Mahendra Kumar Malaiya (Dead) Through Lrs Smt. Sulochana Malaiya vs Ajit Kumar Malaiya

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FA No.124 of 1997 & FA No.144 of 1997

IN THE HIGH COURT OF MADHYA PRADESH

AT JABALPUR

BEFORE


HON’BLE SHRI JUSTICE VIVEK JAIN

FIRST APPEAL No. 124 of 1997

CNR No.: MPHC010005451997

BALCHAND MALAIYA & ORS.
Versus
AJIT KUMAR MALAIYA & ORS.

WITH

FIRST APPEAL No. 144 of 1997

CNR No.: MPHC010005621997

MAHENDRA KUMAR MALAIYA (DEAD) THROUGH LRS SMT.
SULOCHANA MALAIYA AND OTHERS
Versus
AJIT KUMAR MALAIYA AND OTHERS
……………………………………………………………………………………………
Appearance:
Shri Ravish Agrawal - Senior Advocate with Shri Bhanu Pratap Singh-
Advocate for the Appellants (in FA No. 144 of 1997)
Shri Alok Vagrecha, Shri Girish Kumar Shrivastava, Shri Greeshm
Jain, Shri Samarth Shrivastava Shri Abhinesh Soni and Shri Divyanshu Dev
and Ms. Shraddha Pandey- Advocates for the appellants. ( FA No.124 of 1997)
Shri Avinash Zargar, Shri Akhilesh Jain & Shri Gouransh Bhurrak-
Advocate for the respondents in both the appeals.
. ……………………………………………………………………………………………
( J U D G M E N T)
(Reserved on 10.09.2026)
(Pronounced on 14.10.2026)


Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

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FA No.124 of 1997 & FA No.144 of 1997

These two appeals are filed challenging the judgment and decree
dated 23-12-1996 passed in original suit RCSA No.20-A/1993 that was
initially filed in December, 1959. This first appeal is being decided in the
year 2026, which is 67 years after filing of the original suit before the trial
Court.
2 . During course of hearing of this appeal, it was contended by counsel
for the appellants/defendants that on account of long pendency of this
litigation, three generations of the family have suffered by the family being
dragged into this litigation by one of the parties. Be that as it may be.
3 . This case was extensively argued running over many days. There are
almost 2,000 exhibited documents in the case and deposition of each
witness runs into well over 50 pages each and the trial Court record runs
into almost 6,000 pages. Looking to the extra-ordinarily large number of
exhibits, the exhibits of defendants are also numbered in two groups/series
by the Trial Court, one group is Ex. D/1-9 (numbered for example Ex. D 1-
9/ D-1 and so on). The other group is Ex. D/10-16 (numbered for example
Ex. D 10-16/D-1 and so on).
4 . The matter arises from a partition suit filed by one of three brothers
seeking partition of assets and businesses of a joint family which was
initially running a business in the name and style of Hiralal Tikaram. The

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

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FA No.124 of 1997 & FA No.144 of 1997

dispute basically arises between three sons of deceased Tikaram who
expired somewhere in the year 1915. The three sons succeeded properties
by survivorship upon death of Tikaram in business being run by the family,
which was later on diversified into number of businesses. These three sons
of deceased Tikaram are Shiv Prasad Malaiya, Shobharam Malaiya, and
Balchand Malaiya. The eldest son namely Shiv Prasad Malaiya expired in
February, 1951 and after his death, the suit was filed for partition by his son
Dashrath Kumar Malaiya in December, 1959. The suit was filed by legal
representatives of deceased Shiv Prasad Malaiya along with plaintiff No.1
Dashrath Kumar Malaiya, impleading the two brothers of Shiv Prasad
Malaiya namely Shobharam Malaiya and Balchand Malaiya as well as their
children who were stated to be members of Hindu Undivided Family. The
defendants are thus, grouped into defendants No.1 to 9 who are Shobharam
Malaiya, his wife and children and the other group is defendants No.10 to
18, who are the youngest brother of deceased Shiv Prasad Malaiya, namely
Balchand Malaiya and his wife, sons and daughters. Evidence was led
separately by the two sets of defendants who represent the two different
brothers and documents were also exhibited separately by the two groups
of defendants.

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

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FA No.124 of 1997 & FA No.144 of 1997

5. The trial Court has passed a decree of partition by directing that the
plaintiffs are entitled to get 1/3 share in the joint Hindu family properties
mentioned in Schedule-A to the plaint and also to seek rendition of
accounts of the income from properties and businesses mentioned in
Schedule-A to the plaint. This decree passed by the trial Court has been
separately challenged in two first appeals. FA No.124/1997 has been filed
by Balchand Malaiya and his family members while FA No.144/1997 has
been filed by legal representatives of Shobharam Malaiya.
6 Shri Ravish Chandra Agrawal, learned senior counsel representing
the appellants in FA No.144/1997 has vehemently argued that the judgment
and decree of the trial Court is vulnerable in as much as there was no
existence of any joint family on the date of filing of the suit, which was in
December 1959 and the trial Court has erroneously held that there is
existence of a Hindu Undivided Family/joint family/coparcenary on the
date of filing of the suit in December 1959. Learned counsel for the
appellants has vehemently argued that there was partition between the three
brothers Shiv Prasad, Shobharam, and Balchand on the date of Diwali of
year 1941 i.e. on 20.10.1941 . The Bahi-khata of 1939-40 mentions the last
joint account of the family vide Exhibit D-272 and vide Exhibit D-280,
281, 283, and 287 the opening balance of Rs.2,93,574/- was split during the

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

year 1940-41 equally amongst the three brothers into three separate ledgers
which leads to an accounting proof that the businesses were split three
ways in the next year which matches the date 20.10.1941. It was further
argued that thereafter separate and independent ledgers/accounts were
maintained continuously and separation of account is itself proof of
partition of business assets. He further argued that partnership deed Exhibit
D1-9/D1 contains the recital that properties and businesses have been
partitioned on 20.10.1941 and this partition deed is not in dispute. What is
being disputed is that this partnership deed was only in name, just to get
benefit in income tax liability by the family. However, it cannot be argued
by the legal representative of the eldest brother, Shiv Prasad by filing a suit
in the year 1959 that the partition which took place in the year 1941 was
only nominal and not real.
7 . It is argued that there was interruption in the joint family and
severance of joint family status on 20.10.1941 itself. What might have
remained is the actual physical partition and actual physical possession of
the three brothers in their respective shares, but that does not continue joint
family/coparcenary and interruption/severance of joint family status
becomes complete in the year 1941.

