NON REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4726 OF 2010

VINAY EKNATH LAD …....APPELLANT

VERSUS

CHIU MAO CHEN …...RESPONDENT

JUDGMENT

ANIRUDDHA BOSE, J.

The appellant  before  us  is  the  owner  of  a  premises

comprising of a shop room, numbered 3 in the ground floor

of  Sabari  Complex,  Residency  Road,  Richmond  Town,

Bengaluru 560025. This premises is the subject of dispute

in this appeal.  The suit, out of which this appeal arises, was

instituted  by  “Sri  Sabari  Corporation”  styled  as  a  co-

ownership  firm  comprising  of  seventeen  individuals.   All

these individuals were also described as plaintiffs (a) to (q)

in  the  suit  in  the  capacity  of  co-owners.   They  shall  be

referred to later in this judgment as the “original plaintiffs”.

The  mother  of  the  sole  respondent  was  inducted  as  the

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lessee of the subject-premises on 10th May, 1978. At that

point of time, the owner of the premises was a partnership

firm with the same trade name.  Admitted position is that

on  his  mother’s  death  in  the  year  1996,  the  respondent

became the tenant of the subject premises.  The original

plaintiffs through their  learned Advocates issued a notice

terminating the lease in terms of Section 106 of the Transfer

of Property Act on 25/27th September, 2006.  In this notice,

the nature of occupation has been interchangeably used as

“tenancy”  and  “lease”,  but  that  factor  is  not  of  much

significance for determining the rights of the parties in this

appeal. The suit was instituted in the Court of the XII City

Civil  Judge,  Bangalore  on  15th November  2006  claiming,

inter-alia,  delivery  of  vacant   possession  of  the  subject

premises and mesne profit.  We shall subsequently refer to

the respondent as defendant. The original plaintiffs claim to

have had derived their right, title and interest to the subject

premises from the partnership firm after its dissolution. It

has been contended on their behalf that some of them are

the erstwhile  partners  and others  are  their  relatives  and

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they came to own the subject premises as residue property

in accordance with Section 48 of the Indian Partnership Act,

1932. The Trial Court decreed the suit for possession as well

as  mesne  profit  from  the  date  of  service  of  notice  of

termination. The defendant was given six months’ time to

vacate the subject-premises.  The defendant, however, was

successful  in  his  appeal  before  the  High  Court  and  the

judgment  of  the  Trial  Court  was  reversed.  The  present

appellant  is  the  successor-in-interest  of  the  seventeen

individuals who had instituted the suit in the name of joint

proprietary  firm.  This  appellant  claims  to  have  had

purchased the subject premises from the original owners.

His substitution in this appeal was allowed by this Court by

an order passed on 7th January, 2010.

2. The main question which arises for  determination in

this appeal is as to whether the original plaintiffs had the

locus to institute the suit or not. The suit was resisted by

the defendant on the ground that the said plaintiffs could

not have had terminated the tenancy as they did not have

jural relationship with the defendant to initiate the action. It

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has been urged in support of this contention that there was

no attornment in this case and no public notice was issued

on dissolution of the firm as per the provisions of Section

45(1)  of  the  1932  Act.  The  original  plaintiffs’  stand  on

devolution of the subject premises has been contested by

the  defendant.  It  is  his  contention  that  if  the  devolution

came through at  all,  the  process  of  such devolution was

through  conveyance  of  immovable  property  but  without

effecting  registration  on  payment  of  proper  stamp  duty.

Learned counsel for the defendant submitted that for this

reason, the instruments through which such devolution is

sought to be established ought not to be taken cognizance

of  in  a  judicial  proceeding.  The  other  issues  which  have

been raised are ancillary to this main question.  Before we

proceed to examine this question of law, we shall have to

refer to certain facts from which the present controversy

originates.   At  the  time  the  lease  was  created,  the

partnership firm comprised of seven partners and a minor

beneficiary.  The  original  lease  was  for  five  years.  The

arrangement however continued even after lapse of the five

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year  period.  The  defendant  continued  in  possession  on

paying rent and the plaintiffs’  case before the Trial  Court

has been that the defendant had remained in the subject-

premises as a tenant.  According to the plaintiffs, the firm

stood dissolved with effect from 7th December, 1978.

3. In the plaint, there is no specific pleading showing the

manner in which the plaintiffs derived title or interest to the

subject-premises. The defendant contested the suit by filing

written statement.  Proper service of termination notice was

also denied and certain other points were raised, but the

suit  was  mainly  contested  on  the  issue  of  lack  of  jural

relationship between the original plaintiffs and defendant.

