A) ABSTRACT / HEADNOTE

Sachin Jaiswal v. M/s Hotel Alka Raje & Ors., Civil Appeal No. 3269 of 2025, concerns whether immovable property initially purchased and titled in the name of one partner becomes partnership property under Section 14 of the Indian Partnership Act, 1932 when that partner, after formation of the firm, erects and operates a building for partnership business. The Supreme Court affirmed the High Court’s finding that the late Bhairo Prasad Jaiswal had, by his conduct and express relinquishment, brought the land and the hotel building into the firm’s stock and that the property therefore belonged to M/s Hotel Alka Raje as property of the firm.

The Court relied on settled principles that separate property may be converted into partnership property by the owner’s intention and conduct, that no formal instrument is necessary to bring property into firm stock, and precedent such as Addanki Narayanappa v. Bhaskara Krishnappa and Chief Controlling Revenue Authority v. Chidambaram (Madras Full Bench). The Court rejected the appellant’s contention that title could not pass by way of a relinquishment deed without transfer under the Transfer of Property Act, holding that the decisive event was contribution to the partnership (and attendant relinquishment) after the firm’s constitution. Appeal dismissed.

Keywords: Section 14 Partnership Act; relinquishment deed; property of the firm; contribution to partnership; immovable property; Addanki Narayanappa.

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

Late Bhairo Prasad Jaiswal purchased a parcel of land in 1965. After entering into an oral partnership with his brother in 1971 and reducing that agreement to writing in 1972, the partners jointly constructed a building on the land and ran Hotel Alka Raje as the partnership business. Subsequent admissions and documentary acts included a registered relinquishment deed (09.03.1983) by which Bhairo Prasad purported to relinquish rights in favour of the firm and a later partnership deed (2000) fixing profit shares.

After the death of Bhairo Prasad (2005) and a series of partnership adjustments, a dispute arose when the legal heirs asserted ownership claims over the land and building. The firm (and later partners) sued for declaration of title and injunction; the Trial Court dismissed the heirs’ claim relying on the registered relinquishment deed and other material. On appeal, the High Court clarified the decree in favour of the partnership firm alone, holding that the land and building had become property of the firm under Section 14 of the Partnership Act. The appellant challenged that clarification before the Supreme Court, arguing inter alia that a relinquishment deed could not effect transfer of title which must follow modes in the Transfer of Property Act.

The Supreme Court’s task was to examine whether the property had been brought into partnership stock and to review whether title could vest in the firm by the conduct and instruments of the deceased partner. The Court analysed statutory text, precedent, and the chronology of acquisition, formation of partnership, construction and operation of the hotel to determine whether firm-property status had crystallized.

D) FACTS OF THE CASE

1. Land acquisition (01.10.1965): Late Bhairo Prasad Jaiswal purchased a plot measuring 4 bigha 10 biswa 5 biswansi at Rikabganj, Faizabad.

2. Partnership formation (1971–11.10.1972): He entered into an oral partnership with his brother Hanuman Prasad in 1971; partnership deed was executed on 11.10.1972 creating M/s Hotel Alka Raje. Thereafter the brothers jointly constructed and ran the hotel on the acquired land.

3. Induction of partners (07.06.1982): Two more partners joined, enlarging the firm. Bhairo Prasad executed a registered relinquishment deed on 09.03.1983 releasing his rights in favour of the firm and excluding heirs’ claims. Despite relinquishment he continued limited participation in business.

4. Subsequent partnership changes and death: Partnership deeds of 01.12.2000 and 02.06.2005 adjusted shares; Bhairo Prasad died on 30.05.2005. Later retirements and inductions occurred (2017).

5. Litigation: In 2018 heirs attempted to assert possession; the firm filed suit (22.11.2018). Trial Court decreed in favour of the firm (22.12.2020). High Court affirmed and clarified ownership as belonging solely to the firm (09.03.2022). The appellants challenged before the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether property originally in the name of a partner becomes property of the firm when the partner contributes it to the firm after partnership constitution?

ii. Whether a relinquishment deed can operate to transfer or effect ownership rights absent modes of transfer under the Transfer of Property Act?

iii. Whether formal written instrument is necessary to bring immovable property into the stock of the firm under Section 14?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The appellants contended that the land had been purchased by Bhairo Prasad as his separate property and that transfer of title cannot be effected merely by a relinquishment deed; modes under the Transfer of Property Act (sale, gift, exchange, mortgage) are exclusive for transferral of immovable property.

ii. They urged that possession and proprietary rights remained with the deceased and heirs unless clear transfer occurred complying with statutory modes; hence the High Court erred in reading the decree solely in favour of the firm.