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

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FA No.124 of 1997 & FA No.144 of 1997

8 . Learned senior counsel referred to various intervening documents of
1940s to indicate that civil suits were filed, income tax returns were filed
which all indicated that the three brothers carried on their businesses in
individual capacity. He vehemently argued that the three brothers might
have remained tenants-in-common in absence of actual physical partition of
assets, but they ceased to have the status of joint tenants in the properties
right from 20.10.1941.
9 . It is further argued that on 18.07.1949, a document was reduced in
writing which has been placed on record before trial Court as Exhibit P-1.
As per the document Exhibit P-1, three separate lists have been prepared
for the three brothers. This document Exhibit P-1 has to be seen in
continuation of partnership deed Exhibit D1-9/D1 which categorically
mentions that there are four businesses of the family and now the properties
and businesses have been partitioned on 20.10.1941 due to incompatibility
of females of the family with each other and the three brothers Shiv Prasad,
Shobharam, and Balchand would now carry on the businesses in equal 1/3
share i.e. 5 annas and 4 pies each. When the document Exhibit P-1 is seen
in continuation to the aforesaid partnership deed, it would be clear that the
document Exhibit P-1 contains three distinct lists of properties which have
fallen into the share of each of the three brothers. This document Exhibit

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

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FA No.124 of 1997 & FA No.144 of 1997

P-1 has been reduced into writing on 19.07.1949 which records a family
arrangement arrived at on 18.07.1949 under counsel of a mediator named
Ratanlal Malaiya, who was close relative of these parties. This Ratanlal
Malaiya was a highly respectable person, being member of Constituent
Assembly and was thereafter a Member of Parliament and later went on to
become a Minister in Central Government. At the time of writing the
document Exhibit P-1, Ratanlal Malaiya, who was the mediator/arbitrator
between the three brothers, was a member of Constituent Assembly. He
later went on to become a Member of Parliament and a Minister in the
Central Government. In presence of this person Ratanlal Malaiya, the three
lists were drawn, which conclusively establishes that there was partition on
20.10.1941. The partition dated 20.10.1941, so far as the immovable assets
might have remained ambiguous, but upon reducing it in writing on
18/19.07.1949, it became final between the parties and the family
arrangement gave a finality and quietus to the dispute of partition between
the three brothers.
10 . Learned senior counsel further argued that the eldest brother Shiv
Prasad died in the year 1951, and thereafter a partnership deed Exhibit D 1-
9/D-2 was signed by all three branches and plaintiff No.1 Dashrath stepped
into the shoes of Shiv Prasad's 1/3 share. Thereafter, in the year 1952 the

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

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FA No.124 of 1997 & FA No.144 of 1997

middle brother Shobharam ceased to be member of the partnership firm and
alteration of status took place and the name of firm which was Shiv Prasad
Shobharam, Sagar, was changed to Malaiya Oil Mills, Sagar with effect
from 05.02.1951. It is argued that the distribution of businesses also
became final which got reduced into partnership businesses and the
brothers and their legal representatives kept on being inducted and retiring
from the partnership firms. However, the status of Joint Hindu Family got
severed and interrupted in the year 1941, and at the most in the year 1949.
11 . Learned senior counsel further argued that the Trial Court has held
that in order of the Income Tax Appellate Tribunal, Bombay dated
10.10.1949 somewhat creates doubts on termination of joint family status,
though it is not so and this document Exhibit D-55 has been wrongly
construed by the Civil Court to be binding on Civil Court. Though this
document does not conclusively mention that joint family exists but even if
it is held so, then also it is settled in law that for purposes of Income Tax,
the actual division is necessary and mere severance of status is not
sufficient. However, in the present case, the Civil Court was required to
adjudicate that whether there has been a severance of status and the Civil
Court could not have blindly relied on some doubt cast on severance of
status of joint family by an order passed by Income Tax Tribunal, which

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

was not binding on the Civil Court. It is also argued that for the purpose of
taxation, mere disruption in joint family status is not sufficient and actual
physical partition of assets must take place. The trial Court, which
entertained the suit for partition, was first required to adjudicate that
whether any disruption/interruption of HUF status has taken place which
the trial Court erred in not considering. Learned Senior Counsel refers to
Section 25-A of erstwhile Income Tax Act, 1922 (for short ‘Act of 1922’)
which mentions that in case of any claim by a member of Hindu Undivided
Family that a partition has taken place, then the Income Tax Officer shall
make such inquiry as he may think fit and if he finds that the joint family
property has been partitioned among various members of family in definite
portions, then he shall record an order to that effect. It is therefore argued
that as per Section 25-A of Act of 1922, disruption of joint family status
was not relevant, but actual physical partition was relevant. Learned Senior
Counsel relied on judgment of the Hon'ble Apex Court in the case of
Udayan Chinubhai v. CIT , AIR 1967 SC 762, to contend that an order
under Income Tax law recording partition can be made only if the
properties of joint family are partitioned in definite portions i.e. if the
properties are physically divided. A mere division of interest in such
properties is not enough. Learned Senior Counsel referred to para-7 of the
aforesaid judgment which reads as under:

