Case: VINAY EKNATH LAD Vs. CHIU MAO CHEN

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 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. T o 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 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 T ax returns of V. Sivagupta wherein income from suit scheduled property is shown as HUF income. (vi) Income T ax 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 claims without reverting to the documents annexed to this application. The permission to file these documents was given by this Court on 16 th 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 defendant?s defence on derivative title would not survive if the appellant can establish that from the notice of 17 th 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). T o 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 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]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 landlord by the defendant.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 15 th November, 2006. This document is dated 5 th May, 2007. There is reference in this document to an earlier co-ownership agreement effected on 10 th 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 turn solely on the basis of this document. Neither this document per se establishes plaintiffs? ownership of the subject property.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.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. T o 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 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.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 claims without reverting to the documents annexed to this application. The permission to file these documents was given by this Court on 16 th 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.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 defendant?s defence on derivative title would not survive if the appellant can establish that from the notice of 17 th 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). T o conclude this part of the controversy, factual enquiry is necessary which the High Court exercising its appellate jurisdiction has not gone into.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 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.