1973 PLP ﷓ (SCMR)

(ii) for the next five thousand‑rupees‑sixty per centum. (iii) for the next ninety thousand‑rupees fifty per centum. (iv) for the balance of the amount‑twenty‑five per centum of such balance subject to a maximum limit of rupees three lacs: Provided that the total amount payable to a charge‑holder shall not exceed fifty per centum of the transfer price of the property or properties against which he holds the charge. Exceptions (a) . . . . . . . . (b) Subject to the maximum limit of rupees three lakhs as aforesaid, the following classes of charges held by a displaced person or a local shall be paid in full‑ (i) charges on account of principal mortgage money due from an evacuee, and (ii) charges on account of money paid in cash to an evacuee for the purchase of his property, where such transaction did not materialise." Under this exception it will be observed that charges on account of money paid in cash to an evacuee for the purchase of property where such transaction does not materialise, are repayable up to the maximum limit of Rs.3 lakhs. The question, therefore, that next arises for consideration is as to what was the true nature of the transaction in the present case. There is no dispute that the amount paid was paid in cash. The only dispute here is as to "whether it was paid to an evacuee for the purchase of his property." To determine the true nature of the transaction entered into it is again necessary to refer to the agreement of the 9th of May 1949, itself. Under this deed described as a "Deed of Partner ship" the lease entered into between the owners of Imperial Talkies and Hariram Rewachand is expressly included in the ambit of the partnership. The contracting parties declared "Whereas the parties of the 1st and 2nd part have mutually agreed to enter into a partnership with regard to carrying on the business of exhibiting cinema shows, theatrical performances, entertainments dances, as a matter of fact all other kinds of entertainments and in respect of several business premises shops etc. let out on rent, on terms and conditions set forth herein below." Rewachand, the lessee, then covenanted not to exercise the option conferred upon him by the Indenture of Lease to determine the lease earlier that the 31st of March 1967, and further in the event of the partnership continuing till the 31st of March 1967, to exercise the option of renewal for a further period of 10 years. Rewachand further covenanted not to encumber, mortgage, charge or otherwise in any manner whatsoever deal with or dispose of the rights and interests vested in him by virtue of or under the Indenture of Lease. The most important, for our present of the deed of partnership, which we quote in extenso :‑ "(B) The business of the partnership shall consist of cinema shows, theatrical performances, dances and other entertainments of any kind whatsoever and for these purposes to use the auditorium and other office and residential and business pre mises and let out the rest of the leased property to one or more tenants. (N) The Party of the 2nd part doth further bind himself that after the consideration is paid by the first party as shown herein below, the furniture, machinery etc. the property of the second party lying in the cinema premises shall be the property of the partnership. (O) That in consideration of 3/4th value of the machinery, furniture, benefits under the lease dated 3rd May 1947, and goodwill etc. the party of the 1st part shall pay Rs.2,62,500 (Two lacs sixty‑two thousand five hundred) only to the party of the 2nd part which the party of the 1st part has this day paid to the party of the 2nd part and the receipt of which the party of the 2nd part doth hereby acknowledge." Lastly it was provided by Clause (W) that in the event of Hariram acting prejudicially to the interest of the partnership so as to give cause for termination of the lease and the same is terminated before the expiry of the stipulated period, including the period of option mentioned in the Indenture of Lease, he should refund to the appellant the sum of Rs.2,65,000 by way of damages. The lease‑hold interest, which is real property in every sense of the term, was, therefore, a very important asset of the partner ship and the real intention of the parties was that in consideration of the payment of the said sum of Rs.2,62,500 the benefits under the lease as also all the furnitures, fixtures, fittings, etc., of the said Imperial Talkies shall become the assets of the partnership. The partnership was also to let out and realize the rents of the portions of the premises which were not in its use for the purpose of the cinema. If this be so, then can it be doubted that the transaction in effect was an agreement for the transfer or sale of the property of Hariram i.e. his lease ,hold interest in the said imperial Talkies to the partnership firm to be constituted under the aforesaid deed of agreement? We are