4.   The  Trial  Court,  upon  going  through  a  Deed  of  Co-

ownership, marked as exhibit “P-5” came to the finding that

there was no transfer of the subject-premises to any third

party.  This  instrument  carries  the  title  “CO-OWNERSHIP

DEED  OF  SRI  SABARI  CORPORATION:  BANGALORE  –

AGREEMENT  DECLARING  INDIVIDUAL  INTEREST  IN  CO-

OWNERSHIP PROPERTY” and is  dated 5th May 2007.  The

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Trial Court found formation of the co-ownership to be only a

family arrangement.  Finding of the Trial Court on the issue

of attornment of tenancy was that such exercise would have

been required in case there was transfer  of  property but

constitution  of  co-ownership  was  on  the  basis  of  mutual

understanding  among  the  erstwhile  partners  and  their

relatives. The Trial Court also held that the defendant was

aware of Sri Sabari Corporation coming into existence as a

co-ownership concern from a notice issued by the plaintiffs

to the defendant in the year 2004.  We shall deal with this

aspect of the controversy in subsequent paragraphs of this

judgment.

5. The case run by the plaintiffs before the Trial Court was

that the partnership firm stood dissolved with effect from 7th

December, 1978.  The notice of the dissolution of the firm,

however,  was given to the Registrar of Firms on 7th June,

1995.  After  dissolution  of  the  firm,  an  agreement  was

entered into among the erstwhile partners and their family

members and some of the family members of the erstwhile

partners were recognised as co-owners of the properties of

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the dissolved partnership firm and a delineated portion of

the property of  the firm was given to the co-owners.  An

agreement was registered as co-ownership agreement. The

subject  premises  comes  within  the  scope  of  the  assets

given to the co-owners.  In the intervening period, mother

of  the  defendant  passed  away  and  the  defendant  was

allowed to continue as the tenant.  Before the Trial Court,

dispute was raised as to whether the notice of termination

was properly served or not.   The defendant however had

replied to the notice of termination on 29th November, 2006

casting doubt on locus of the individuals on whose behalf

the notice to terminate the tenancy was issued. The same

defence has been taken in written statement to the suit. As

regards service of the termination notice, the Trial Court on

fact did not find any defect on service of the notice.

6. In appeal by the defendant, the High Court reversed

the finding on the point of locus of the original plaintiffs. It

was held by the High Court :-

“13.Sabari  Corporation  was  registered  as  per Ex.P1.  Seven partners  were  its  partners  for  the purpose  of  its  business  and  if  they  had  to dissolve,  the  plaintiffs  should  have  taken

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pleadings in their suit.   No such pleadings have been taken in the plaint. After the dissolution of the  firm,  the  property  of  the  firm  has  been devolved  as  it  is  stated  by  the  plaintiff  by  its members  of  the  partnership  firm.  From  the registration  of  the firm as per Ex.P1,  7  persons were partners however there are as many as 18 plaintiffs who represent the Co-ownership. On the dissolution  of  the  firm,  its  business  cease  to operate and in case of transfer of its properties of its partners, there should have been pleading in the plaint. Nature of partition among the partners and how these strangers have come into picture as  the  co-owners  of  the  properties  of  the partnership firm should have been narrated. It is the contention of the defendant that u/a 40-C of the  Karnataka  Stamp Act,  while  the  property  is being  partitioned  among  strangers,  there  shall have been stamp duty paid to the Government. In the instant case, no such thing has been done. In response to  the  same,  the  respondents  counsel submitted that no transfer has been effected by virtue of the dissolution of the firm and what has been done is only a partition of the partnership property among its members and the newcomers are their brothers, sons and wives of the partners. Under  Section  243  of  the  Indian  Contract  Act, widow or child of deceased partner receive share out of the profits is not a partner. In view of the said provision  while  transferring the property  of the  partnership  firm to  the non partners  of  the firm,  it  is  nothing  but  conveyance  for  which necessary  stamp  duty  should  have  been  paid. However, there is no such things coming out from the plaint.  Hence it  is  held that the partnership firm has not properly conveyed its properties on the plaintiffs through the procedure known to law. The  court  below  has  framed  issues  relating  to jural  relationship.  The  Trial  Court  came  to  the conclusion that partition of the firm’s property is only  a  family  arrangement  and  there  is  no transfer of any right, title or interest in favour of the  third  parties.  It  is  only  an  internal arrangement  made  by  co-owners  of  the  Sabari Corporation. It is further referred that legal notice Ex.P9 was issued in the name of co-owners of the property and the defendant has been paying rent

