9911796707
TMI Blog1967 (3) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... Lala Maidhan, Lala Mai Diyal and Lala Matu Ram collectively referred to as the second party. There was a partial partition on August 21, 1947, among the members of Dina Nath Nanak Chand and the joint family status was severed. By deed dated September 8, 1943, the eight annas share which was allotted to Lala Suraj Bhan in the assessee-firm was divided between the four members of the family : four annas going to Lala Suraj Bhan and the remaining four annas to three other members. By a subsequent deed dated March 18, 1950, this arrangement was confirmed. The application of the assessee-firm for registration under section 26A of the Income-tax Act for the assessment year 1949-50 was granted by order of the Income-tax Officer, and the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... celling renewal of registration was proper and justified ?" The High Court answered the question in the affirmative. They observed that after severance of the joint family status among the members of Dina Nath Nanak Chand, the partnership deed dated August 21, 1939, ceased to represent truly the constitution of the firm, and that since all the members of the Hindu undivided family were partners under the instrument of partnership and not merely the karta, the application for renewal not signed by all the members could not be maintained. Against the answer recorded by the High Court in the affirmative, with special leave, the assessee-firm has appealed to this court. The answer to the question referred to the High Court primarily depends u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Chand and that as they were not so signed the Income-tax Officer had no power to grant renewal. The High Court agreed with the Tribunal and did not express any opinion on the view expressed by the Commissioner. Counsel for the assessee-firm submits that the High Court misinterpreted the deed of partnership. He says that the agreement of partnership was made between Lala Suraj Bhan on the one hand and the second party on the other, and that the recital that Lala Suraj Bhan represented the joint Hindu family Dina Nath Nanak Chand, did not operate to make the members of that family partners of the firm in their own right. In adjudicating upon that plea the court has in the first instance to determine the intention of the parties as disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, minors and even unborn persons and strangers to the family. A partnership under section 4 of the Indian Partnership Act is " the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all." Under an agreement of partnership there must arise the relation of principal and agent inter se between the members of the partnership for the purpose of carrying on the business. The intention disclosed by the deed was that Lala Suraj Bhan was to be a partner, and he was described as manager and he signed the document in that capacity ; it did not thereby seek to bring into existence a relationship of partners between the Hindu undivided family and the other members described as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party have got their shares inter se defined the members of the second party shall be treated as one group and would be jointly entitled to the rights and be responsible for the liabilities as a partner to the first party. Likewise the members of the first party would be jointly entitled to the rights and be responsible for the liabilities as a partner to the second party. The first part of the clause does not indicate that the members of the joint family, Dina Nath Nanak Chand, were entitled to enforce any claim against the second party. The second part is somewhat obscure. The expression " members of the first party " means, in our judgment, having regard to the other covenants, Lala Suraj Bhan alone : it was not by the use of that expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all view of the diverse covenants, we hold that the partnership agreement was between Lala Suraj Bhan on the one hand, and the named persons on the other, and the fact that Lala Suraj Bhan was originally the karta of the joint family, Dina Nath Nanak Chand, and that joint family had later ceased to exist by reason of partition will not affect the validity of the partnership or its continuance. Lala Suraj Bhan being the contracting party, the application for registration could not be rejected because the other members of the joint family, Dina Nath Nanak Chand, did not sign the application for renewal of registration of the firm for the year 1950-51. The appeal must therefore be allowed and the order passed by the High Court set aside. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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