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CASE NO.: Appeal (civil)  5720 of 2006

PETITIONER: Shreedhar Govind Kamerkar

RESPONDENT: Yesahwant Govind Kamerkar and Anr

DATE OF JUDGMENT: 12/12/2006

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T [Arising out of SLP (Civil) No.8368 of 2005]

S.B. SINHA,  J :

       Leave granted.

       Parties herein are brothers.  The dispute between them is tenancy right  in respect of  a premises known as ’Navalkar Building’ situate at N.C.  Kelkar Road, Dadar in the town of Mumbai.   Appellant herein allegedly  acquired the said tenancy right  in terms of a deed of assignment entered into  by and between him and one Saraswati Balkrishna Pawar and three others.   One Krishna Tatoba Pawar alias Balkrishna Tatoba Pawar was the original  tenant of the said premises.  He was running a hair cutting saloon therein  under the name and style of ’Anant Hair Dressing Saloon’.  He died leaving  behind him the assignors of the said  deed of assignment dated 18.01.1966.   The business as also the tenanted premises was assigned for valuable  consideration.  He was allegedly carrying on business therein.  Leave and  licence agreement was executed by him in relation to the self-same premises  in favour of one Shri Walke on 01.02.1970.  The said Walke was running a  business in the said premises under the name and style of ’Deepak  Provisional Store’.  A dispute arose between the parties resulting in initiation  of a proceeding under Section 145 of the Code of Criminal Procedure.  The  properties were attached.  The said Walke also filed a suit.  The said suit is  said to have been compromised.  Appellant herein is said to have obtained   possession of the said premises on 23.03.1978, whereafter he started a  business under the name and style of ’Shree Medico’.   

       The parties hereto i.e. the three brothers, entered into a partnership on  01.04.1971.  The same was dissolved on 31.03.1977, inter alia, on the  premise that the appellant had been claiming full ownership in relation to the  said tenanted premises as also the business in Shree Medico.  A suit was  filed by Respondent No.1 in the City Civil Court, Mumbai, which was  registered as S.C. Suit No.5903 of 1981 wherein, inter alia,  the following  prayers were made :

(a)     It be declared that the Plaintiff and the Defendants  Nos. 1 and 2 have 1/3 shares in the suit business of  Medical and General Store carried on Navalkar  Building on the ground floor, N.C. Kelkar Road,  Dadar, Bombay 400 028 as also the tenancy rights  in the presmises as also the premises on the ground  floor of Navalkar Building, N.C. Kelkar Road,  Dadar, Bombay-400 028.

(b)     It may be declared that the partnership business of  Medical and General Stores carried on in Navalkar  Building on the ground floor, N.C. Kelkar Road,

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Dadar, Bombay-400 028, stood dissolved as from  the date of the suit or from such other date as this  Hon’ble Court may deem fit.

(c)     The accounts of the partnership business of  Medical and General Stores be made up and the  Plaintiff be awarded the amount found due to his  share at the foot of the account."

       Although in the said suit allegedly no relief was claimed in respect of  the business of the Deepak Provisional Store,  at the hearing,  the plaintiff  made his claim in respect of  the business running under the name and style  of ’Shree Medico’ and claimed interest in the said ’Deepak Provisional  Store’.  The appellant in his written statement did not raise any question as  regards legality or otherwise of  the said tenancy right in the partnership in  terms of Section 15 of the Bombay Rents, Hotel and Lodging House Rates  Control Act, 1947 (for short, ’the  Bombay Act’).

       In the said suit, inter alia, the following issues were framed :

"1.     Whether the Plaintiff proves that the partnership          firm of M/s Shreedhar Govind Kamerkar was/is          registered under the Indian Partnership Act?                   2.     Is the answer to the above issue is in the  affirmative, whether the Plaintiff proves that the  business known as Deepak Provision Centre and  the shop premises on the Ground Floor, Navalkar  Building, N.C. Kelkar Road, Dadar, Bombay-400  028 ?