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SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

“7. But an order recording partition can be made only if the
properties of the joint family are partitioned in “definite
portions”, that is, the properties are physically divided if they
admit of such division, otherwise in such division as they admit
of. In Gordhandas T. Mangaldas v. CIT [11 ITR 183] the High
Court of Bombay held that Section 25-A contemplates a physical
division of the joint family property : a mere division of interest
in such property is not enough. Beaumont, C.J., in delivering the
judgment of the Court observed at p. 195:
“I think that the expression ‘definite portions’ indicates
a physical division in which a member takes a particular
house in which he can go and live, or a piece of land
which he can cultivate, or which he can sell or
mortgage, or takes particular ornaments which he can
wear or dispose of, and that the expression ‘definite
portions’ is not appropriate to describe an undivided
share in property where all a particular member can
claim is a proportion of the income, and a division of the
corpus, but where he cannot claim any definite portion
of the property…. No doubt the expression ‘division in
definite portions’ will have to be construed with regard
to the nature of the property concerned. A business
cannot be divided into parts in the same manner as a
piece of land; division may only be possible in the books.
Special cases will have to be dealt with by the Income
Tax Officer when they arise. If he comes to the
conclusion, that, having regard to the nature of the
property, what has been done amounts to a division in
definite portions, he will record his finding under sub-
section (1); If he comes to the conclusion that it does
not, then he will have to go on assessing the family
under sub-section (3).”
12 . Shri Agrawal, learned senior counsel, further argued that the
document Exhibit P-1 is a family arrangement, and an arrangement
between joint owners in a joint family property does not require
registration. It was acted upon by all the parties. It is vehemently argued
that it is duly admitted by evidence on record that the families of the three

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

brothers constituted three different HUFs in themselves, i.e. the families of
Shiv Prasad represented by Dashrath being eldest male member, as well as
other two brothers, Balchand and Shobharam. In the HUF of Dashrath,
partition took place on 25.07.1971, in the HUF of Shobharam, partition
took place in 1953 and in the HUF of Balchand, the youngest brother,
partition took place in the year 1958. Therefore, all the members of the
family have acted upon the document Exhibit P-1 of the year 1949. It is
argued that Plaintiff No.1 Dashrath has admitted in his deposition that he
has carried out partition in his HUF as per the document Exhibit P-1 with
understanding between members of the family that if anything extra comes
in the hands of the HUF or goes away from the hands of HUF, then this
partition would be liable to be modified further. However, the three
brothers have duly acted upon the document of the year 1949.
13 . Learned senior counsel argues that the business partition was
completed in the year 1949, whereas the partition of immovable assets also,
which might have been somewhat ambiguous up to 1949, was reduced into
writing by preparing three lists. In any event, lists in pursuance to past
settlement do not require any registration. In this case, partition was
effected in 1941 and the Schedule/lists of properties was reduced in writing
in 1949. On this point, learned senior counsel relied on judgment of the

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

Hon'ble Apex Court in the case of Roshan Singh Vs. Zile Singh and
Others, 2018 (14) SCC 814 (decided on 24.2.1988).
14. Learned senior counsel argued that the arrangement/settlement vide
Exhibit P-1 dated 18/19.07.1949 is being disputed by the plaintiffs only on
the ground that it required further accounts to take place and the parties
were to meet further by Diwali of the year 1949 and therefore the partition
is not complete. It is argued that if this document Exhibit P-1 is minutely
examined then it would be clear that the only thing which remained was
that Shobharam and Balchand were required to get a separate factory
established for the eldest brother Shiv Prasad, which would be an oil mill
and soap factory containing two expellers but the building would be of
such proportion that in case of need it can be extended up to four expellers.
This factory was never constructed, but if something remained, then only
some accounting disputes remained in view of the position that
subsequently the two brothers, along with Plaintiff No.1 Dashrath Kumar,
executed a partnership deed Exhibit D1-9/D-2 in the year 1959. Even
otherwise, there is sufficient evidence on record to indicate that the
question of third mill did not remain in dispute and the trial Court has
erroneously held that since the separate mill for Shiv Prasad was never
built, Exhibit P-1 cannot be enforced, which was erroneously held

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Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

amounting to unequal partition. Learned senior counsel argued that as per
written statement of Defendants No.10 to 16, each brother was to get one
mill, and in the earliest oil mill of the family i.e. Heera Oil Mill, the son of
the eldest brother Shiv Prasad i.e. the Plaintiff No.1- Dashrath Kumar was
inducted as a 50% partner, which is duly admitted in Para-11 of the plaint,
which further gets corroborated by the partnership deed dated 20.10.1952
which can be seen from document Exhibit D1-9/D-8, mentioning that the
name of the firm Shiv Prasad Shobharam has been altered as Malaiya Oil
Mills and in this mill, Plaintiff No.1 Dashrath Kumar was given a 50%
share. The learned senior counsel further relied to the deposition of
Dashrath Kumar in Para-14, wherein he admitted the transfer of expellers
to Malaiya Oil Mill in the year 1955 and admitted that expellers were
received after the death of his father Shiv Prasad Malaiya in February 1951
that two expellers were received after the death of his father. It was argued
that by mutual consent and conduct, instead of a new mill being
constructed for Shiv Prasad, after the death of Shivprasad, in the existing
Malaiya Oil Mill the Plaintiff No.1 got 50% share, which was a substitute
arrangement in lieu of constructing a new mill for Shiv Prasad Malaiya. It
is therefore argued that the parties continued entering into fresh business
deals one after another well into the 1950s. The disputes might have
remained pending between the parties, but these were mere disputes of

