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TMI Blog1965 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... o is the petitioner in this Writ Petition. (4) The preamble portion of the instrument recites that Donty Bheemaiah, the father of the first party and the second party constituted a partnership firm with equal shares under a registered deed of partnership dated 3-11-1956 and were carrying on business. Both parties were kartas of their respective families. Donthy Bheemiah died on 24-11-1961. After his death the first party who became the karta of the family, became the partner in place of Donthy Bheemiah. It is further recited that the accounts of the said business were taken and the assets and liabilities and profits and loss of the firm were ascertained on 13-4-1962, the correctness of which was accepted by both parties. By mutual agreement the first party retired from business from 16-4-1962. (5) The operative portion of the instrument states that the first party shall have nothing to do with the business carried on by the partnership that the entire business is left solely to the second party with all its assets and liabilities and that the business shall henceforth be carried by the second party in his own name and in his own building for his own profit and at his own cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12) Mr. M.P. Somasekhara Rao, the learned counsel for the Petitioner contended before us that the substance of the transaction evidenced by the instrument, is a release by which the first party relinquishes certain of his rights and interests in certain properties of the dissolved firm and that there is a consequent argumentation of the rights and interests of the second party. On the other hand, the learned Government Pleader contended that the transaction in substance is a conveyance of half the undivided interest of the first party in certain assets of the erstwhile partnership firm in favour of the second party. (13) The question, as formulated and referred to by the Division Bench does not require us to consider whether the instrument in question is an instrument of partition between the first party and the second party. Further, the latter question is settled by the following pronouncement of a Full Bench of this Court in Nanjunda Setty v. State of Mysore 1963(2) Mys LJ 75(AIR 1964 Mys 124):-- .......Where the release results in the releaser getting exclusive right to a portion of the common property, what happens in reality is a division of the common property. If, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction has to be looked into In Nanjunda Setty's case. 1963(2) Mys LJ 75(AIR 1964 Mys 124)(FB) two sons of who were members of a Hindu undivided family with their father, executed two separate deeds each releasing all his rights and interests in the joint family property on receipt of a cash consideration paid out of the joint family property. Though these two deed were styled as 'Release Deed' the Full Bench of this Court held that these two intended to be achieved by those deeds was to divide the joint family property. (20A) Section 46 of the Indian Partnership Act provides that on the dissolution of a firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights. Thus, on the dissolution of a firm the erstwhile partners will be co-owners of the properties of the firm. Until such property is distributed among the partners according to their rights, each of the partners will have an undivided share or interest in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited to those things which were specially in the contemplation of the parties when the release was executed. This rule is good law in India as in England........ (24) In the above case the Supreme Court was considering how the general words of a release should be construed. Their Lordships laid down that the general words of a release should be understood as referring to a state of things which were in the contemplation of the parties at the time of the deed and not to a state of things brought about by subsequent events and not in the contemplation of the parties at the time of the deed. I do not see how these observations support the contention of Mr. Somasekhara Rao that a partial release of the rights and interest of the release can be treated as a release. (25) However, I think it is not necessary to express a final opinion on testator question whether the instrument in question is a release if the instrument can be construed as a conveyance. (26) Section 6 of the Act reads as follows:-- 6. Instruments coming within several descriptions in schedule.--Subject to the provisions of the last preceding section, an instrument so framed as to come within two or more of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguishment of the rights and interest of the first party in certain specified properties of the dissolved firm and corresponding augmentation of the rights and interests of the second party, in consideration of a certain sum of money paid to the first party, there is no reason why the transaction should not be regarded as a sale of the undivided interest of the first party to the second party In this transaction there is a transfer of a property, namely the first party's undivided where to the second party for a consideration of a sum of money. All the requirements of a sale are satisfied. (33) When a co-owner sells his undivided interest in a common property to another