3.      If the answer of the above issues in the affirmative,  whether the Plaintiff proves that on 31st March,  1977 the said business of Deepak Provision Centre  was in existence ?    

4.      If the answer to the above issues is in the  affirmative, whether the Plaintiff proves that the  said business of Deepak Provision Centre and the  said premises were excluded from the dissolution  of the said firm of M/s Shreedhar Govind  Kamerkar ?

5.      Whether the Plaintiff proves that the business of  M/s Shree Medico carried on by the Defendant  No.1 in the said premises is a partnership business  of the parties to the suit ?

8.      Whether the Plaintiff proves that he is entitled to  1/3rd share in the said business of the 1st Defendant  and in the tenancy rights in the said premises ?

9.      Whether the Plaintiff proves that he is entitled to  the dissolution and accounts of the said business of  the 1st Defendant and the tenancy rights of the said  premises ?"

       Issue Nos. 2, 8 and 9 were answered  in the negative, whereas Issue  Nos.3, 4 and 5 were held to be not surviving.  The learned Trial Judge, inter  alia, on the aforementioned findings dismissed the suit.  On an appeal  preferred by the respondents herein, a learned Single Judge of the High  Court, however, allowed the appeal directing :

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"a)     It is declared that the plaintiff and defendant Nos.1          and 2 have 1/3rd share each in the business of          Deepak General Stores carried on the ground floor          in Navalkar building at N.C. Kelkar Road, Dadar,          Mumbai-400 028 and also equal tenancy rights in          the premises where Deepak General Stores          business was being carried out.

b)      It is declared that partnership business of Deepak          General Stores at the aforesaid premises stood          dissolved as from July 1981.

c)      The accounts of the partnership business of          Deepak General Stores shall be made and the          plaintiff and the defendants will be entitled to          amount found due to their share at the foot of the          account.

d)      Partnership premises where Deepak General Stores          was being run shall be partitioned by metes and          bounds and they will be entitled to possession of          1/3rd share and will be placed in possession.

e)      There will be an enquiry into the mesne profits          from the date of the suit till delivery of possession          in respect of Deepak General Stores and that of the          premises.

       Plaintiff will be entitled to costs of this suit as well          as of the Appeal."

       The High Court in its judgment, inter alia, relied upon the admission  of the appellant herein that the royalty received in respect of the said  tenanted premises used to be deposited in the partnership account.  

       The deed of dissolution dated 31.03.1977 clearly postulated that the  said tenancy was a part of the assets of the partnership (Ex.P-3) and  agreement dated 01.02.1977 (Ex. P-4), whereby and whereunder the parties  thereto agreed that the partnership should be dissolved.

       Mr. U.U. Lalit, the learned Senior Counsel appearing on behalf of the  appellant, would inter alia submit :

1)      Having regard to the stand taken by the learned counsel for the          respondents before the City Civil Court as also before the High Court          to the effect that no share was being claimed in respect of the business          of ’Shree Medico’, and the said claim having been kept confined only          to ’Deepak Provisional Store’, the High Court committed a manifest          error in  passing the impugned judgment.

2)      Having regard to the finding of fact arrived at by the City Civil Court          that the tenancy right in respect of the premises in question had been          acquired by the appellant in his individual capacity and he having          obtained  possession thereof from the licensee only in the year         1978,           prior whereto the partnership was dissolved, the question of the        said          property being an asset of the partnership did not and could not        arise.

3)      The plaintiff-respondent, in his deposition having clearly admitted          that he had     no concern with the said tenanted premises, the          impugned judgment cannot be sustained.            4)      In any event having regard to the provisions contained in Section 15          of the Bombay Act, the tenancy right could not have been assigned.  

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5)      Partnership having been dissolved on 31.03.1977 and  the suit          having been filed on 16.10. 1981, the same was clearly barred by          limitation.

       Mr. Shekhar Napadhe, the learned Senior Counsel appearing on  behalf of the respondents, on the other hand, would contend :          1.      It is not a fit case where this Court should exercise its discretionary  jurisdiction under Article 136 of the Constitution of India.