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to  the  plaintiff  continuously.  Therefore,  the plaintiffs have been declared as landlords of the suit schedule property and the defendant is the tenant. In view of the fact that the court has held that there is no transfer of property, application of attornment of tenancy was also denied. The court has not answered the question raised in respect of  the  jural  relationship  between  the  parties. When the lease agreement entered into between the parties is Sabari Corporation partnership firm with the defendant’s mother and till the filing of the suit, the existence of Sabari Corporation, co- ownership has not been declared and no notice was issued to the defendant or even to the public and  exhibits  referred  above  show  the  name  of Sabari Corporation as a firm. Therefore, | am of the  view that  the  court  below has  not  properly answered  the  question  of  jural  relationship properly.

14.  Consequent  upon  the  dissolution  of  the partnership firm, the partners should have issued notice to the public and also to the persons who involved in the business of the partnership firm. Notice u/s 45(v) of the Partnership Act will  help the third parties that the firm who had no notice of dissolution and on the other it  also seeks to protect  the  partners  of  a  dissolved  firm  from liability  to  third  parties  for  acts  of  the  other partners  subsequent  to  dissolution.  Post dissolution  activities  of  the  partners  and  its business  will  cease  to  affect  by  virtue  of  the dissolution. In such case, where notice is issued, it  made  clear  to  the  public  and  also  to  the customers for the purpose of their transactions. In the instant case, no notice has been produced by the plaintiff and no averment to substantiate this dissolution has been made. In view of the above, the  plaintiffs  have  no  legal  authority  to  pose themselves  as  Co-ownership  of  Sabari Corporation.  As  it  already  referred,  the  LRs. cannot become the part of the partnership firm. At the most, they are entitled for the profits and benefit out of it. Without assigning proper reasons the  court  below  has  held  that  the  Sabari Corporation,  a  partnership  firm  has  been

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transferred  into  co-ownership  firm,  hence  the plaintiffs  have  got  legal  right  to  file  the  suit. Hence the said finding of the Trial Court on issue No.1  is  not  proper.   Accordingly  Point  No.1  is answered in the negative.”

7. The  High  Court  had  sustained  the  plea  of  the

defendant that there was improper stamping of the deed of

co-ownership. The defendant’s case on this point has been

that birth of the co-ownership firm was not on the basis of

distribution of assets after dissolution of a partnership firm

but there was conveyance of the assets of the firm. For this

purpose,  registration of  the instrument of  conveyance on

proper payment of stamp duty was not effected. The High

Court  accepted  the  defendant’s  stand  that  the  plaintiffs

could  not  establish  their  locus standi  to  institute suit  for

recovery of possession.  Finding of the High Court on this

count  is  that  the  property  of  the  partnership  firm,  on

dissolution,  stood  partitioned  among  seventeen  persons,

including persons who were not members of the firm. On

the question of proper issue of the termination notice as

contemplated in Section 106 of the Transfer of Property Act,

the finding of the Trial Court has not been upset by the High

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Court. The judgment under appeal does not deal with this

point.

8.  We  accept  the  plaintiffs’  stand  that  the  principle  of

estoppel bars a tenant from questioning the title landlords.

This is incorporated in Section 116 of the Evidence Act. But

this principle cannot be made applicable in the present case

straightaway as the main defence set up by the tenant is

that he had acknowledged the said partnership firm as the

landlord but  questioned the locus standi  of  the plaintiffs,

who operated under the same trade name. In absence of

attornment  or  public  notice  of  dissolution,  the  defendant

had no way of having knowledge of change of landlord of

the  subject-premises  from  partnership  firm  to  a  co-

ownership concern. The co-ownership firm admittedly was

not the defendant’s landlord at the time of commencement

of the lease.  Thus,  identity of the landlord stood altered,

though  the  seventeen  individuals  continued  to  operate

under the same trade name.  For this reason, the very fact

that rent was continued to be paid to Sri Sabari Corporation

cannot constitute acceptance of the original plaintiffs as the

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landlord by the defendant. On the question of attornment,

learned counsel for the appellants have argued before us

that title could be acquired in terms of Section 109 of the

Transfer of Property Act and in such a situation, attornment

would not be necessary. The said provision reads:-

109.  Rights  of  lessor’s  transferee.--If  the  lessor transfers the property leased, or any part thereof, or any part  of  his  interest therein,  the transferee,  in the  absence   of  a  contract  to  the  contrary,  shall possess all the rights, and, if the lessee so elects, be subject to all  the liabilities of the lessor as to the property  or  part  transferred  so  long  as  he  is  the owner of it; but the lessor shall not, by reason only of such transfer cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him:

