P. Ramakrishnan, J.
1. The Chief Controlling Revenue Authority, the Board of Revenue, Madras, has referred to us, for our decision, under Section 57 of the Indian Stamp Act, about the correct classification, for the purpose of levy of Stamp Duty under the Indian Stamp Act, of an instrument. The specific question propounded to us for decision is whether the instrument, dated 20th March, 1965 (deed of dissolution of partnership) operates both as a deed of dissolution of partnership and a deed of partition.
2. Under Article 45 of Schedule I to the Stamp Act, for an instrument of partition as defined by Section 2 (15) of the Act, the stamp duty leviable is the same as on a Bond for the amount of the value of the separated share or shares of the property. Under Article 46 of the same Schedule, an instrument of dissolution of partnership has to be levied stamp duty of a fixed sum of Rs. 20 in Madras State. Section 5 of the Indian Stamp Act provides that any instrument comprising or relating to several distinct matters shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable under the Act. In contra-distinction, Section 6 of the Act provides that, subject to the provisions of Section 5, an instrument so framed as to come within two or more of the descriptions in Schedule I, shall, where the duties chargeable thereunder are different, be chargeable only with the highest of such duties. The view of the Chief Controlling Revenue Authority is that the instrument in question, though dealing with a single matter, has been so framed as to come within the classification of an instrument of partition as well as an instrument of dissolution of partnership, and, therefore, under Section 6, the higher stamp duty payable in the case of instrument of partition should be levied on it. On the other hand, the contention of the respondent is that the instrument is only a deed of dissolution of partnership, that the provisions regarding partition are incidental and form part and parcel of the dissolution and cannot be separated and that, consequently, the document can be viewed only as an instrument of dissolution of partnership and 'assessable to stamp duty as such.
3. To decide the question, it will be appropriate to give briefly the main provisions of the instrument, which is in Tamil:
Agreement of dissolution of a business partnership between the two partners Abdul Hai and M. Abdulla. The said partners, in pursuance of the partnership deed, dated 24th August, 1960 have been carrying on retail cloth business at New Karachi Stores, at No. 58, Big Street, Kumbakonam, and also wholesale cloth business in the premises at No. 283, Bazaar Street, Kumbakonam, belonging to M. Abdulla. After discussion, the two partners have decided to dissolve the above partnership business with effect from 29th March, 1965. In accordance with the agreement, the following arrangements are made for the dissolution of the partnership:
1. M. Abdulla will take over the entire retail business in cloth at the New Karachi Stores at No. 58, Big Street, with its goodwill, trade name and assets and liabilities;
2. M. Abdul Hai will take over the wholesale cloth business, being conducted at No. 283, Bazaar Street, Kumbakonam, with its goodwill, trade name and assets and liabilities;
3. If any of the partners fail to discharge the liability as mentioned above, and as a result, the other partner suffers any loss, the former will be bound to reimburse the latter for the loss;
4. After settling the accounts with the help of an Auditor, the two partners have agreed to settle their claims inter se as follows:
4(a). The second partner is liable to pay to the first partner Rs. 55,000, after adjusting the share of the net profits due to him. This amount has been paid to him in the following manner : (i) Rs. 25,000 which he had already received by a cheque drawn on the Indian Overseas Bank, Kumbakonam, on 27th July, 1964 and (ii) another cheque for Rs. 30,000 drawn on the United Commercial Bank, Kumbakonam, paid on the date of the instrument by the second partner to the first partner.
4 (b). After the execution of the above instrument neither partner will have any claim against the assets and liabilities of the two businesses--New Karachi Stores allotted to the second partner or the wholesale business allotted to the first partner....
4. It is clear from the purport of the instrument that it deals with a single matter. Secondly, it puts an end, by dissolution to the partnership business that the two partners had been conducting from 1960 in regard to the wholesale as well as the retail business in cloth. An instrument of partition, as defined in Section 2 (15) of the Stamp Act, means any instrument whereby co-owners of any property divide or agree to divide such property in severally, and includes also a final order for effecting a partition passed by any Revenue Authority or any Civil Court and an award by an Arbitrator directing a partition. The instrument in question also makes a division of property by allotting the wholesale business to one partner and the retail business to the other partner. This property, consisting of the wholesale and retail business, was owned by the two brothers, at the time of the- execution of the instrument, as co-owners. That the relationship in similar circumstances has to be viewed as one of co-ownership, has been settled by a long chain of decisions of this Court as well as of other Courts, and this view is binding on us. We will briefly, refer to these decisions. In Board of Revenue v. Alagappa : AIR1937Mad308 , while repelling, an argument put forward by Mr. Rajah Ayyar that the document will not be an instrument of partition because it would not be proper to regard partners as co-owners of the partnership property. Varadhachariar, J., speaking for the Special Bench, observed:
The difficulty in applying the conception of co-ownership to individual items : of partnership assets, is no reason against applying that description to the net assets of the partnership on a dissolution. Section 265, Contract Act, was worded in a form suggesting that it was for the Court to distribute the net assets as amongst the partners; but Section 46, Partnership Act of 1932, puts it clearly as a right of the partners to claim to have the surplus distributed amongst them or their representatives according to their rights. There is in our opinion accordingly no inherent incompatibility between the conception of co-ownership and the position of partners.
