JUDGMENT

(Delivered by Ramakrishnan, J.)

The Chief Controlling Revenue Authority, the Board of Revenue, Madras, has referred to us, for our decision, under S. 57 of the Indian Stamp Act, about the correct classification, for the purposes 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.

Under Art. 45 of Sch. I to the Stamp Act, for an instrument of partition, as defined by S-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 Art. 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 S. 5 of the Indian Stamp Act ptovides 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 natters, would be chargeable under the Act. In contradistinction, S. 6 of the Act provides that, subject to the previsions of S. 5, an instrument so framed as to come within two or more of the descriptions in Sch. I, shall, where the duties chargeable thereurder are different, be chargeable only with the higbe of such duties. The view of the Chief Control-ing Revenue authority is that the instrument in question, though dealing with a sing matter, has been so framed as to come with the classification of an instrument of partition as well as aa instrument of dissolution of partnership, and, therefore, under S. 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, consequent) the document can be viewed only as an instr ment of dissolution of partnership and asset able to stamp duty as such.

To decide the question, it will be appr priate to give briefly the main provisions the instrument, which is in Tamil:

“Agreement of dissolution of a business partnership between the two partners Abdul Hai and M. Abduila. The said partners, pursuance of the partnership deed dated 24 August 1960, have been carrying on retail cloth business at New Karachi Stores, at No. 58, Big St., Kumbakonam, and also wholesale cloth business in the premises No. 283, Bazaar St., Kumbakonam, belonging to M. Abdulla After discussion, the two partners have decided to dissolve the above partnership business with effect from 20th March 1965. In accordanance with the agreement, the following arrangments are made for the dissolution of the partnership:

1. M. Abduila will take over the entire retail business in cloth at the New Karachi Stores at No. 58, Big St., with its goodwill trade name and assets and liabilities;

2. M. Abdul Hai will take over the whole sale cloth business being conducted at No. 283, Bazaar St., Kumbakonam, with its good-will, 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 net profits due to him. This amount his 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 Bask, Kumbakonam, on 27th July 1964, and (ii) another cheque for Rs. 30,000, drawn on the United Commercial Bank, Kumabakenam, paid on the date of the instrument by the second partner to the first partner;

4(b) After the execution of the above instru ment, 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……“

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 wall as the retail business in cloth. An instrument of partition, as defined in S 2(i5)of the Stamp Act, means any instrument whereby co-owners of any property divide or agree to divide such property in sevaralty, and includes also 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 partners, at the time of she execution of the instrument, as co-owners. That the relationship in similar cireumstances 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 A.I.R 1937 Mad. 398 F.B while repelling an argument put forward by Mr. Rajah Aiyar that the document will not be an instrument of partition because it would not be proper to regard partners at co-owners of the partnership property, Varadacharlar 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. S. 26S Contract Act, was worded in a form suggesting that it was for the court to distribute the net assets as amongst the partners; but S. 46 Partnership Act, 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 above-said view, an earlier decision of the Bombay High in Choturam v. Ganesh 3 Bom. L.R 132. where a similar view has been held that a deed or dissolution of partnership could also amount to an instrument of partition. In Board of Revenue v. Narasimham A.I.R 1961 Mad. 504. Jagadisan J. while speaking for the Beneh, 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 a!so usefully refer to the decision in Christie v. Commissioners of Inland Revenue 1866-67, 2. Ex. Rep. 46. where at page 52. Channell, J. 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 payiag another out, and where there might have been no conveyance. Hera 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 a Full Bench of the Andhra Pradesh High Court adopted the view of this court in Board of Revenue v. Alagappa 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 Art.|31 of the Schedule to the Hyderabad Stamp Act.

In Board of Revenue v. A.P Benthall, Venkatarama Aiyar, J., at page 38 of the report, has referred with approval to the decision of this Court in Board of Revenue v. Alagappa 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, the instrument can be viewed both as a deed of dissolution and a deed of partition, and under S. 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 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 distinct and separated coparcener and the fifth was a stranger. Therefore, the rationale of the decision in Board of Revenue v. Alagappa did not tern 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 Court, indicate to our mind that any difference would arise between partners who belonged to single family and partners who were strangers.

Learned Counsel for the respondent referred to a decision of the Supreme Court in Narayanappa v. Bhaskara Krishnappa. That decision dealt with an entirely different question, viz, whether an instrument of dissolution of partnership in that particular case was compulsorily registrable under S. 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 immoveable property. The Supreme Court held that the interest of the partners of a family in the partnership assets was moveable property and the document evidencing the relinquishment of that interest was not compulsorily registrable under S. 17 (1) of the Registration Act. The decision of the Andhra Pradesh High Court in Narayanappa v. Krishnappa A.I.R 1959 A.P 380 F.B 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 moveable and immoveable property cannot be regarded as a right or interest in immoveable property within the meaning of S. 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 reference.

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.

The reference is, therefore, answered in favour cf the revenue. We bold that the instrument dated 20th March 1965 operates both as a dead of dissolution of partnership as well as a deed of partition, and therefore, under S. 6 of the Indian Stamp Act, the higher duty payable for a deed of partition will bt payable on the instrument. There will be no order as to costs.

V.C.S