Provided  that  the  transferee  is  not  entitled  to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee  shall  not  be  liable  to  pay  such  rent  over again to the transferee.

The  lessor,  the  transferee  and  the  lessee  may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court  having jurisdiction to entertain a suit for the possession of the property leased.”    

9. It has been held by a two Judge bench of this Court in

the  case  of  Bismillah  Be(Dead)  by  Legal

Representatives Vs. Majeed Shah 2017 2 SCC 274:-

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“24. Law relating to derivative title of the landlord (Lessor) and challenge, if made, to such title by the tenant (Lessee) during  subsistence  of  tenancy  in  relation  to  demised property is fairly well settled. Though by virtue of Section 116 of the Evidence Act, 1872, the tenant is estopped from challenging the title of his landlord during continuance of the tenancy, yet the tenant/lessee is entitled to challenge the  derivative  title  of  an  Assignee/Vendee of  the  original landlord  (Lessor)  of  the  demised  property  in  an  action brought by the Assignee/Vendee against the tenant for his eviction from the demised property  under  the Rent  laws. This right of a tenant is, however, subject to one caveat that the tenant/lessee has not attorned to the Assignee/Vendee. In  other  words,  if  the  tenant/lessee  pays  rent  to  the Assignee/Vendee of the tenanted property then it results in creation  of  an  attornment  between  the  parties  which,  in turn, deprives the tenant/lessee to challenge the derivative title of an Assignee/Vendee in the proceedings.”

This  authority  has  been  followed  in  a  later  case,

Appollo Zipper India Limited Vs. W. Newman and

Company Limited [(2018) 6 SCC 744]. It has been held

in this case:-

“42...  Similarly,  the  law relating  to  derivative  title  to  the landlord  and  when  the  tenant  challenges  it  during subsistence  of  his  tenancy  in  relation  to  the  demised property  is  also  fairly  well  settled.  Though  by  virtue  of Section  116 of  the  Evidence  Act,  the  tenant  is  estopped from challenging the title of his landlord, yet the tenant is entitled to challenge the derivative title of an assignee of the original landlord of the demised property in an action brought by the assignee against the tenant for his eviction under  the  rent  laws.  However,  this  right  of  a  tenant  is subject to one caveat that the tenant has not attorned to the  assignee.  If  the  tenant  pays  rent  to  the  assignee  or otherwise  accepts  the  assignee’s  title  over  the  demised property, then it results in creation of the attornment which, in turn, deprives the tenant to challenge the derivative title of the landlord.”  

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10. The  defendant’s  stand  on  this  point  is  that  since  it

continued to pay rent in favour of the same landlord by the

same trade name, notice of the change of ownership cannot

be attributed to him.  On this count,  argument has been

advanced on behalf of the original plaintiffs before the Trial

Court  that  on  17th May,  2004  a  termination  notice  was

issued to the defendant by them. Though the said notice

was not ultimately given effect to, the defendant from the

said notice must have had acquired knowledge of plaintiffs

having become owner of the subject premises.  This issue

has been dealt with by the Trial Court in Paragraph 11 of the

judgment in the following manner:-

“11.....The  plaintiff  has  also  produced  Xerox  copy  of notice  dated  17.5.2004  issued  to  defendant  by  the present  plaintiffs.   Issue  of  this  notice  has  been admitted by the Defendant herein.  On perusal of this notice, which is not marked, however not denied by the defendant, it clearly goes to show that it was brought to the notice of the defendant in the year 2004 itself, that Sri Sabari Corporation came to be converted into a co-ownership concerned and all the names of plaintiffs herein  are  mentioned  in  the  said  notice.   Therefore, now the defendant cannot contend that he is not aware of formation of Sri Sabari Co-ownership.  The learned counsel  for  the  plaintiff  also  argued  that  Sri  Sabari Corporation partnership firm came to be dissolved and notice  of  the  same was   recorded  on  7.6.1985  with effect from 7.12.1978 as per form No.A.1, issued by the Registrar of Firm as per Ex.P-6.  It is not denied by the Defendant.   Therefore,  it  is  clear  that  Sri  Sabari Corporation  came  to  be  dissolved  with  effect  from