co-owner, there is necessarily a release of the interest of the transferor co-owner But this only means that every transaction of sale between two co-owners, is a transaction of release also just as every transaction of partition between two co-owners is, as explained in Nanjunda Setty's case 1963(2) Mys LJ 75: (AIR 1964 Mys 124 (FB), also a transaction of mutual release. (34) Every sale may not involve a release. A sale between two persons who had no prior common interest in a property sold, will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently the document ought not to be required to be stamped as a conveyance. (37) With all respect to their Lordships it appears to me that their Lordships have not set out correctly the definition of the term conveyance in the Mysore Stamp Regulation, 1900. Section 2(9) of the Mysore Stamp Regulation, 1900, s it stood at the time this decision was rendered reads as follows: 'Conveyance' includes a conveyance on sale and every instrument by which property, whether movable or immovable is transferred inter vivos and which is not otherwise specifically provided for by Schedule I. (38) The definition of the term 'conveyance' in S. 2(1)(d) of the Mysore Stamp Act, 1957, is exactly the same as that in S. 2(9) of the Mysore Stamp Regulation 1900, except for the absence of the figure I after the word 'Schedule' (39) The term 'conveyance', as defined in the Mysore Stamp Regulation 1900, as well as in the Mysore Stamp Act 1957, consists of two parts namely: (i) a conveyance on sale and; (ii) every instrument of which property transferred inter vivos and which is not otherwise specifically provided for by the schedule; (40) I think the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the conveyance, the partnership property. The conveyance is made to the continuing partner but, whether made to him or to any other person, it is for all purposes a sale of the property in question in consideration of the price or purchase money of 1,10,000 pounds. (44) Piott B who agreed with Kelly C.B. observed as follows: This appears to me to be substantially a conveyance of property 'upon a sale' If this transaction had taken place between a third person not a member of the firm and Mr. Back there would not have been a doubt about the stamp duty being payable and in my judgment the fact of its taking place between Mr. Back and an old member of the firm makes no difference. (45) In Phillips v. Commissioners of Inland Revenue, (1867) 2 Ex. 399on dissolution of a partnership a deed was executed, by which, after reciting that it had been agreed that the share of the retiring partner in the real assets of the firm should be taken by the continuing partners and that he should be allowed in account a sum of 17,313 pounds as an equivalent for the value of his share, the retiring partner in consideration of the sum of 17,313 pounds conveyed his share of the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sibilities you are liable I have duly given this release (in writing) of my free will and pleasure. (49) The question that was referred to the Full Bench of the Bombay High Court, was whether the deed should be stamped as a deed of release or as a conveyance In a very brief judgment Scott C.J., who spoke for the Full Bench held that the document was a conveyance sale of the property namely, the four annas share in the pressing factory. (50) In Board of Revenue v. Murugesa Mudaliar, , three out of five partners of a firm retired from business and executed a deed in favour of the two remaining partners releasing their interest in an immovable property receiving the proportionate value of their shares in cash. The question arose whether the instrument was chargeable to stamp duty as a conveyance under Art. 19 of Schedule 1A of the Indian Stamp Act or under Art. 44 of that Schedule Rajamannar C.J., who delivered the opinion of the Full Bench observed as follows: It is not the case of anyone that there was a decision of the property be metes and bounds and in accordance with the said shares. In such circumstances, the document in and by which the co-owner purports to abandon o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a document under which one Hindu Co-parcener purported to give up his right in the family property in favour of the remaining co-parceners, would not be a deed of conveyance but a deed of release. Their Lordships of the Madras High Court considered this concession as based on an earlier decision of a Full Bench of that Court in (1895) ILR 18 Mad 233. Their Lordships also stated that they followed the principle of the decision of the Full Bench in (1895) ILR 18 Mad 233. (55) In that earlier case, a Hindu son executed on favour of his father, as representing the interest of other members of the family, an instrument by which the son relinquished his interest over the joint family property in consideration of certain lands being allotted to him for life and certain debts incurred by him to be paid It was held that the instrument was a release and not an instrument of partition as it was a deed by which one co-owner renounced his claim for partition against the family property in consideration of a certain income to be enjoyed by him for his life out of certain lands over which he had no power of alienation. (56) The correctness of the decision of the Full Bench of the Madras Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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