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SARATHE
Signing time: 15-10-2026
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FA No.124 of 1997 & FA No.144 of 1997

accounts of the businesses in which there were defined shares. The parties
kept on entering into fresh agreements and partnerships which indicates
that there was a disruption of HUF status and the parties were acting in
their own right in individual capacity and were dealing with the businesses
by protecting their individual rights, and no unpartitioned joint business
remained after 20.10.1941. The only question of establishment of a
separate mill for Shiv Prasad Malaiya, who was the father of Plaintiff No.1,
also got a quietus in the years 1951–52 by creating a partnership firm for
the running of Heera Oil Mill and then giving 50% share to Plaintiff No. 1
in the said oil mill. If something remains then the accounts of the said firms
may require to be renditioned. However, a suit for rendition of accounts
was filed by Plaintiff No.1 in the year 1960, which got dismissed in default
of prosecution and was never get restored. Therefore, it is argued that
nothing remained for the trial Court to entertain in the matter of partition
and the partition suit itself was not maintainable as the partition amongst
the family members had already taken place. He placed reliance on the
following judgments :-
i. Mussamat Giraj Bai Vs. Sadashiv Dhundiraj [1916 TLW 114 (PC)]
ii. Kalyani Vs. Narayanan, 1980 Supp. SCC 298
iii. M/s Kalloomal Tapeshwari Prasad (HUF) Vs. Commissioner, 1982 (1) SCC 447
iv. Union of India Vs. M.V. Valliappan, 1999 (6) SCC 259
v. Murlidhar Kishangopal (firm), Indore Vs. CIT, AIR 1964 MP 224

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FA No.124 of 1997 & FA No.144 of 1997

vi. Chandradas Haridas Vs. CIT, 1960 SCC Online SC 186.
vii. Roshan Singh Vs. Zile Singh, 2018 (14) SCC 814
viii. Mehatrin Vs. Munga bai, 1985 MPWN 304.
ix. Manchand Gangaram Sethji Vs. Mallappa Mahalingappa, 1976 (2) SCC 429
x. Raj Gounder Vs. M. Sengodan, 2024 (12) SCC 350.
xi. Siragam Narayana Reddy Vs. Siragam Pedda, 2012 SCC Online AP 425.
15 . Supporting the aforesaid contentions, Shri Girish Shrivastava, Shri
Alok Vaghrecha, and Shri Greeshm Jain, learned counsel for the appellant
in FA No.124 of 1997, supplemented the aforesaid arguments. It was
argued by Shri Greeshm Jain, Advocate that coparcenary is a status and
partnership is an agreement, and there is no presumption that HUF
continued to exist. He further argued that what was conducted by Ratanlal
Malaiya in the year 1949 can only be deemed to be an arbitration
proceeding between members of the family and the remedy lay under the
relevant provisions of the Arbitration Act, 1940 and hence, a suit for
partition was not maintainable because the mandate of the arbitrator was
never terminated.
16. He further relied on various applications filed under Order 41 Rule
27 CPC to submit that various relevant documents have been placed on
record by way of these applications and these applications should be
allowed and the matter be remanded back to the trial Court for fresh
decision because the documents go to the root of the matter. He also relied

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FA No.124 of 1997 & FA No.144 of 1997

on certain applications for amendment in the plaint to bring the pleadings
in the written statement of Defendant Nos.10 to 16 in line with the
documents now being sought to be brought on record by way of different
applications under Order 41 Rule 27 CPC. In sum and substance, he
submits that the crux of these applications is that certain properties were
purchased by the gifts made over by the father-in-law of Defendant No.10
Balchand Malaiya or from the own income or funds or Stridhan of the wife
of Balchand Malaiya. By way of these applications, certain properties
being in the exclusive ownership of Balchand Malaiya are required to be
pleaded and pleadings in that regard are being proposed to be inserted.
17 . Shri Girish Shrivastava, learned counsel for some of the appellants in
FA No.124/1997 vehemently argued that disruption in status of HUF took
place much prior to filing of the suit. Balchand had changed residence from
the family home to Heera Mill premises in the year 1937 and in the year
1939, the middle brother Shobharam had also changed residence and left
the family home. Partition took place in the year 1941 and assets were
separated. From 1941 till 1949, there is no document on record to indicate
that any joint family business existed. There is no Bahi-khata of HUF and
on the contrary, in the year 1943 partnership was started and certain
disputes might have arisen in the matter of profits or assets of this

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FA No.124 of 1997 & FA No.144 of 1997

partnership. However, that would amount to an accounting dispute or a
dispute of rendition of account of this partnership. It is argued that by
perusal of notice Exhibit D-7 sent by Balchand to Plaintiff No.1 on
05.11.1958, there is a notice of dissolution of partnership of Malaiya Oil
Mill which was created in the year 1952. This was replied vide Exhibit D-9
and the dispute of dissolution of Malaiya Oil Mill became cause of action
for filing of the suit, arising from the notice dated 20.05.1959 (Exhibit P-
26). He argued that the only dispute remained of rendition of accounts
which has been converted to a partition suit unnecessarily. He argued that
the presumption of union is stronger in brothers and weaker in the case of
cousins. To prove separation evidence of actual partition of joint estate by
metes and bounds is not necessary and once the shares are defined there is
severance of joint status. The parties may decide to live together and enjoy
the property as tenants-in-common, but they cease to be joint tenants
immediately from the time the shares are defined and thenceforth the
parties held the properties as tenants in common. It is therefore, argued that
the appeal be allowed and the suit for partition be dismissed because
everything stands settled by document Exhibit P-1 dated 18/19.07.1949.
18. Shri Alok Vaghrecha, Advocate also argued for some of the
appellants in FA No.124 of 1997. He argued that upon perusal of document

