Supreme Court of India
SACHIN JAISWALversusM/S HOTEL ALKA RAJE & OTHER
- Citation
- 2025 INSC 275
- Decided
- 27 February 2025
- Disposal
- Dismissed
- Bench
- SUDHANSHU DHULIA
Holding
The property contributed by the late father became the partnership firm's property under Section 14 of the Partnership Act, 1932, and the High Court's clarification was upheld.
Summary
The appellant, Sachin Jaiswal, challenged a High Court clarification that the land and hotel building contributed by his late father to the partnership firm M/s Hotel Alka Raje constituted the firm's property under Section 14 of the Partnership Act, 1932. The father had purchased the land in 1965, entered into a partnership with his brother in 1972, and jointly constructed the hotel, later executing a relinquishment deed in 1983. The trial court held the firm sole owner, and the High Court clarified that the property belonged to the firm alone, not to the individual partners. The appellant argued that title could not be transferred by a relinquishment deed and must follow the Transfer of Property Act. The Supreme Court affirmed that a partner’s contribution, evidenced by intention, converts the property into partnership stock under Section 14, rendering the High Court's clarification correct, and dismissed the appeal.
Issues considered
- Whether the land and building contributed by the late father became property of the partnership firm under Section 14 of the Partnership Act, 1932
- Whether a relinquishment deed can effect transfer of title in respect of partnership property in lieu of the modes of transfer prescribed by the Transfer of Property Act
Legislation cited
Headnote
Issue for Consideration Whether the High Court was justified in holding that the Hotel constructed by the late father of the appellant on the property which he had bought in 1965, was his contribution to the firm and thus, the same was brought on to the stock of the firm and would become the as per Section 14, Partnership Act. Headnotes† Partnership Act, 1932 – s.14 – Interpretation – Late father of the appellant, if had brought the property in question to the stock of the partnership firm as his contribution to the same: Held: s.14 enables a partner
Subjects
Section 14 of the Partnership ActLandBuilding of HotelFirm’s propertyContribution to the partnership firmProperty brought on the stock of the partnership firm‘Property of the firm’Partnership firmBuilding constructed jointly over the property
Judgment
[2025] 2 S.C.R. 1396 : 2025 INSC 275
Sachin Jaiswal
v.
M/s Hotel Alka Raje & Other
(Civil Appeal No. 3269 of 2025)
27 February 2025
[Sudhanshu Dhulia* and Ahsanuddin Amanullah, JJ.]
Issue for Consideration
Whether the High Court was justified in holding that the Hotel
constructed by the late father of the appellant on the property
which he had bought in 1965, was his contribution to the firm and
thus, the same was brought on to the stock of the firm and would
become the ‘property of the firm’ as per Section 14, Partnership Act.
Headnotes†
Partnership Act, 1932 – s.14 – Interpretation – Late father of
the appellant, if had brought the property in question to the
stock of the partnership firm as his contribution to the same:
Held: s.14 enables a partner to bring a property which belongs to
him, by the ‘evidence of his intention’ to make it a property of the firm
and to do so, no formal document or agreement is necessary – In
the present case, the late father of the appellant first acquired the
property in the year 1965 and then after constituting the partnership
firm (respondent No.1) in 1972, he jointly constructed a building
over the property with his brother and partner, pursuant to which the
building was constructed which was to run as a hotel – Thus, the
late father of the appellant had brought the property in question to
the stock of the partnership firm as his contribution to the same –
The property had become the firm’s property at the very moment
he started constructing the hotel on his land after constituting the
partnership – The evidence of his intention to contribute the land
and the building of Hotel is clear – Order of the High Court not
interfered with. [Paras 14, 15, 17]
Case Law Cited
Addanki Narayanappa v. Bhaskara Krishnappa [1966] 3 SCR 400 :
1966 SCC OnLine SC 6 – relied on.
* Author
[2025] 2 S.C.R. 1397
Sachin Jaiswal v. M/s Hotel Alka Raje & Other
The Chief Controlling Revenue Authority vs. Chidambaram, Partner,
Thachanallur Sugar Mills and Distilleries and Ors., AIR 1970
Mad 5 (FB) – approved.
List of Acts
Partnership Act, 1932.
List of Keywords
Section 14 of the Partnership Act; Land; Building of Hotel; Firm’s
property; Contribution to the partnership firm; Property brought on
the stock of the partnership firm; ‘Property of the firm’ ; Partnership
firm; Building constructed jointly over the property.