G) RESPONDENT’S ARGUMENTS

i. The firm/respondents maintained that after constitution of the partnership the deceased partner contributed the land and constructed the hotel for partnership business and that conduct, documentary acts and the relinquishment deed evidenced intention to make the property partnership property under Section 14.

ii. It was argued that a formal transfer is not necessary where the partner’s intention and acts demonstrate contribution to the firm; therefore title should be treated as firm property and heirs have no individual claim.

H) JUDGEMENT 

The Supreme Court dismissed the appeal and affirmed the High Court. The Court reasoned that Section 14 defines property of the firm broadly to include property originally brought into the stock of the firm and property acquired for the purposes of the business. The Court emphasised settled doctrine: a partner’s separate property may be converted into partnership property by evidence of intention and by acts consistent with contribution.

Reliance was placed on Addanki Narayanappa v. Bhaskara Krishnappa where this Court held that property brought into partnership ceases to be the contributor’s trading asset and becomes partnership asset; the contributor cannot assert exclusive rights during subsistence of partnership. The Bench also relied on the Madras Full Bench decision in Chief Controlling Revenue Authority v. Chidambaram, which underscored that no formal document is necessary; intention manifested by conduct suffices.

The factual matrix acquisition in 1965, formation of partnership in 1972, joint construction and operation of the hotel, execution of a relinquishment deed in 1983 and continued participation in business together manifested the deceased partner’s intention to treat the land and building as partnership property. Having so found, the Court held that the High Court correctly read the Trial Court’s decree in favour of M/s Hotel Alka Raje alone.

The appellant’s contention that transfer must follow modes in the Transfer of Property Act was rendered unnecessary by the finding that the property had become partnership property under Section 14, and therefore separate treatment of relinquishment as a standalone transfer was not required. The Court concluded there was no merit in interference under Article 136 and dismissed the appeal.

a. RATIO DECIDENDI

The operative ratio is that where a partner brings his separate property into the stock of the firm by conduct or instrument evidencing intention, that property becomes property of the firm under Section 14 and ceases to be the individual partner’s proprietary asset. No formal instrument is necessary; the decisive test is intention demonstrated by acts (e.g., joint construction, business use, bookkeeping, relinquishment), supported by recognized precedent (Addanki Narayanappa; Chidambaram). Once contributed, the contributor’s heirs cannot assert exclusive title in the partnership asset during the partnership’s subsistence.

b. OBITER DICTA 

The Court observed obiter that questions regarding the legal mechanics of a relinquishment deed under the Transfer of Property Act did not require determination once the property’s character as firm property was established. Implicitly, the Court affirmed the view that equitable and practical considerations surrounding partnership contributions may override hyper-technical insistence on formal modes when intention and conduct are clear. The Court also noted that distinctions between ownership and beneficial interest in partnership settings must be read in light of partners’ agreement and behaviour.

c. GUIDELINES 

i. Section 14 should be interpreted to give effect to the commercial reality of partnership: property contributed by a partner becomes firm property where intention is evidenced.

ii. Courts should examine the chronology (acquisition, time of partnership formation, acts of improvement, business use) to infer intention to contribute property to firm stock.

iii. A registered relinquishment deed is a significant piece of evidence of intention but not the sole determinant; it must be read with the surrounding facts.

iv. Disputes by heirs challenging partnership characterization require clear proof that the deceased never intended contribution or that the firm’s use was inconsistent with exclusive ownership.

I) CONCLUSION & COMMENTS

The decision reiterates commercial realism in partnership jurisprudence: partners can, by intention and conduct, convert separate property into partnership property without technical formalities. For practitioners, this case underscores the evidentiary value of contemporaneous partnership deeds, bookkeeping entries, construction and operational records and any registered documents such as relinquishment deeds. Where a partner seeks to retain proprietary claims over land used for partnership business, clear reservations, contemporaneous documentation and explicit contractual stipulations are necessary.

Heirs contesting firm title must demonstrate either absence of contributing intention or show that the property was kept outside the firm by express contract. The Court’s reliance on Addanki Narayanappa and the Madras Full Bench reflects doctrinal continuity. The judgment balances property law formalities with commercial substance and will likely influence how litigants draft partnership agreements and how courts approach conversion of immovable assets into firm stock.

J) REFERENCES

a. Important Cases Referred

i. Addanki Narayanappa v. Bhaskara Krishnappa, [1966] 3 SCR 400 : 1966 SCC OnLine SC 6.
ii. The Chief Controlling Revenue Authority v. Chidambaram, Partner, Thachanallur Sugar Mills and Distilleries and Ors., AIR 1970 Mad 5 (Full Bench).
iii. Sachin Jaiswal v. M/s Hotel Alka Raje & Other, [2025] 2 S.C.R. 1396 : 2025 INSC 275.

b. Important Statutes Referred

i. Indian Partnership Act, 1932, s.14.
ii. Transfer of Property Act, 1882 (arguments referenced; no specific section determined by Court).