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FA No.124 of 1997 & FA No.144 of 1997

Exhibit D-11, it would indicate that the business was inherited by Dashrath
Kumar from father and it did not devolve upon him by survivorship. He
further argued that inter se partition of branch of Dashrath Prasad took
place in the year 1971 which is evident from Exhibit D-17. He relied on
various paragraphs of deposition of plaintiff No.1 Dashrath Kumar to
indicate that the dispute stood settled as much as partition was concerned
and only the dispute of rendition of accounts remained. This has been
unnecessarily converted into a partition dispute and suit for partition was
filed without any reason.
19 . Countering these assertions, Shri Avinash Zargar and Shri Akhilesh
Jain, learned counsel for the respondents in all these appeals represent the
plaintiffs, which is the branch of eldest brother Shiv Prasad. They have
vehemently argued that the suit for partition was duly maintainable and
there was no prior partition between the members of the undivided Hindu
family. It is stated that in the plaint proper pleadings were taken regarding
existence of status of Hindu undivided family of the three brothers who
were sons of Tikaram. The list of properties were also given. The father of
plaintiff, namely Shiv Prasad, who was the eldest brother, was managing
the entire property since 1940 and defendant No. 10 took over the
management of Hira Oil Mill from Shiv Prasad in 1940. Vijay Oil Mill was

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FA No.124 of 1997 & FA No.144 of 1997

started by Balchand in 1943. Vijay Kumar, son of middle brother
Shobharam, took up the management of Vijay Oil Mills in 1947. After
death of Shiv Prasad, the youngest brother, Balchand, i.e. defendant no. 10,
started managing the entire Hindu joint family property. In 1948 Balchand
expressed his intention for partition, and one Ratanlal Malviya was made
the mediator/arbitrator for that purpose. On 18/07/1949, houses and open
plots were provisionally divided, and on 19/07/1949 the three brothers
decided that they will prepare the accounts of all the businesses up to
Diwali of 1949 so that partition may be finally affected and registered.
However, the three brothers could not prepare proper accounts in spite of
reminders being given by the mediator/arbitrator Ratanlal Malviya from
time to time, and Balchand/defendant no. 10 sent letters to father of
plaintiff Shiv Prasad that as partition has not been finally effected,
therefore, he will become the full owner of Hira Mills from 10/11/1950. In
his letter dated 31/03/1957 addressed to plaintiff no. 1, the
mediator/arbitrator Ratanlal Malviya showed his inability to effect the
partition. Therefore, all these documents indicate that partition in fact never
took place and it always remained inconclusive. It was argued that though a
partnership firm might have been created, but it is simplicitor conversion of
HUF to partnership firm only to reap benefits of tax because upon
conversion to partnership firm, the tax liability further got reduced. HUF in

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

20

FA No.124 of 1997 & FA No.144 of 1997

fact continued, but it continued in the name of partnership firm only for the
purpose of tax benefits.
20 . He further vehemently relied on Para 6 of Exhibit P/1 to contend that
businesses were never partitioned, and it was agreed that accounts of the
businesses shall be settled up to Diwali of Samvat 2006, i.e. 1949. By
placing heavy reliance on Exhibit P/53, it was argued that by this letter
Balchand expressed his intention that he will run Hira Mills solely and it
shows that since Balchand had taken some of the businesses in his hands,
which was contrary to what had been agreed between the parties, therefore,
any understanding that that could have been said to have arrived at in 1941
had failed and reduced to nullity. It was argued that properties were never
introduced to partnership, and the partnership was only in the matter of
share of profits arising out of the businesses being run by the family.
21 . The learned counsel for the respondents have also argued that the
arbitrator Ratanlal was a highly respected person not only within the
family, but was a person of national stature, being member of Constituent
Assembly, and in his deposition he categorically stated that he tried a lot
for partition, but the same could not be done. He further admitted that the
business is combined, and till date no final decision on partition has taken
place. The learned counsel for the respondents has vehemently relied on
various documents which are letters written by arbitrator Ratanlal Malviya

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

21

FA No.124 of 1997 & FA No.144 of 1997

to the three brothers and their legal representatives, which reflect that
partition remains inconclusive and that no conclusive partition has been
arrived at on account of existing disputes between the three brothers or
their legal representatives. Such letters are placed on record as Exhibit P/1
to P/55, which have been vehemently relied by learned counsel for the
respondents/plaintiffs to argue that no actual partition took place and the
partition always remained inconclusive between the members of the family,
and there was no option left with the plaintiffs but to institute a suit for
partition. Therefore, it is argued that the properties and businesses never got
partitioned, therefore, the partition suit was in fact maintainable and it has
rightly been held to be maintainable by the trial court. By placing reliance
on documents Exhibit P/3, P/16, P/18, P/20, P/48, P/50, P/52, and P/53,
which are the letters written inter se between the parties, so also the order
of Income Tax Appellate Tribunal D1-9/D 55, it is argued that no partition
actually took place.
22. Learned counsel for the respondents/plaintiffs have also raised a
very emotional argument in stating that, in fact, the document Exhibit P-53
is of such an import and meaning that the father of plaintiff no. 1, who was
the eldest brother Shivprasad, expired within 15 days of receipt of this
letter Exhibit P-53. By this letter, defendant no. 10 Balchand had expressed
intention to take over the control of Hira Oil Mills in his own hands and left