Case Arising From
Civil Appellate Jurisdiction: Civil Appeal No. 3269 of 2025
From the Judgment and Order dated 09.03.2022 of the High Court
of Judicature at Allahabad, Lucknow Bench in FA No. 60 of 2021
Appearances for Parties
Advs. for the Appellant:
Ms. Vasudha Banka, Kushagra Kaul, Kabir Dixit.
Judgment / Order of the Supreme Court
Judgment
Sudhanshu Dhulia, J.
1. Leave granted.
2. The appellant before this court has challenged the order dated
09.03.2022 passed by the High Court of Judicature at Allahabad, in
First Appeal No. 60/2021 by which the High Court has disposed of
the First Appeal preferred by the appellant with certain clarifications.
3. Briefly, the facts necessary for our consideration are that father of
the appellant, late Bhairo Prasad Jaiswal had vide registered sale
deed dated 01.10.1965 purchased a plot of land admeasuring 4
bigha 10 biswa 5 biswansi situated at Mohalla Rikabganj, Faizabad.
Then, in the year 1971, he entered into an oral partnership with his
1398 [2025] 2 S.C.R.
Supreme Court Reports
brother, namely Hanuman Prasad Jaiswal, which was later reduced
into writing vide Partnership Deed dated 11.10.1972 and thus the
partnership firm, M/s Hotel Alka Raje i.e. respondent No. 1 herein
was constituted. The two brothers jointly constructed a building on
the land and started running a hotel business under the name and
style of ‘Hotel Alka Raje’.
4. In 1982, two new partners, which are respondent Nos. 2 and 3 herein,
were inducted in the firm vide Partnership Deed dated 07.06.1982. In
1983, late Bhairo Prasad Jaiswal wished to relinquish his rights from
the land on which the hotel was constructed and thus, he executed
a relinquishment deed dated 09.03.1983 duly registered, pursuant
to which the property was released in favour of M/s Hotel Alka
Raje (respondent No. 1 herein). This Relinquishment Deed further
stipulated that his legal heirs or successors will have no right, title
or interest in the property.
5. Although he had relinquished his right and title from the property
on which the hotel was constructed, late Bhairo Prasad Jaiswal still
continued to run the hotel business along with the other three partners
but due to old age, he was unable to devote much of his time to
the business and thus, a Partnership Deed dated 01.12.2000 was
entered into between the 4 partners, wherein the profits or losses of
the partnership were to be divided as such that late Bhairo Prasad
Jaiswal was to have a share of 10 paise in a rupee or 10% of the net
profits or losses while the other three partners were to have 30% each.
6. On 30.05.2005, late Bhairo Prasad Jaiswal passed away and
thereafter, a new Partnership Deed dated 02.06.2005 was executed
between the three remaining partners, which included Shri Hanuman
Prasad Jaiswal (brother of late Bhairo Prasad Jaiswal) and
respondent Nos. 2 and 3 herein. The partnership firm continued
with the above-mentioned three partners till the year 2017, when
Shri Hanuman Prasad Jaiswal wished to retire due to old age and
thus, a supplementary partnership agreement dated 01.04.2017 was
executed, as per which, Shri Hanuman Prasad Jaiswal was to retire
from the partnership w.e.f. 01.04.2017 and along with respondent Nos.
2 and 3, a new partner i.e. respondent No. 4 herein was inducted
into respondent No. 1-firm.
7. Then a civil suit for declaration of title and decree of permanent
injunction was filed by respondent Nos. 1-4 herein, on 22.11.2018
[2025] 2 S.C.R. 1399
Sachin Jaiswal v. M/s Hotel Alka Raje & Other
before the Civil Judge, Senior Division, Faizabad (hereinafter, ‘Trial
Court’). It was averred by the respondent-plaintiffs that in October
2018, the appellants, in order to stake a claim over the property
on which the building of Hotel Alka Raje is situated, tried to take
possession of the property, based on the claim that it was acquired
by their late father, Bhairo Prasad Jaiswal. In their written statement,
the defense taken by the present appellant was that the land was
purchased by their father, late Bhairo Prasad Jaiswal and thereafter
a building was constructed on it by him. Nowhere has it been stated
that the land was purchased and building was constructed out of their
ancestral fund/property. Their entire grievance seems to be that they
should also have been made a partner in the firm which was denied.
8. The suit filed by respondents-plaintiffs was decreed by the Trial Court
vide judgment and decree dated 22.12.2020 holding that respondent
Nos. 1 to 4 are the sole owners-in-possession of the property and
that the appellants have no right, title or interest in the same. To
arrive at this finding, the Trial Court placed much reliance on the
Relinquishment Deed dated 09.03.1983, which was executed by
late Bhairo Prasad Jaiswal and the Trial Court was of the opinion
that the said Relinquishment Deed, being a registered document has
its veracity and there it is clearly mentioned in the same that late
Bhairo Prasad Jaiswal had relinquished all his rights, title & interest
in the property in favour of the firm-M/s Hotel Alka Raje, which is
respondent No. 1 herein. Further, it was also mentioned in the deed
that even the successors/heirs of late Bhairo Prasad Jaiswal would
not have any share in the property.