2.      Having regard to the provisions contained in Section 17 of the  Partnership Act, the suit was not barred by limitation.

3.      No question as regards applicability of Section 15 of the Bombay Act  having been raised in the written statement, nor any issue having been  framed in that behalf, the same should not be permitted to be raised  for the first time before this Court.

       The deed of partnership admittedly has not been produced.  The  parties, however, had entered into a formal deed of partnership. Non  production of the said document has, however, not been taken serious note  of by the High Court.  What was produced was extract from the certificate of  registration issued by the Registrar of Firms.   

       In absence of the deed of partnership, it might not be  possible for us  to arrive at a finding that the partnership was originally brought in the stock  of the firm.   

       We will, therefore, have to proceed to determine the said question on  the basis of the  materials which are available on records.

       We may at the outset notice the admission of the appellant in his  deposition before the learned Civil Court, which is in the following terms :          "Q.     You have stated that the business of M/s Shridhar          Govind Kamerkar was carried on at Navalkar          Bldg.  So what was this premises at Navalkar          Bldg. used ?

Ans.    The said premises were given for running the          business to one Shri Walke and the royalty was          received therefrom was credited to the accounts of          M/s Shridhar Govind Kamerkar a partnership firm.

Q.      I put it to you that prior to giving the premises in          Navalkar Bldg. to Shri Walke Deepak Provision          Centre was being run therefrom.  What have you to          say?

Ans.    I started the said business of M/s Deepak Provision          Centre in the said premises."

       Indisputably, a deed of dissolution  was entered into by and between  the parties.  The said instrument was executed on 31.03.1977, the  relevant  portions whereof are as under :

"WHEREAS   the parties above named were partners in a  partnership, a will for carrying on the business of Bidis,  Tobacco, Cigarette and other sundry articles under the  name and style of M/S SHREEDHAR GOVIND  KAMERKAR, at 203/205, Haji Habib Chawl, N.M.  Joshi Marg, Bombay 13 and the tobacco shop at

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Harharwala Building, Delisle Road, (N.M. Joshi Marg),  Bombay and  Deepak Provision Centre, Navalkar Bldg.   N.C. Kelkar Road, Dadar, Bombay-28, and a tobacco  godown at Rangari Chawl, Maidan, Patra Shed, N.M.  Joshi Marg, Bombay 13, under the terms and the  conditions of a deed of partnership duly executed on the       day of January, 1971, Between the Party of First Part,  Second  Part & Third Part."

                       xxx                     xxx             xxx 1.      The parties hereby agreed that the partnership  between them to carry on the said business in the name  and style of Messers SHREEDHAR, GOVIND  KAMERKAR and other sundry articles at 203/205 Haji  Babib Chawl, N.M. Joshi Marg, Bombay 13 and a  tobacco shop at Harharwala Building, N.M. Joshi Marg,  known as Ganesh Tea House and Deepak Provision  Centre, Navalkar Building, N.C. Kelkar Road, Dadar,  Bombay 28 and tobacco godown at Rangari Chawl  Maidan, Patra Shed, N.M. Joshi Marg, Bombay 13 and  Mor Brand Chuna (Lime) and the parties had agreed the  terms under which the said partnership was dissolved on  the further terms and conditions.

                       xxx                     xxx                     xxx

3. In respect of Bidi shop at Harharwala Bldg., N.M.  Joshi Marg, Bombay-13, known as Hotel Ganesh Tea  House which is given on royalty shall remain with the  party of the Third Part Shri P.G. Kamerkar and he shall  be responsible to repay the deposit amount received.

4. In respect of Deepak Provision Centre at N.C. Kelkar  Road, Dadar, Bombay 28 the case is pending in court of  the said shop and after the court decision the decision  will be taken with the mutual consent of all the partners.   And secondly in respect of Mor Brand Chuna (Lime) the  matter is under dispute with other parties and that matter  will be decided with the mutual consent of these  partners."