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

22

FA No.124 of 1997 & FA No.144 of 1997

apart 5 businesses for the 2 brothers, namely Shivprasad, father of
defendant no. 1, and Shobharam who was the middle brother. It is argued
that the entire matter has arisen out of greed of defendants no. 1 and 10
who were the middle and younger brothers of his father, and out of such
greed, all this matter has arisen. The partition remains unequal till the entire
properties are divided by metes and bounds in 1/3 share between 3
branches of the family represented by 3 brothers Shivprasad, Shobharam,
and Balchand.
23 . It is argued that the document Exhibit P/1 dated 18/19-7-1949 is not
a conclusive partition or even a family arrangement. If it was a conclusive
partition or family arrangement, then it would have been comprising of all
the properties. However, if the plaint is seen, then it would be clear that the
plaint contains a number of properties which are not contained in the
document Exhibit P/1. Therefore, the document Exhibit P/1 was not a
conclusive document of partition or arrangement of all family properties by
metes and bounds, and therefore, the suit for partition was maintainable
even if Exhibit P/1 is taken at its face value and taken to be binding
between the parties to the said arrangement.
24. Learned counsel for the respondents has further argued that there is
presumption of jointness of Hindu family and there is a strong presumption
in favour of Hindu brothers constituting a joint family. It is for the person

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

23

FA No.124 of 1997 & FA No.144 of 1997

alleging disruption or severance of the status of jointness to establish it.
The burden lies on the party claiming disruption in the joint status. The
learned counsel for the respondents have relied on a number of judgments
to buttress the point that there is a presumption of jointness in Hindu
family, and the burden lies heavily on the person who projects disruption or
severance of status of jointness of the family. It was further argued that if a
person proves that there was nucleus with which the joint property could be
acquired, then there would be presumption of the property being joint, and
the onus would shift on the person who claims it to be self-acquired
property to prove that he purchased it with his own funds and not out of
joint family funds. Learned counsel relied on the following judgments :-
i. Bharat Singh Vs. Bhagirathi, 1965 SCC Online SC 57.
ii. Shankarrao Dejisaheb Shinde Vs. Vithalrao Ganpatrao, 1989 Supp II SCC 162.
iii. Lachapeta Ramalaxmi Vs. Lachapeta Balanarsaiah, 2006 SCC Online AP 778.
iv. K.V. Narayanaswami Iyer Vs. Ramakrishan Iyer, 1964 SCC Online SC 277.
v. D.S. Lakshmaiah Vs. L. Balasubramanyam, 2003 (10) SCC 310.
vi. Bhagwati Prasad Vs. Dulhin Rameshwari Kuer, AIR 1951 SC 486.
vii. Kesharbai Vs. Tarabai Prabhakarrao Nalawade, 2014 (4) SCC 707.
viii. Shrinivas Krishanrao Kango Vs. Narayan Devji Kango, 1954 (1) SCC 544.
ix. Kochadai Naidu Vs. Ayyalu Naidu, 1980 Supp SCC 506.
x. Apoorva Shantilal Shah Vs. CIT, 1983 (2) SCC 155.
xi. Kalyani Vs. Narayanan, 1980 Supp SCC 298.
xii. Seth Gopaldas (HUF) Vs. CIT, 1984 Supp SCC 630.
xiii. Rampal Vs. Deputy Director Consolidation, 2015 SCC Online All 6105.
xiv. South Indian Lucifer Match Works Vs. CIT, 1961 (43) ITR 319.

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

24

FA No.124 of 1997 & FA No.144 of 1997

25 . In rejoinder submissions, Shri Ravish Chandra Agarwal, learned
senior counsel has argued that correspondence between Balchand and
plaintiff No. 1 Dashrath only show inter se dispute between Balchand and
Dashrath with respect to some properties, and Shobharam was never part of
this discussion, which shows that there was disruption of joint family
because if there was no disruption of joint family, then Shobharam would
also have been part of this discussion. The letters by Balchand even prior to
1949 are with respect of actual allotment or physical possession of
immovable properties, but disruption of status had already been done in
1941. He further relies on Exhibit D-1, which is the partnership deed, to
submit that it does not mention schedule of properties, and the recital
clearly states that all the immovable and movable properties were
partitioned in the year 1941. This was not a nominal partnership for tax
purposes, but it was for real purposes. He argued that there was still need to
divide properties in the year 1949 even if partition had taken place in the
year 1941, because the movable assets, i.e. business assets, were pooled
into partnership in the year 1943, but there was no formal understanding of
immovable properties which was reduced to writing, and it was reduced to
writing only in the year 1949. The document of the year 1949 does not
infer that there was no partition in the year 1941. He further argued that
Income Tax law cannot be brought in civil law. For the purpose of taking

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

25

FA No.124 of 1997 & FA No.144 of 1997

benefit of tax, the considerations are different to infer disruption of
jointness, but for the purpose of civil litigation, the considerations are
different, and actual physical division and possession is not contemplated
in civil law to infer disruption of status of joint family. It is therefore
argued that the appeals be allowed, and the judgment of the trial court be
set aside, and the suit filed by the plaintiff be dismissed.
26. This court has heard learned counsel for the rival parties at great
length and perused the record.
27. A suit had been filed by plaintiffs who are legal representatives of
eldest brother Shivprasad for partition and for accounts of joint family on
the assertion that there was a joint family left behind by Tikaram who died
in the year 1915 leaving behind him 3 sons, i.e. father of the plaintiff no. 1
and his two uncles who are defendants no. 1 and 10. It was mentioned in
the plaint that earlier the business of the family used to be Kirana and food
grains, and lot of properties were acquired. In the year 1940, the youngest
brother Balchand took up the management of Hira Oil Mills, Sagar from
his brother, Shivprasad who was father of Plaintiff No.1, in the year 1940.
In the year 1943, Vijay Oil Mills was started which was in management of
Balchand, and in the year 1947 Vijay Kumar, son of middle brother
Shobharam, took up the management of that Mill. Balchand was carrying