9. Against the judgment and decree of the Trial Court, First Appeal was
filed by the appellant herein along with other defendants to the suit.
Vide Impugned Order dated 09.03.2022 the High Court disposed of
the First Appeal with the following clarification with respect to the
decree passed by the Trial Court:
“We, therefore, clarify the position to the effect that the
decree rendered by the trial court shall be read in favour
of the firm namely ‘M/s Hotel Alka Raje’ alone. We also
clarify that the share of the partners particularly of late
Bhairon Prasad Jaiswal shall stand inherited by his legal
heirs to the extent mentioned in the last partnership deed
entered in accordance with law.
1400 [2025] 2 S.C.R.
Supreme Court Reports
There is no other question raised by the appellants which
is either urged or may call for any consideration.
The first appeal is, accordingly, disposed ·of with the
clarification as aforesaid.”
In other words, the High Court has held that the only entity which
could be said to be the owner-in-possession of the property, having
rights, title and interest over the same is the partnership firm itself
i.e., respondent No. 1 herein.
10. We have heard learned counsel for the appellant and although notice
was served on all respondents, no appearance was entered on their
behalf and this matter remained uncontested from the side of the
respondents. It is submitted by learned counsel for the appellant
that the High Court has committed an error in passing the aforesaid
clarifications. It is further contended by the appellant that the High
Court has passed the impugned order, without considering their
submission that ownership rights/interest in a property cannot be
transferred by way of a relinquishment deed and can only be done
through the modes of transfer defined in the Transfer of Property
Act, i.e. sale, mortgage, exchange or gift.
11. We shall now proceed to determine whether first, the High Court was
correct in passing the aforesaid clarifications and secondly, whether
the High Court fell into error by not taking into consideration the
contention raised by the appellant as regards the fact that transfer
of title over the property could not have taken place through a
relinquishment deed. Even though the property belonged to late
Bhairo Prasad Jaiswal, once he entered into a partnership with his
brother Hanuman Prasad vide partnership deed dated 11.10.1972
and consequently the partnership firm-M/s Hotel Alka Raje came into
existence, the property, inclusive of the land and the building which
was constructed for running the hotel business, became a property
of the firm by virtue of Section 14 of the Indian Partnership Act, 1932
(hereinafter, ‘Partnership Act’) which reads as under:
“14. The property of the firm- Subject to contract between
the partners, the property of the firm includes all property
and rights and interests in property originally brought into
the stock of the firm, or acquired, by purchase or otherwise,
by or for the firm, or for the purposes and in the course
[2025] 2 S.C.R. 1401
Sachin Jaiswal v. M/s Hotel Alka Raje & Other
of the business of the firm; and includes also the goodwill
of the business.
Unless the contrary intention appears, property and rights
and interests in property acquired with money belonging to
the firm are deemed to have been acquired for the firm.”
The High Court has held that a bare perusal of Section 14 of
Partnership Act would indicate that any property which is brought on
the stock of the firm becomes the firm’s perpetual property. In the
opinion of the High Court, the Hotel which was constructed by late
Bhairo Prasad Jaiswal on the property which he had bought in 1965,
was his contribution to the firm and thus, the same was brought on
to the stock of the firm and would become the ‘property of the firm’
as per Section 14 of the Partnership Act. In this regard, this is what
the High Court has observed:
“The dispute before the trial. court does not appear to be
with respect of the proportionate share of partners but
for a declaration of the property of ‘Hotel Alka Raje’ to be
the property of firm. The suit was instituted by the firm
as plaintiff no. 1 whereas respondent nos. 2 to 4 were
the coplaintiffs. It is not in dispute that ‘Hotel Alka Raje’
which was constructed upon two plots out of which one
belonged to late Bhairon Prasad Jaiswal was contributed
by him as a part and parcel of the partnership deed. The
said property inclusive of the land and building for all legal
consequences became a property of the firm namely ‘M/s
Hotel Alka Raje’ situated at Rikabganj, Faizabad.”
12. Having heard learned counsel for the appellant and having gone
through the record, we are in complete agreement with the High
Court on the aforesaid aspect. The High Court based its order on
an interpretation of Section 14 of the Partnership Act and taking into
consideration the fact that it was an admitted position that the property
was contributed by late Bhairo Prasad Jaiswal to the partnership firm.