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7.12.1978 and the notice of the same was given to the concerned  authority.   The  names  of  7  partners  are mentioned  in  Ex.P-8  and  after  dissolution  of  the partnership  firm,  a  co-ownership  was  constitute. Therefore, there is no question of transfer of any right, title or interest over the schedule property to others. Because it is only an internal arrangement.  Therefore, for the reasons stated above, I am of the opinion that the  plaintiffs  are  entitled  to  recover  possession  of schedule premises from the defendant and hence, my findings on issue No.3 is also in the affirmative.”

          (quoted verbatim)

11.   The receipt  of  the notice dated 17th May,  2004 has

been  accepted  by  the  defendant  in  paragraph  7  of  his

written statement in the following terms:-

“7. The defendant humbly submits that on an earlier occasion namely on 17th May 2004 Sri Sabari Corporation  has  attempted  to  terminate  the tenancy,  defendant’s  mother  opposed  the termination  notice.   Thereafter  Sri  Sabari Corporation has demanded a sum of Rs.2,00,000/- (as additional advance) from defendant, since there was a threat of eviction, defendant has paid of sum of  Rs.2,00,000/-  (Rs.Two  lakhs)  to  Sri  Sabari Corporation.  After receiving a sum of Rs.2,00,000/- from  the  defendant  Sri  Sabari  Corporation  has withdrawn the notice dated 17th May, 2004, assured him  that  it  will  not  terminate  the  tenancy  and allowed him to continue to carry the business as per the agreement of  lease dated 10.5.1978.   On the assurance of  the plaintiff that it  will  not terminate the tenancy, he has borrowed a sum of Rs.7,00,000/- and spent for the interiors as well as the furnitures in the schedule premises.

12.  Plaintiffs’ argument on law is that in an eviction suit,

title need not to be proved in a manner required in a suit for

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declaration  of  title.  On  this  count,  the  following  passage

from the case of Apollo Zipper (supra) has been cited:-

“40… It is a settled principle of law laid down by this Court  that  in  an eviction suit  filed by the landlord against  the  tenant  under  the  rent  laws,  when the issue of title over the tenanted premises is raised, the  landlord  is  not  expected to  prove his  title  like what he is required to prove in a title suit.”

Two  earlier  authorities,  Sheela  vs.  firm  Prahlad  rai

Premm  Prakash [(2002)  3  SCC  375]  and  Boorugu

Mahadev & sons vs. Srigiri [(2016) 3 SCC 343] broadly

lay down the same principle of law. It is not the law that in a

landlord-tenant suit the landlord cannot be called upon at

all to prove his ownership of a premises, but onus is not on

him to establish perfect title of the suit property.

13.   The  other  limb  of  defence  of  the  tenant  related  to

admissibility  of  Exhibit  P5,  which  in  substance  is  a

modification  instrument  of  an  earlier  co-ownership

agreement  of  the  year  1993.  Exhibit  P5  however,  is  a

document  that  came  into  existence  after  the  suit  was

instituted on 15th November, 2006. This document is dated

5th May, 2007.  There is  reference in this document to an

earlier  co-ownership  agreement  effected  on  10th March,

1993. The necessity of executing Exhibit P5 appears to be

demise of two of the co-owners, who were parties to the

aforesaid  document  of  1993  and  their  shares  were

transferred to their respective widows. But the suit cannot

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turn  solely  on  the  basis  of  this  document.  Neither  this

document  per  se  establishes  plaintiffs’  ownership  of  the

subject property.

14.  The  plaint,  exhibits  and  deposition  of  the  plaintiffs’

witness  do  not  adequately  explain  the  journey  of  the

subject premises from the erstwhile partnership firm, which

had inducted mother of the present defendant as a tenant,

to the seventeen individuals operating as a co-ownership

firm. What has been argued on behalf of the appellant is

that  upon  dissolution  of  the  firm,  there  was  sharing  of

residue assets thereof under Section 48 of the Partnership

Act 1932 among the partners or their legal representatives.

On the controversy of inadequate payment of stamp duty, it

was argued on behalf of the appellant, relying on a decision

of this Court in the case of S.V. Chandra Pandian Vs. S.