       Although  the agreement dated 01.02.1977 is a disputed document,  but having regard to the fact that the High Court had placed reliance  thereupon, we may also notice clause 8 thereof which is in the following  terms :

8)      The closed shop viz. Deepak Provisional Stores  with the room situated at Nawalkar Building, N.C.  Kelkar Road, Dadar, Mumbai-400028 is of the  ownership of all the three partners and all the three  shall bear the expenditure to be incurred therefor.   Further, all the three shall equally bear the entire  expenditure viz. its rent etc."

We may also notice that although a claim was made by the plaintiff  that the tenancy had been acquired by the partnership from the beginning,  from the deposition of the plaintiff-respondent no.1, it appears that the  following facts have been elicited : (i)  Deepak Provisional Store (Centre)  was not run by the partners (page 61);  (ii) All licences of Shree Medico  were standing in the name of defendant no.1.  He  had  never signed on any  document pertaining to Shree Medico (page 62);  (iii)  He  had no source of

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income in 1966 (page 71); (iv) There is no documentary evidence to show  that the said premises were acquired out of the funds of partnership firm  (page 72);  (v) No documentary evidence exists to show that the business of  partnership was carried out at the same premises (page 82); (vi) The  property was under attachment from 1969 to 1978 (page 82); (vii) The  possession of the property was obtained in 1978 (page 84); and (viii)  Plaintiff claimed a share in the business which was running under the name  and style of ’Shree Medico’ and not of ’Deepak Provisional Store’ (page  94).

However despite a claim having been made by the plaintiff in respect  of ’Shree Medico’, it appears, a statement was made at the Bar by the  learned counsel for the plaintiff on 17.03.1994, which had been recorded by  the learned Trial Judge  as under :

"(1)    That the Plaintiff is not claiming any right in the          business of     ’Shree Medico’.

(2)     The Plaintiff is claiming the right only in respect          of the business of ’Deepak Provision Centre".

(3)     The tenancy rights in respect of the shop premises          being Shop No.1."

The High Court also in para 6 of its judgment noticed the said  statements in the following terms  :

"\005Counsel for the appellants however fairly conceded  that the plaintiffs-appellants  are not making any claim in  respect of Shree Medico."                  

       The learned Senior Counsel appearing on behalf of the appellant may,  thus, be right in his submission that keeping in view the pleadings of the  parties as also the statements of the plaintiff in his deposition before the  learned City Civil Court, the respondent could not lay any claim in respect  of any business which was being carried in the premises in question under  the name and style of ’Deepak Provisional Store, but the same, in our  opinion,  may not be decisive to arrive at a conclusion that the right in  respect of the tenanted premises in question never formed the part of the  assets of the partnership.

       We have noticed hereinbefore that either there was no deed of  partnership, or in any event the same had not been produced.  What,  therefore, formed ’the assets’ of the partnership must be gathered from the  admission of the parties as also the other materials available on records.                    What forms the property of the firm is stated in Section 14 of the  Indian Partnership Act, 1932  (for short, ’the  Act’).  It 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 of 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 required  for the firm."

       With a view to determine the said question, we  may notice some

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other provisions of the Act as well.

"17. Rights and duties of partners. - Subject to contract  between the partners -

after a change in the firm

(a) - where a change occurs in the constitution of a firm,  the mutual rights and duties of the partners in the  reconstituted firm remain the same as they were  immediately before the change, as far as may be;

after the expiry of the term of the firm, and

(b) - where a firm constituted for a fixed term continues  to carry on business after the expiry of that term, the  mutual rights and duties of the partners remain the same  as they were before the expiry, so far as they may be  consistent with the incidents of partners at will; and

where additional undertakings are carried out,

(c) where a firm constituted to carry out one or more  adventures or undertakings carries out other adventures  or undertakings, the mutual rights and duties of the  partners in respect of the other adventures or  undertakings  are the same as those in respect of the  original adventures or undertakings."

"50.  Personal profits earned after dissolution.-  Subject to contract between the partners, the provisions  of clause (a) of section 16 shall apply to transactions by  any surviving partner or by the representatives of a  deceased partner, undertaken after the firm is dissolved  on account of the death of a partner and before its affairs  have been completely wound up :            Provided that where any partner or his  representative has bought the goodwill of the firm,  nothing in this section shall affect his right to use the firm  name."