The Bench followed, for the abovesaid view, an earlier decision of the Bombay High Court in Choturam v. Ganesh (1901) 3 Bom. L.R. 132, where a similar view has been held that a deed of dissolution of partnership could also amount to an instrument of partition. In Board of Revenue v. M. Narasimhan I.L.R. : AIR1961Mad504 , Jagadisan, J., while speaking for the Bench, considered compendiously the several forms in which a dissolution of partnership may have to be worked out:
If the partnership business had ended in loss a partner might retire from the partnership after making his contribution towards the loss sustained. The accounts of the partnership might be taken and settled and adjusted between the partners and as a result of such account taking one partner may owe another partner a particular sum of money. Partners may also agree to have the net assets of the partnership divided between them as a result of dissolution. In the last instance if the transaction is embodied in writing it may operate as an instrument of partition, though it came about as a result of the dissolution of the partnership. But in the other instances referred to above any document embodying the transaction cannot certainly be called a deed of partition.
This would show that, while it may not be possible to predicate that every instrument of dissolution of partnership will also involve a division or partition of property, in specific instances dissolution may involve division of property or assets. To such instances the ingredients of an instrument of partition will be attracted. In this connection, we may also usefully refer to the decision in Christie v. Commissioners of Inland Revenue (1866-1867) 2 Ex. Reports 46, , Channell, B. observed:
We are not called upon in this case to say what would have been the state of things in the case of one partner paying another out, and where there might have been no conveyance. Here there has been a conveyance, and the only question therefore that can arise is, whether it is a 'conveyance on the sale' of property within the meaning of the Act of Parliament.
The Court held, in the circumstances of the case, that the instrument involved a conveyance. In Kalyan Shetty v. I.G. of Stamps : AIR1963AP474 , a Full Bench of the Andhra Pradesh High Court adopted the view of this Court in Board of Revenue v. Alagappa1, and held that, where, in a deed of dissolution of partnership, the partners agreed to divide the assets between themselves, the instrument could rightly be described as one of partition chargeable to duty as one under Article 31 of the Schedule to the Hyderabad Stamp Act.
5. In Board of Revenue v. A.P. Benthall : 2SCR842 , Venkatarama Ayyar, J., at page 38 of the Report, has referred with approval to the decision of this Court in Board of Revenue v. Alagappa I.L.R. (1937) Mad. 553 : (1937) 1 M.L.J. 374 : A.I.R. 1937 Mad. 308 and observed that, if a partnership carried on by members of a family is wound up and the deed of dissolution effects also a partition of the family properties as in Board of Revenue, Madras v. Alagappa Chettiar I.L.R. (1937) Mad. 553 : (1937) 1 M.L.J. 374 : A.I.R. 1937 Mad. 308 , the instrument can be viewed both as a deed of dissolution and a deed of partition, and under Section 6 the duty payable will be the higher duty as on an instrument of partition. It is urged by learned Counsel Sri Ratan appearing for the respondent, that, in the above observations of the Supreme Court, there is a reference to the partnership carried on by members of a family which would imply that in that case there was a deed of partition of properties held by the family members under a different title from that of partners, and therefore it was urged that the decision of the Supreme Court could not be treated as approving the principle laid down in the above cases. But we are unable to agree with this submission. A reference to the decision in Board of Revenue v. Alagappa I.L.R. (1937) Mad. 553 : (1937) 1 M.L.J. 374 : A.I.R. 1937 Mad. 308 (shows that the business in that case was conducted by five partners, three of whom were undivided members of a family, the fourth was a distant and separated coparcener and the fifth was a stranger. Therefore, the rationale of the decision in Board of Revenue v. Alagappa I.L.R. (1937) Mad. 553 : (1937) 1 M.L.J. 374 : A.I.R. 1937 Mad. 308 did not turn upon the partners being members of a family before the partnership was formed. The principle laid down there would apply, apart from any previous relationship of the partners as members of a family, nor does the observation cited above of the Supreme Courts indicate to our mind that any difference would arise between partners who belonged to single family and partners who were strangers.
6. Learned Counsel for the respondent referred to a decision of the Supreme Court in Narayanappa v. Bhaskara Krishnappa : 3SCR400 . That decision dealt with an entirely different question, viz., whether an instrument of dissolution of partnership in that particular case was compulsorily registrable under Section 17 (1) (c) of the Registration Act. The test for the purpose of compulsory registration is whether the document involves a transfer of interest in immovable property. The Supreme Court held that the interest of the partners of a family in the partnership assets was movable property and the document evidencing the relinquishment of that interest was not compulsorily registrable under Section 17 (1) of the Registration Act. The decision of the Andhra Pradesh High Court in Narayanappa v. Krishnappa : AIR1959AP380 , which formed the subject-matter of the Supreme Court's decision on appeal can also be referred to. The Full Bench held that the interest of a partner in partnership assets comprising of movable and immovable property cannot be regarded as a right or interest in immovable property within the meaning of Section 17 (1) (b) of the Registration Act. It is obvious, therefore, that the point decided by the Supreme Court in the decision cited above covers an entirely different matter, and has no application to the facts of this References.
7. Learned Counsel Sri Ratan appearing for the respondent made a final plea that, if we are to uphold the view of the Revenue in the present case, it would make it necessary for partners, who dissolve their partnership, to pay a heavy stamp duty, and this would impose an oppressive burden on trade and business interests. But that cannot be viewed as a ground for us to interpret the question of law in any different manner than what several prior decisions of the Courts have done consistently.
8. The Reference is, therefore, answered in favour of the Revenue. We hold that the instrument, dated 20th March, 1965, operates both as a deed of dissolution of partnership as well as a deed of partition, and therefore, under Section 6 of the Indian Stamp Act, the higher duty payable for a deed of partition will be payable on the instrument. There will be no order as to costs.