as affording the grounds for relief, whether such debt be existent, accruing, conditional or contingent. Therefore, the question is whether, in respect of the amount standing to the credit of a partner, he has any claim to recover the money which the civil Courts recognise as affording the ground for relief. In Mohamad Kassim v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a firm against the firm unless the firm is registered, suggests that if the firm is registered, a suit by a partner against the firm would be maintainable. Order 30, rule 9, of the Code of Civil Procedure provides that a suit between a firm and one of its members may be instituted and Order 30 shall apply to such suits. All these provisions, in our opinion, suggest that, though in law the firm as such has no legal entity, a partner would be entitled to claim repayment of the money advanced by-him to the firm and such a claim could also be enforced in a court of law. In Karri Venkata Reddi v. Kollu Narasayya ; in a suit by one of the partners against the other partner for recovery of a sum of money, a Division Bench of this court held as follows : "It may be taken generally that if the account sought is in respect of a matter which though arising out of the partnership business or connected with it, does not involve the taking of general accounts the court will as a rule give the relief asked for, and will now-a-days refuse to interfere only in those cases in which a partial account would work injustice to the other partner." Thus, unless great injustice will be caused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Partnership Act, the learned judges stated : "Thus, the Act recognises a partner advancing moneys to the firm and being entitled to interest at 6 per cent. per annum. We do not consider it necessary to elaborate the point any further. It is sufficient to state that we cannot accept the view of the Tribunal that in no event can a partner who advances money to a firm of which he is a partner occupy the position of a creditor or be said to carry on the business of money-lending," This now takes us to the next question as to whether there was a valid transfer of an actionable claim. Section 130 of the Transfer of Property Act requires that the transfer of an actionable claim, whether with or without consideration, shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent and shall be complete and effectual upon execution of such an instrument. The learned counsel for the accountable person, relying on the decisions in Chimanbhai Lalbhai v. Commissioner of Income-tax, Commissioner of Income-tax v. New Digvijaysinhji Tin Factory, E. S. Hajee Abdul Kareem Son v. Commissioner of Income-tax, Abdul Rahaman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of the gift was assumed by the donee and retained thereafter to the entire exclusion of the donor. The scope of section 10 of the Estate Duty Act has come up for consideration in a number of decisions. In Chick v. Commissioner of Stamp Duties, New South Wales, their Lordships of the Judicial Committee of the Privy Council, while considering a similarly worded clause of the New South Wales statute, held that the donee must not only enjoy possession but entirely exclude the donor from association. Their Lordships distinguished the decision in Munro v. Commissioner of Stamp Duties, on the ground that in that case the gift was of a property shorn of certain of the rights which appertain to complete ownership and that, therefore, the donor cannot, merely because he remains in possession and enjoyment of those rights, be said within the meaning of the section not to be excluded from possession and enjoyment of that which he has given. In George Da Costa v. Controller of Estate Duty, the Supreme Court held that : "The crux of section 10 lies in two parts-(1) the donee must bona fide have assumed possession and enjoyment of the property, which is the subjec-tmatter of the gift, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift itself was made subject to the condition that the funds would be available for the use of the partnership business and, as such, they would be subject also to the control and management by the donor in his capacity as managing partner." These two decisions of this court directly cover the point at issue. In the case on hand, the donor had advanced money to the partnership. He had only a right to claim that money subject to the rights of the partnership. The donor was also alive to the fact that the amount in the partnership firm would continue to be available to the firm and would be subject to the rights of the other partners. Therefore, when the gift was made, the gift should be deemed to have been made only subject to the rights of the partnership to utilise those funds. The gift in such a case was shorn of those rights which belonged to the partnership. It, therefore, follows that section 10 of the Estate Duty Act has no application to the present case. The learned counsel for the revenue strongly relied on two decisions of the Gujarat High Court-Smt. Shantaben S. Kapadia v. Controller of Estate Duty and Controller of Estate Duty v. Chandravadan Amratlal Bhatt and a re ..... 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