13. The law on this point is settled which is that separate property of an
individual partner, can be converted into partnership property. In this
context, reliance can also be placed upon a judgment of this Court
in Addanki Narayanappa v. Bhaskara Krishnappa, 1966 SCC
OnLine SC 6 in which this Court has held that irrespective of the
1402 [2025] 2 S.C.R.
Supreme Court Reports
character of the property, when it is brought in by the partner when
the partnership is formed, it becomes a property of the partnership
firm, by virtue of Section 14 of Partnership Act. This Court held as
follows:
“7. It seems to us that looking to the scheme of the Indian
Act no other view can reasonably be taken. The whole
concept of partnership is to embark upon a joint venture
and for that purpose to bring in as capital money or even
property including immovable property. Once that is done
whatever is brought in would cease to be the trading asset
of the person who brought it in. It would be the trading
asset of the partnership in which all the partners would
have interest in proportion to their share in the joint venture
of the business of partnership. The person who brought it
in would, therefore, not be able to claim or exercise any
exclusive right over any property which he has brought
in, much less over any other partnership property. He
would not be able to exercise his right even to the extent
of his share in the business of the partnership. As already
stated, his right during the subsistence of the partnership
is to get his share of profits from time to time as may be
agreed upon among the partners and after the dissolution
of the partnership or with his retirement from partnership
of the value of his share in the net partnership assets as
on the date of dissolution or retirement after a deduction
of liabilities and prior charges.”
(emphasis supplied)
14. A similar view has been taken by the Full Bench of the Madras
High Court in The Chief Controlling Revenue Authority vs.
Chidambaram, Partner, Thachanallur Sugar Mills and Distilleries
and Ors. AIR 1970 Mad 5 (FB), wherein it was held that Section 14
of the Partnership Act enables a partner to bring a property which
belongs to him, by the ‘evidence of his intention’ to make it a property
of the firm and in order to do so, no formal document or agreement
would be necessary. The Full Bench has thus held as follows:
“First of all, as we earlier observed, under S. 14 of the
Partnership Act, it is always possible for a partner to
[2025] 2 S.C.R. 1403
Sachin Jaiswal v. M/s Hotel Alka Raje & Other
bring into the partnership, property belonging to him
by the evidence of his intention to make it part of the
assets of the partnership. There is a very early decision
of the English Court, namely, Robinson v. Ashton which
embodies this principle, where a man became a member
of a partnership, and the agreement was that the business
should be conducted at the mill belonging to him, and he
was credited in the books of the partnership with the value
of the Mills, Jessel M.R. said that it made no difference that
his contribution was in the form of mill and machinery, and
not in the form of money. The property, therefore, became
the property of the partnership. On the same principle of S
14, we have the decision of the Full Bench of the Calcutta
High Court in Premraj Brahmin v. Bhaniram Brahmin and
the learned Judges pointed out that, by virtue of S. 14,
property could be thrown into the partnership stock without
any formal document, and would, therefore, become the
property of the firm.”
(emphasis supplied)
15. It is apparent from a perusal of the record that late Bhairo Prasad
Jaiswal, first acquired the property in the year 1965 and then after
constituting the partnership firm (respondent No. 1) in 1972, he
jointly constructed a building over the property with his brother and
partner, Hanuman Prasad Jaiswal, pursuant to which the building
was constructed which was to run as a hotel. This leaves no room
for any doubt that late Bhairo Prasad had brought the property in
question to the stock of the partnership firm as his contribution to the
same. In fact, this is precisely the reason which prompted the High
Court to clarify that the decree rendered by the Trial Court ought to
be read in favour of the partnership firm-respondent No. 1 alone, as
opposed to being read in favour of the firm along with the other three
partners, i.e. respondent Nos. 2-4 herein, because the property had
become the firm’s property at the very moment late Bhairo Prasad
Jaiswal started constructing the hotel on his land after constituting
the partnership. The evidence of his intention to contribute the land
and the building of ‘Hotel Alka Raje’ is quite clear.
16. We are also of the opinion that with the above findings there was
no occasion for the High Court to separately address the contention
1404 [2025] 2 S.C.R.
Supreme Court Reports
put forth by the appellant regarding relinquishment and the legal
aspects of it.
17. We therefore see no reason to take a view different from that of
the High Court in this regard. There is absolutely no scope for our
interference with the order of the High Court dated 09.03.2022 in
the exercise of our jurisdiction under Article 136 of the Constitution
of India.
18. Accordingly, the appeal stands dismissed.
Result of the case: Appeal dismissed.
†
Headnotes prepared by: Divya Pandey
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