further strengthened in this view by the fact that the partnership through the managing partner, the appellant, was also given the right to collect the rents, issues and profits of the shop and office rooms and residential portions situated in the premises in which the cinema itself was located. The learned counsel for the appellant has also drawn our attention to the definition of the word "property" given in the Pakistan (Administration of Evacuee) Property Act, 1957, where under "property" includes both movable and immovable property. This has been done for the purpose of establishing that in any event the parties did also contemplate a transfer of movable property, such as furnitures and machineries. We have also been referred to the definition of property given in subsection (25) of section 3 of the General Clauses Act to show that this includes the "benefits arising out of land" within the word "property" and a lease‑hold interest, it is contended, is certainly a benefit arising out of land. There can be no dispute with regard to the above. If there was, in the present case, a transfer or even an assignment of the lease‑hold interest, then there was a transfer of property, and even if the transfer was to the firm as such, the true legal position would be that all partners of the firm would be treated as co- owners of the property having a right to share in its distribution on the dissolution of the firm. The agreement did, therefore, clearly contemplate a transference of the lease‑hold rights of the evacuee to, at any rate, the firm of which the appellant was a partner and became entitled to a share. As against this the learned counsel appearing on behalf of the Department has contended that the transaction was not a transac tion for the transfer of property at all but was merely a transac tion for creating a partnership, and even if it was a transaction for the transfer of any property to the partnership the appellant could not take advantage of it, for the true position of a partner is that he cannot say that he is the exclusive owner of any portion of the property until the firm has been dissolved, its debts and liabilities paid and the assets divided amongst the partners. In support of this contention an observation of Cornelius J., as he then was, in the case of Ajudbia Pershad Ram v. Sharp Sunder and others (A.1 R 1947 Lah. 13) has been cited. There a passage from Lindley on Partnership has been quoted to the following effect. "What is meant by the share of a partner is his proportion of the partnership assets after they have been all realised and converted into money, and all the partnership debts and liabili ties have been paid and discharged. This it is, and this only, which on the death of a partner passes to his representatives, or to a legatee of his share; and which on his bankruptcy passes to his trustee." While it is true that a partner cannot claim any asset of a partnership as exclusively his own until a distribution of the assets thereof has taken place, yet in law every partner is, in the absence of any special agreement to the contrary, equally interest ed in the whole of the partnership assets, and if the property happened to be real property then the legal estate in it would be e governed by the ordinary doctrines of real property. Vide Lindley on Partnership, 11th Edn. p.

426. It is futile, therefore, to argue that even if the lease‑hold interest became an asset of the firm, the appellant acquired no interest therein. A lease‑hold interest is, subject to any contract to the contrary, both transfer able and heritable under the Transfer bf Property Act and, therefore, if Hariram transferred his interest in the lease‑hold to the firm, there was a transfer of property and the transaction was in essence for the transfer or sale of property. Exception (b) (ii) of Rule 4 of the Satisfaction of Charges (Evacuee Property) Rules, 1961, does not require that the money should have been paid to the evacuee for the purchase of his property by the applicant himself. It is sufficient if the charge is held by a displaced person or a local. In the present case a charge was admittedly declared in favour of the appellant, who was a displaced person, and it was partially accepted even by the Additional Settlement Commissioner (Accounts). The requirements of the aforementioned exception were, therefore, in every way satisfied. Having read the provisions of the Deed of Partnership as a whole, we have no hesitation in coming to the conclusion that the Settlement Authorities were wrong. We would, therefore, set aside the order of the Settlement Commissioner (Policy) and the Additional Settlement Commissioner (Accounts) and direct them to act in accordance with law as declared by this Court. This appeal is, accordingly, allowed, but having regard to the fact that the only respondents in this case are the Settlement Authorities, we make no order as to costs. Appeal accepted.