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

26

FA No.124 of 1997 & FA No.144 of 1997

out all the businesses which were started at Satna. In the year 1948,
Balchand expressed intention not to remain as member of joint family, and
a provisional partition took place on 18-07-1949, and on 19-07-1949, it was
agreed that all the 3 brothers would prepare the accounts of the businesses
so that partition may be finally affected and registered. The arbitrator
chosen by the three brothers was one Ratanlal Malviya, who was close
relative of all the parties, but he did not give his final adjudication for want
of rendition of accounts of businesses. Various correspondences were
referred in the plaint to indicate that on account of subsequent
correspondences, it would infer that no partition took place, and
correspondence went on up to filing of the suit in the year 1959, that there
were disputes of partition between the parties. The plaintiff in the plaint
related to certain oil mills which was the bone of contention between the
parties, which are as under:
(1) Malaiya Oil Mills (formally known as Hira Oil Mills)
(2) Vijay Oil Mills
(3) Shrenik Oil Mills
(4) Mahendra Oil Mills
(5) Rajkumar Oil Mills

28. Apart from that, two shops, i.e. Shobharam Mahendra Kumar and
Balchand Laxmichand, were also mentioned, and a plot known as
Ambagad Wala plot with buildings attached thereto. Rajkumar Oil Mills is

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

27

FA No.124 of 1997 & FA No.144 of 1997

a incorporated company in which the defendant no. 10 Balchand was the
Managing Director, and plaintiff no. 1 had certain shares therein. It was
averred in the plaint that three partnership deeds were executed on 18-11-
1943, 01-9-1951, and 20-10-1952 which were only in the name and
actually there was no partition, and these firms were constituted only to get
income tax benefits, otherwise the businesses remained joint. Various
averments were made as to the deliberation between the parties from time
to time.
29 . From a perusal of the plaint, it appears that the actual dispute
remained between the branch of Shivprasad who was the plaintiff led by
plaintiff No. 1 Dashrath Kumar S/o Shivprasad, on one side; while the
branch of Balchand was on the other side. The plaint contained various
lists.
List A - related to whole of the movable and immovable properties
which are 45 in numbers.
Supplementary List A - showed the four boundaries of the
properties mentioned in List A.
List B - contained the list of properties in possession of plaintiff No.
1 Dashrath Kumar and other LRs of eldest brother, Shiv Prasad.
List C - showed the properties in possession of middle brother
Shobharam Malviya and his branch.
List D - showed the properties in possession of defendant no. 10,
Balchand and his branch.

30. The valuation of properties in the hand of branch of plaintiff was
mentioned as Rs. 3.46 lakh, in the hand of branch of middle brother

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

28

FA No.124 of 1997 & FA No.144 of 1997

Shobharam was mentioned as 12.65 lakh and in the hand of youngest
brother Balchand was mentioned as 21.59 lakh, and therefore, it was
projected before the trial court that the three branches are in possession of
unequal shares.
31 . The defendant No.1 Shobharam, who was the middle brother, filed
written statement and opposed the suit. He stated that the entire properties
shown in List A are not joint family properties. He stated that in the year
1949, the joint business came to an end and entire movable properties and
businesses got partitioned. This took place in the Diwali day of the year
1941. The three brothers had equal share in the profits of partnership firm,
but it was not a joint family, but it was a partnership firm and whatever
proceeds the partnership firm was having and distributed to the three
brothers became the exclusive property of each of the three brothers and
ceased to be joint family income. It was further contended that Vijay Oil
Mills was started in the year 1943. He denied that on the date of death of
eldest brother Shivprasad, who was father of plaintiff No. 1, there was any
joint family property. There was categorical assertion that immovable
property got divided on the Diwali day of 1949, and after Diwali day of
1949, nothing remained to be divided. The entire partition got over, and
only some disputes of accounting might have remained. Various averments

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

29

FA No.124 of 1997 & FA No.144 of 1997

on each of the properties were made. It was contended that the original
business, i.e. Kirana shop of Hiralal Tikaram, remained a common shop
and not a shop of Hindu Undivided Family. It was common of all partners
and not jointly owned by Hindu Undivided Family. Various averments were
made regarding each of the different businesses, which only amounted to
assertion that the businesses ceased to be joint and were separately owned
after partition in the year 1941, by which the businesses were partitioned,
and it was formally converted into partnership firm in the year 1943.
32. Defendants no. 10 to 16, representing the branch of youngest brother
Balchand, filed a separate written statement and stated that there was
disruption of joint family in the year 1941, and from that date Shivprasad,
Shobharam, and Balchand ceased to be joint tenants, but became tenants-
in-common and therefore, on the date of filing of the suit, these three
brothers or their legal representatives, were not carrying out any joint
family business. These properties contained in Schedule A to the plaint
were denied to be properties of HUF/joint family, so also the values of the
properties were denied. It was pleaded in the written statement that in or
about the year 1937, differences arose between the three branches of the
family, and therefore, defendant no. 10 firstly separated from the family
residence and began to live and mess separately in some buildings attached

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

30

FA No.124 of 1997 & FA No.144 of 1997

to Hira Oil Mills. Later in the year 1939, Shobharam also separated, and in
the family home, only eldest brother Shivprasad and his family remained to
reside. The disruption had started in the year 1937 itself, and it got
completed on Diwali day of 1941, which further got formalized by
executing partnership firm in 1943.
33. It was further pleaded that the first oil mill, named Hira Oil Mills
was started by Balchand, defendant no. 10, in the year 1936, after having
obtained expert training in oil technology at Kanpur. Oil mill was initially
not a joint family business, and when separation took place in 1941, then
the two elder brothers, Shivprasad and Shobharam, insisted that it be
brought in the hotchpot of joint family property and because defendant no.
10 did not want to displease his brothers, he agreed that Hira Oil Mill be
brought in the hotchpot and be run after Diwali 1941 as the partnership
concern of the three brothers. He stated that all the businesses at Satna have
nothing to do with the other two brothers because these are the sole
properties of Balchand Malaiya, and the business at Satna was started by
Balchand Malaiya from his own share. He denied that eldest brother
Shivprasad was managing the entire affairs of the family till his death. He
stated that there was no joint family either in the year 1948 or 1949, and it
had ceased to exist in the year 1941. He stated that Vijay Oil Mills was