"53. Right to restrain from use of firm name or firm  property.- After a firm is dissolved, every partner or his  representative may, in the absence of a contract between  the partners to the contrary, restrain any other partner or  his representative from carrying on a similar business in  the firm name or from using any of the property of the  firm for his own benefit, until the affairs of the firm have  been completely wound up :

       Provided that where any partner or his  representative has bought the goodwill of the firm,  nothing in this section shall affect his right to use the firm  name."

         The parties have entered into the deed of dissolution voluntarily.  The  appellant herein is not an illiterate.  He has been carrying on business.  He  had acquired tenancy right on his own showing.  He had acquired the  tenancy right in his own name.  He had also been fighting litigation with the  said Walke for a long time.

       We have also noticed hereinbefore clause (8) of the agreement dated

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01.02.1977.  From the preamble of the deed of dissolution dated 31.03.1977,  it is evident that the partnership had been carrying on business inter alia in  Bidis, Tobacco, Cigarettes etc. under the name and style of ’M/s Shreedhar  Govind Kamerkar’ situated Haji Habib Chawl, N.M. Joshi Marg, Bombay  and a tobacco shop at Harharwala Building, Delisle Road and a tobacco  godown at Rangari Chawl, Maidan, Patra Shed, N.M. Joshi Marg, Bombay  but also ’Deepak Provisional Store’, Navalkar Building.

       Clause (1) of the said deed of dissolution also refers to ’Deepak  Provisional Store’.  In clause (3) of the said instrument, royalty in relation to  a hotel, namely, Hotel Ganesh Tea House was assigned to P.G. Kamerkar,  Respondent No.2 herein.  In relation to the ’Deepak Provisional Store’, it  was categorically stated that the matter was pending in the court.  Clause (4)  of the said deed of dissolution suggests that the parties intentionally left out  division of their properties in respect of ’Deepak Provisional Store’ as also  ’Mor Brand Chuna (Lime)’, as litigations were pending.

       The very fact that the parties had referred to the business carried out  under the name and style of ’Deepak Provisional Centre’ at N.C. Kelkar  Road, Dadar, Mumbai, which was not and could not be the subject-matter of  the partnership as the same was entered into in the year 1971 and dissolved  in 1977, the admission of the appellant herein that the royalty received from  the said tenanted premises was being deposited in the partnership account  assumes significance.  If  the said property was the exclusive property of the  appellant, and he had been dealing therewith as the sole owner thereof, the  question of any reference being made thereto in the deed of dissolution  would not have arisen.  It may be true that in absence of the original deed of  partnership dated 01.04.1971 having been brought on records, it is difficult  for the court to arrive at a finding that the same had been originally brought  in the stock of the firm.  There is also no direct evidence that the appellant   had brought the same as his investment  in the partnership at the initial stage  thereof but it is evident that the same was done  at a latter point of time. An  inference in relation thereto must be drawn for the other materials on  records. The said agreement dated 01.04.1971 having been in dispute, we  may not be decisive.  In a case of this nature, the conduct of the parties  assumes significance.  Admission, as is well-known, is the best proof of a  claim.  Section 58 of the Indian Evidence Act states that the facts admitted  need not be proved.  The very fact that the royalty received in respect of the  said premises was being deposited in the partnership account is a clear  pointer to show that the same was the property of the partnership.

       We may at this juncture also consider the submission of Mr. Lalit, in  regard to the applicability of the provisions of Section 15 of the Bombay  Act, which reads as under :

       "In absence of contract to the contrary, tenant not  to sub-let or transfer or to give on licence.

       (1) Notwithstanding anything contained in any law  but subject to any contract to the contrary, it shall not be  lawful after the coming into operation of this Act for any  tenant to sub-let the whole or any part of the premises let  to him or to assign or transfer in any other manner his  interest therein and after the date of commencement of  the Bombay Rents, Hotel and Lodging House Rates  Control (Amendment) Act, 1973, for any tenant to give  on licence the whole or part of such premises.