V. Sivalinga Nadar (1993) 1 SCC 589 that in such cases

of sharing of residual assets of a partnership firm, payment

of stamp duty equivalent to that of transfer or conveyance

of property is not necessary. It has been held in this case:-

“16… From the foregoing discussion it seems clear to us that regardless of its character the property brought into stock of the firm or acquired by the firm during its subsistence for the purposes and in the  course  of  the  business  of  the  firm  shall constitute  the  property  of  the  firm  unless  the contract between the partners provides otherwise. On  the  dissolution  of  the  firm  each  partner becomes entitled to his share in the profits, if any, after the accounts are settled in accordance with Section  48  of  the  partnership  Act.  Thus  in  the entire  asset of  the firm all  the partners  have an

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interest albeit in proportion to their share and the residue, if any, after the settlement  of accounts on dissolution  would  have to  be  divided  among the partners in the same proportion in which they were entitled to a share in  the profit.  Thus during the subsistence of the partnership a partner would be entitled  to  a  share  in  the  profits  and  after  its dissolution  to  a  share  in  the  residue,  if  any,  on settlement of accounts. The mode of settlement of accounts  set  out  in  Section  48  clearly  indicates that the partnership asset in its entirety must be converted  into  money  and  from  the  pool  the disbursement has to be made as set out in clause (a) and sub-clauses (i),  (ii)  and (iii)  of  clause (b) and thereafter if there is any residue that has to be divided among the partners in the proportions in which they were entitled to a share in the profits of the firm. So viewed, it becomes obvious that the residue would in  the eye of  the law be movable property  i.e.  cash,  and  hence  distribution  of  the residue among the partners in proportion to their shares in the profits would not attract Section 17 of the Registration Act. Viewed from another angle it must be realised that since a partnership is not a legal entity but is only a compendious name each and every partner has a beneficial interest in the property of the firm even though he cannot lay a claim  on  any  earmarked  portion  thereof  as  the same cannot be predicated. Therefore,  when any property  is  allocated  to  him  from  the  residue  it cannot be said that he had only a definite limited interest in that property and that there is a transfer of the remaining interest in his favour within the meaning  of   Section  17  of  the  Registration  Act. Each and every partner of a firm has an undefined interest in each and every property of the firm and it  is  not  possible  to say unless  the accounts  are settled and the residue or surplus determined what would be the extent of the interest of each partner in the property. It is, however, clear that since no partner can claim a definite or earmarked interest in one or all of the properties of the firm because the  interest  is  a  fluctuating  one  depending  on various factors, such as, the losses incurred by the firm,  the  advances  made  by  the  partners  as distinguished from the capital brought in the firm, etc.,  it  cannot  be  said,  unless  the  accounts  are

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settled in the manner indicated by Section 48 of the  Partnership  Act,  what  would  be  the  residue which  would  ultimately  be  allocable  to  the partners. In that residue, which becomes divisible among the partners, every partner has an interest and when a  particular  property  is  allocated to  a partner in proportion to his share in the profits of the  firm,  there  is  no  partition  or  transfer  taking place nor is there any extinguishment of interest of other  partners  in  the  allocated  property  in  the sense of a transfer or extinguishment  of interest under Section 17 of the Registration Act. Therefore, viewed from this  angle also it  seems clear to us that  when a  dissolution  of  the  partnership  takes place  and  the  residue  is  distributed  among  the partners after settlement of  accounts there is  no partition,  transfer  or  extinguishment  of  interest attracting Section 17 of the Registration Act.”

15.  The documents through which the plaintiffs claim to

have  come  to  own  the  property  were  not  adequately

stamped and for that reason, such document could not be

relied upon. To this argument of the defendant, stand of the

plaintiffs has been that once a document has been admitted

without objection, in view of Section 35 of the Karnataka

Stamp Act (a provision similar to Section 36 of the Indian

Stamp Act 1899) such objection could not be taken at the

appellate stage. The case of Dr. Chiranji Lal (D) (supra)

Vs. Haridas 2005 SCC 746 was cited on behalf  of  the

defendant.  But  we  need  not  enter  into  this  controversy

while  examining  the  rival  claims  in  this  appeal  as  the

document  which  was  effectively  made  exhibit  and  relied

upon,  is  exhibit  P5.  This  document  came  into  existence

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after filing of the suit. We are to determine the position as it

subsisted prior to the institution of the suit and existence of

this document in isolation does not have any impact on the

case of either of the parties.

