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Peyare Lal Vs. Mt. Misri and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1940All453
AppellantPeyare Lal
RespondentMt. Misri and anr.
Excerpt:
- - if for any reason the sale were to fail, the property would be retained by bhagwan das alone......described in the plaint belonged to them. there was a firm kure mal kallu mal. bhagwan das and durga prasad were its partners. the property in dispute, as has been found by both the lower courts, belonged to this firm. on 17th august 1933 bhagwan das sold the property in dispute to the plaintiffs. on the next day, that is 18th august 1933 the same property was sold by durga prasad to the defendant. both the sale deeds were registered on the same day, 18th august 1933. the firm was subsequently dissolved by an award, dated 24th july 1935. the defendant contended that the plaintiff's sale deed was invalid inasmuch as bhagwan das had no right to sell the partnership property. the trial court found that, though bhagwan das had no right to sell the property to the plaintiffs yet the sale.....
Judgment:

Ganga Nath, J.

1. This is a defendant's appeal and arises out of a suit brought by the plaintiffs-respondents for declaration that the house described in the plaint belonged to them. There was a firm Kure Mal Kallu Mal. Bhagwan Das and Durga Prasad were its partners. The property in dispute, as has been found by both the lower Courts, belonged to this firm. On 17th August 1933 Bhagwan Das sold the property in dispute to the plaintiffs. On the next day, that is 18th August 1933 the same property was sold by Durga Prasad to the defendant. Both the sale deeds were registered on the same day, 18th August 1933. The firm was subsequently dissolved by an award, dated 24th July 1935. The defendant contended that the plaintiff's sale deed was invalid inasmuch as Bhagwan Das had no right to sell the partnership property. The trial Court found that, though Bhagwan Das had no right to sell the property to the plaintiffs yet the sale was ratified in the arbitration proceedings by Durga Prasad and therefore the plaintiffs' sale deed was valid. On appeal the decision of the trial Court was upheld.

2. The defendant has appealed. It has been urged on his behalf that the plaintiffs' sale deed was invalid, because there could be no ratification by Durga Prasad in the arbitration proceedings. The argument is based on the fact that Bhagwan Das executed the sale deed in his own right and not on behalf of the firm and therefore there could be no ratification by his partner Durga Prasad. This contention of the learned Counsel for the appellant seems to be correct. Section 196, Contract Act, lays down:

Where acts are done by one person on behalf of another, but without his knowledge or authority he may elect to ratify or to disown such acts. If he ratify them, the same effects will follow as if they had been performed by his authority.

3. Section 200 further lays down:

An act done by one person on behalf of another without such other person's authority, which, if done with authority, would have the effect of subjecting a third person to damages, or of terminating any right or interest of a third person, cannot, by ratification, be made to have such effect.

4. In this case, as already stated, the sale had not been made by Bhagwan Das on behalf of Durga Prasad or the firm. Further the ratification by Durga Prasad would have the effect of prejudicially affecting the rights of the defendant, to whom Durga Prasad had sold the same property. It has been urged on behalf of the respondents that, though there could be no ratification of the sale, yet as the property in dispute was subsequently allotted to Bhagwan Das the sale which was invalid when made by Bhagwan Das for want of his title became valid. Learned counsel relied on Section 43, T.P. Act. This section enjoins:

Where a person fraudulently or erroneously represents that he is authorized to transfer certain immovable property and professes to transfer such property for consideration such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists.

5. Subsequent to the sales by the parties proceedings for dissolution of the partnership were instituted. These proceedings terminated in an arbitration award on 24th July 1935. This award was made with the consent of the parties. Under the award the sale deed executed by Durga Prasad to the defendant was held to be invalid and the plaintiffs' sale deed was held to be valid. Durga Prasad was allowed to carry on the business of the firm, as the sole proprietor, after the dissolution of partnership. Under the terms of the award Bhagwan Das was to pay Rs. 1500 towards the discharge of the liabilities of the firm. All the assets of the firm were allotted to Durga Prasad. The effect of holding the sale deed of the plaintiffs as valid was to allot this property to Bhagwan Das. If for any reason the sale were to fail, the property would be retained by Bhagwan Das alone.

6. It was contended that the award could not be received in evidence, because the defendant was no party to the arbitration proceedings. The award is only a piece of evidence of the fact that the property in dispute was allotted to the plaintiffs' vendor on the dissolution of the partnership and belonged to him, and as such, it is admissible in evidence. Both the sale deeds were originally invalid, as the property in dispute belonged to the firm and neither the plaintiffs' vendor nor the defendant's had any authority to sell the property in dispute as his own.

7. It was contended by learned Counsel for the appellant that, inasmuch as the property belonged to both the partners of the firm, each partner should be deemed a co-owner of the property in dispute and, as such each had a right to transfer his share. The property, as already stated, did not belong to the transferors but belonged to the firm and according to the provisions of Sections 15 and 19, Partnership Act, none of the partners had any right to treat this property as his individual property and to transfer it as such. According to Section 15 a partner can use the property exclusively for the purposes of the partnership. It lays down:

Subject to contract between the partners the property of the firm shall be held and used by the partners exclusively for the purposes of the business.

8. The principal differences between co-ownership and partnership have been stated in Lindley on Partnership, Edn. 10, at p. 31:

1. Co-ownership is not necessarily the result of agreement. Partnership is. 2. Co-ownership does not necessarily involve community of profit or loss. Partnership does. 3. One co-owner can, without the consent of the others, transfer his interest, or in the case of land his equitable interest, to a stranger, so as to put him in the same position as regards the other owners as the transferor himself was before the transfer, except that in the case of a transfer by a joint tenant the stranger will become a tenant in common or in the case of land a tenant in common in equity with the other owners. A partner can not do this....

9. The property in dispute was allotted subsequently to Bhagwan Das, the plaintiffs' vendor, on the dissolution of partnership. Whatever defect there was in the sale deed at the time it was made was subsequently cured in virtue of Section 43, T.P. Act, when Bhagwan Das acquired the property on the dissolution of partnership. The plaintiffs have a right to avail themselves of the benefit of the provisions of Section 43, T.P. Act. They have so elected. In the result the appeal is dismissed with costs.


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