TMI Blog1980 (10) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The petitioner is a public limited company incorporated under the Indian Companies Act. Its business is to manufacture and sell sugar. The petitioner manufactures sugar in its factory situated at Meerut. 3. There is a sugar factory known as S.B. Sugar Mills at Bijnor. It was originally owned by a partnership concern comprised of six brothers. The partnership firm was dissolved through court action in 1944. The mill thereafter became the property of the six brothers as co-owners. Banarsi Dass is one of the brothers. This mill also used to manufacture and sell sugar under the name and style of S.B. Sugar Mills, Bijnor. In 1948 Banarsi Dass purchased the share of one of his brothers. He, therefore, became a co-owner to the extent of 1/3 in this joint property. At the time of the dissolution of the partnership an agreement was arrived at between the six brothers that the running of the factory will be leased out by the co-owners to anyone among themselves on a bid being made by each of the co-owners. The lease was to be for a period of 5 years. Banarsi Dass took the lease of S.B. Sugar Mills, Bijnor in 1961 for a period of 5 years. 4. It seems that Banarsi Dass had some fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above proviso means Jaswant Sugar Mills Ltd. by itself for the Meerut factory or does it mean Jaswant Sugar Mills Ltd. as a legal entity producing sugar both individually at Meerut and along with Banarsi Dass at Bijnor. 8. It cannot be disputed that a partnership concern by itself is not a legal entity. A partnership concern or firm has, however, been given individual status in various enactments like the Income-tax Act or the Code of Civil Procedure. The question is whether it is a "person". Clause (42) of Section 3 of the General Clauses Act defines this word as under :- "(42) `person' shall include any company or association or body of individuals, whether incorporated or not." On a plain reading of the General Clauses Act it would appear that S.B Sugar Mills Lease Firm, a partnership firm or concern, would be a person distinct from the petitioner which is a public limited company. It is, therefore, urged that sugar produced in the factory at Meerut is produced by a person other than the person who is manufacturing sugar in the factory at Bijnor. This view finds support from a judgment of the Kerala High Court in Rice and Oil Mills Partnership Firm, Kandassakadayu v. Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compendious expression of the relationship between the partners, who, by an agreement between them embark on a commercial venture and contribute capital or labour and share profit and loss according to mutual understanding..........." Nevertheless after making the above observations the Full Bench went on to notice that, "In mercantile practice the trade seems to look upon the firm as a kind of a body distinct from its members and capable in its right of owning property and entering into dealings and creating rights and liabilities binding on the partners. But in law that clearly is not the position. Therefore, though technically in law the partnership is not a legal entity or a juristic person, there are occasions, both in law and in practice, when a Firm has been treated as having a distinct personality from those of the partners. Indeed, as noticed earlier, the Code of Civil Procedure and the Income-tax Act recognise a partnership firm as a "person" or an entity having independent and distinct existence liable for its acts and entitled to enforce rights. One has to see the context before opining in law whether in those circumstances the firm would or would not be a distinct en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip it becomes the property of the firm and what a partner is entitled to is his share of profits if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in Cl. (a) and sub-clauses (i), (ii) and (iii) and Cl. (b) of S. 48. 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 exclusive property of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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