       Provided that the State Government may by  notification in the Official Gazette, permit in any area the  transfer of interest in premises held under such leases or  class of leases or the giving on licence may premises or  class of premises and no such extent as may be specified  in the notification.

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                        It is not in dispute that the State of Maharashtra had issued a  notification in terms of the proviso appended to Section 15 of the Bombay  Act, in terms whereof assignment of a business together with tenancy right  was permissible.  Furthermore,  Section 15 does not contain an absolute bar.   It is subject to a contract to the contrary between the landlord and the tenant.   A landlord may also in a given situation by reason of acceptance of rent or  otherwise from the sub-tenant or assignee may acknowledge the sub-tenancy  or  assignment and thus accept him to be his tenant.  It is not a case where a  landlord has brought any suit for eviction of the tenant on the ground that he  had wrongfully assigned his right, title and interest in the tenanted premises  in contravention of Section 15 of the Bombay Act and, thus, liable for  eviction.  We are concerned with a partnership.  Assisgnment of tenancy  having regard to the statutory provision would not attract Section 23 of the  Indian Contract Act.  Even otherwise in a case of  this nature, the said  question does not arise.

       In any event, a transaction may be void so far as landlord is  concerned.  Such a void transaction may not have any effect on the  application of the property towards partnership.   To some extent, the point  appears to have been covered by this Court in Arm Group Enterprises Ltd. v.  Waldorf Restaurant and Others [(2003) 6 SCC 423], wherein this Court  opined :

"\005Mere carrying on by the tenant a partnership business  as partner in the leased premises, no doubt, does not per  se amount to sub-letting unless it is shown that he  withdrew his control of the leased premises and parted  with the possession of the property and thereby  surrendered his individual tenancy rights in favour of the  partnership firm\005"                            

       We may, in this connection, usefully notice that in ’Lindley &  Banks  on Partnership’, 18th Edn., it is stated :

"8-13   Lord Lindley observed that "a partnership may be          illegal upon the general ground that it is formed for          a purpose forbidden by the current notions of          morality, religion, or public policy".  On that          ground, he considered that a partnership formed          for the purpose of deriving profit from the sale of          obscene or blasphemous prints or books, or for the          procurement of marriages or of public offices of          trust, would be "undoubtedly illegal."

8-14    It has already been seen that a partnership between          a resident British citizen or a resident alien and an          alien enemy is illegal and incapable of creation or          continuation; on the same basis, a partnership          formed in order to trade with an enemy nation          would clearly be illegal.  However, since a neutral          may lawfully trade with one of the belligerent          nations, a partnership formed for that purpose          would be unobjectionable."

8-16    Equally, although a statute may appear to prohibit          certain activities and impose a penalty for failure          to observe its provisions, it does not follow that          conduct which would attract the penalty is          necessarily illegal.  If the statute can genuine be          classed as prohibitory, as will be the case if the          penalty is imposed for the protection of the public,          then such conduct will be illegal  Per contra if, on          a true construction of the statute, the penalty

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       merely represents, as Lord Lindley put it, "the          price of a licence for doing that the statute          apparently forbids".  Thus, in Brown v. Duncan, it          was held that a partnership of distillers was not          illegal, even though one partner carried on          business as a retail dealer in spirits within two          miles of the distillery (contrary to the Duties on          Sprits Act 1823, ss. 132, 133) and was not          registered as a member of the firm in the excise          books (as required by the Excise Licences Act          1825, s. 7).  Lord Lindley did, however, doubt          whether the statutes in question were properly          construed by the court.   

               The following alphabetical list of businesses          and professions contains the most important          example of partnership whose legality is or may be          affected by statute."

8-31    By virtue of the Financial Services and Markets          Act 2000, no person may carry on, or purport to          carry on, a regulated activity in the United          Kingdom unless he is duly authorized so to do or is          exempt from the provisions of the Act in relation          to that activity.  Contravention of this general          prohibition constitutes an offence and any          agreement made by a person whilst carrying on a          regulated activity in breach of the prohibition will          be unenforceable against the other party.