16. An application, registered as I.A. No. 1/2009 has been

taken out by the plaintiffs in connection with the present

Civil Appeal, through which the appellant seeks to introduce

to the present proceeding the following documents:-

(i) partnership deed dated 10.10.1975 constituting firm by

Name Sri Sabari Corporation

(ii) Deed of dissolution dated 7.12.1978 dissolving the firm

by name Sri Sabari Corporation.

(iii) Co-ownership agreement dated 7.12.1978

(iv) copy of registered agreement declaring interest in co-

ownership property dated 19.3.1993

(v) Income Tax returns of V. Sivagupta wherein income from

suit scheduled property is shown as HUF income.

(vi) Income Tax returns of S. Giridhar wherein income from

suit scheduled property is shown as HUF income.

17.   These documents, however, would have to be proved

to enable the plaintiffs to show the journey path of the title

of the subject premises. At this stage, we do not think we

can enter into that exercise, which would call for proving of

these  documents.  We  have  to  examine  the  respective

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claims without reverting to the documents annexed to this

application.  The  permission  to  file  these  documents  was

given  by  this  Court  on  16th January,  2009.  Upon  going

through the application however we decline to permit the

appellant to adduce fresh evidence before this Court at this

stage of the proceeding.

18. Without the aid of  these documents annexed to the

aforesaid  interlocutory  application,  the  Trial  Court  found

plaintiffs had established title superior to that of the tenant

in  respect  of  the  subject  premises.  The  Trial  Court  has

proceeded  on  a  principle  akin  to  admission  by  the

defendant of plaintiffs’ position as that of the landlords of

the subject-premises.  That  is  the underlying reasoning of

the  Trial  Court’s  judgment.  According  to  the  original

plaintiffs, the defendant entered into negotiation with them,

for which paragraph 7 of the written statement has been

relied  upon.  The  said  notice  of  2004,  however,  was  not

made exhibit. The High Court, in the judgment under appeal

has not dealt with finding of the Trial Court on this aspect of

the suit. This is a point which could have material impact on

adjudication  of  the  rival  claims.  We hold  so  because the

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defendant’s defence on derivative title would not survive if

the appellant can establish that from the notice of 17th May

2004 the ownership of seventeen original plaintiffs could be

established. In that event, Section 116 of the Evidence Act,

1872 would become applicable. The defendant’s continued

payment of rent thereafter would constitute acknowledging

the  said  plaintiffs  as  his  landlord.  This  would  result  in

creation of attornment, as held in the cases of Bismilla Be

(supra) and Apollo Zippers (supra). To conclude this part

of the controversy, factual enquiry is necessary which the

High Court exercising its appellate jurisdiction has not gone

into.  

19. We have already opined that  sufficient  material  was

not there before the first two Courts to establish the original

plaintiffs’ claim of ownership of the subject premises on the

basis of a family arrangement after dissolution of the firm.

The appellant’s attempt to adduce additional documents to

establish his stand on that point has been rejected by us at

this  stage.  The  ratio  of  the  judgment  in  the  case  of

S.V.Chandra Pandian (supra) cannot be applied in the

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present proceeding as there is no material before us from

which we could conclude that the original plaintiffs’ title to

the  subject-premises  came  from  residue  assets  of  the

dissolved firm. In a landlord-tenant suit, the landlord is not

required to prove his title in the subject property as in a

title-suit.  But  when  the  landlord’s  derivative  title  is

challenged, the same has to be established in some form.

On this point the original plaintiffs have failed before the

first two Courts.

20.  In  such  circumstances,  for  the  reasons  already

indicated,  we  set  aside  the  judgment  under  appeal  and

remand the matter to the High Court for readjudicating the

rival  claims  and  defence.  Before  the  High  Court  the

appellant shall be at liberty to file appropriate application

for producing additional evidence and if such an application

is filed, the same shall be considered on its own merit.

21. Since substantial  time has lapsed after  the suit  was

instituted, we request the High Court to decide the appeal

on remand as expeditiously as possible.  The appeal stands

allowed  in  the  above  terms.  As  we  are  remanding  the

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matter, we do not consider it necessary to make a detailed

analysis of title of the original plaintiffs or their successor.

……………………………..J.   ( Deepak Gupta)

New Delhi, Dated: December 18, 2019

…………………………….J.         (Aniruddha Bose)  

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