10.44   What is of greater importance is to ensure that the          occupation rights of the firm are clearly          established where the premises are to remain in the          sole ownership of one or more of the partners.

               If a lease in favour of the firm is to be          granted,        then it must be in writing.  The          termination of such a lease may, however, not be          without difficulty and its existence may          conceivably have adverse inheritance tax          consequences.

               If the agreement omits any reference to such          occupation rights then, in the absence of any other          evidence, it will not be assumed, merely because          the premises are indispensable to the partnership          business, that they belong to the firm or are subject          to the firm’s right to (i) a lease or tenancy or,          where that is still relevant, (ii) an exclusive licence          to occupy within the meaning of the Agricultural          Holdings Act 1986.  It will rather be inferred that          each individual partner who is not beneficially          interested in the premises has been granted a non-         exclusive licence to enter them in order to carry on          the partnership business.  Such licence would seem          to be contractual in nature and might, as a matter          of implication, not be terminable during the          currency of the partnership, particularly if it can be          shown that the partnership business can only be          carried on from those premises and that the          termination of the licences would strike at the          substratum of the partnership  agreement.  In such          circumstances the only effective way of          determining the licence would be to dissolve the          partnership but, even then, they would prima facie

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       continue until the winding up is complete."             

       We are not oblivious that all properties of the owner may not be  partnership property and each case,  thus,  must be determined on the basis  of fact materials on record.     

       In  Dwijendra Nath Mullick and Another v. Rabindra Nath Chatterjee  and Others [AIR 1987 Cal 289], it is stated : "18. It is for the partners to determine by agreement  amongst themselves what shall be the property of the  firm and the quantum of their beneficial interests therein  inter se and what shall be the separate property of one or  more of them. If there is no express agreement, then the  source from which the property was obtained, the  purpose for which it was acquired, and the mode in  which it has been dealt with, are to be considered to  ascertain such intention."                  In Jayalakshmi v. Shanmugham and Others [AIR 1988 Ker 128], it is  stated :

"\005It is not necessary that every partnership for the  purpose of its business should own and utilize its own  partnership property.  Therefore mere user of a shop for  the business will not make the shop or the tenancy right  in it a partnership asset.  Something more is required.  It  was so held by the Supreme Court in Arjun Kanoji  Tankar v. Santaram Kanoji Tanker (1969) 3 SCC 555  also."  

       We, however, in this case are of the opinion that as the usufruct of his  lease hold was to be deposited in the partnership account, the same  formed  the part of the assets of the partnership.

       The question  as to whether the suit was barred by limitation or not  also must be judged from the aforementioned context.  The cause of action  for the suit was said to have been arisen, as stated by the plaintiff in his  plaint in the following terms :

"The plaintiff says that the cause of action arose at the  end of July, 1981 when the Defendant No.1 refused to  render accounts and started claiming the partnership  business and the partnership premises as his own."

       The question which would, therefore, arise is as to whether running of  ’Shree Medico’ without complying with clause 4 of the deed of dissolution  would give rise to a continuous cause of action.  Mere execution of deed of  dissolution did not discharge the parties thereto from their rights and  liabilities.  The rights and liabilities of the partners in respect of the  partnership property  would be discharged only when the firm is finally  wound up and the properties of the firm are distributed.   

       Sections 50 and 53 of the Act indicate to the said effect.  The partner  of a dissolved firm can not only exercise his right under Section 50, he may  also restrain the use of the firm’s name and firm’s property in terms of  Section 53 of the Partnership Act.  Section 37 of the Partnership Act  determines the rights of the outgoing partner in certain cases to avoid shares  to subsequent profits.  If the tenancy right was being subjected to any profit  by one of the partners, the cause of action arose.  The cause of action for the  suit, therefore, did not perish with the execution of the deed of dissolution on  31.03.1977.

       For the reasons aforementioned, there is no merit in this appeal.  It is

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dismissed accordingly.  The parties shall pay and bear their own costs.