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

31

FA No.124 of 1997 & FA No.144 of 1997

started in the year 1943. The defendant no. 10 stated that the main purpose
of the plaintiff no.1 seems to be to get possession of Malaiya Oil Mills, but
he is silent about the possession of the old family shop named as Hiralal
Tikaram shop, which is in the possession of plaintiff no. 1. Detailed
pleading in respect of each Oil Mill was made. It was stated that Vijay Oil
Mill was started in 1943 after disruption of joint family status. Shrenik Oil
Mill was started from the separate business of foodgrains being carried out
by Balchand at Satna, and it was established somewhere in the year 1949.
Mahendra Oil Mill was established by defendant no.1 Shobharam from his
separate funds. Rajkumar Oil Mill is a private limited company. Therefore,
it was argued that none of the other oil mills, apart from Hira Oil Mills,
renamed as Malaiya Oil Mills, have been established from joint family
property or joint family income, but have been established after partition of
the businesses in the year 1941.
34 . The main question that arises for determination before this Court is
that whether there was any partition in the family in the year 1941 or in the
year 1949, or whether the partition of businesses in the year 1941 remained
a nominal partition only for tax purposes, or it was a partition creating
irreversible disruption in jointness of businesses of family. If there is
disruption of jointness of businesses in the family in the year 1941, then the

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

32

FA No.124 of 1997 & FA No.144 of 1997

subsequent properties and businesses acquired by each of the members of
family would be their individual properties derived from their individual
shares in the income of their share in partnership, because then it would
cease to be a joint business, but it would be a business conducted by
partners and the proceeds from that business would be individual income of
the partners, and would cease to be income of the joint family. There would
be disruption of jointness and all properties that would be acquired from
the income of the business after 1941 would be individual property of the
person in whose name it has been purchased and there would be no
presumption of the jointness of the properties.
35 . From the pleadings and the evidence on record, it is clear that up to
Diwali day of 1941, only one Oil Mill was there, i.e. Hira Oil Mill, which
later on got renamed as Malaiya Oil Mills in the year 1951-52. The other
oil mills have been established after 1941, and therefore, it is required to be
seen that whether in the year 1941 there was any disruption in joint family
status.
36 . The document that has been placed on record to indicate a partition
having taken place in the family in the year 1941 is a partnership deed
dated 18-11-1943, (Exhibit D-1-9/D-1). This deed is admitted between all

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

33

FA No.124 of 1997 & FA No.144 of 1997

the parties, and there is a dispute of interpretation of this deed that whether
it is a nominal deed only to reap income tax benefits, or it is a real partition.
37 . From a perusal of this deed, it is clearly mentioned therein that the
family is a joint family carrying out four businesses as under:
(1) Hiralal Teekaram, Sagar;
(2) Hiralal Teekaram, Lalitpur;
(3) Shivprasad Shobharam, Hogganj, Sagar;
(4) Hiralal Oil Mill, Sagar.

38 . It is also mentioned that some fields, villages, and house properties
are also there, and on account of incompatibility of female temperament
and differences of opinion in the management and supervision of business
and domestic affairs, there has been an amicable settlement and partition of
properties on 20-10-1941 in definite portions. The share of each of the
brothers is shown as 5 aana, 4 pies.
39. Reading along with the said partnership deed if the ledger entries are
seen, then as per ledger entry Exhibit D-1-9/272, the closing balance is Rs.
2,93,574/-. In the ledger Exhibit D-1-9/280, which is of the year 1940-41,
Deepawali to Deepawali, which was the accounting practice at that time,
the liability portion contains separate amount of Rs. 97,858/- against all the
three brothers totaling to Rs. 2,93,574/-. It indicates that there was
separation of capital between all these three brothers.

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

34

FA No.124 of 1997 & FA No.144 of 1997

40 . Exhibit D1-9/281, 283, and 287 indicate ledgers of Shivprasad,
Shobharam, and Balchand in firm Hiralal Tikaram. It indicates that separate
accounts of all the three brothers used to be kept from the year 1941
onwards.
41 . The partnership deed Exhibit D-1, dated 18-11-1943, does not leave
anything to doubt that there has been a disruption of jointness of Hindu
family in mentioning that they have partitioned the businesses as well as
the house properties and fields in villages. Clause 8 of this deed mentions
that the income of the house property will be shared by each partner in
proportion to the respective aforesaid share held by each of the partners in
the firm. This partnership deed is not a disputed document, and Clause 6 of
the partnership deed mentions that at the end of each accounting year, i.e.
Diwali day, accounts of the firm shall be made up and profit and losses
shall be distributed to the partners in proportion to their respective shares.
Clauses 6 to 8 of this partnership deed are as under
“6. That proper books of accounts shall be kept and at the end of each
Diwali year, accounts of the firm shall be made up and Profits &
Losses of the year shall be ascertained, as the case may be, and
distributed to the partners in proportion to their respective shares and
adjusted to their respective accounts.
7. That the profits or Losses of the share held by the joint family in the
name of Balchand in the firm named and styled as Balehand
Lakhmichand, Katra Bazar, Saugor, will hereinafter be shared by
parties No. (1) (2) and (3) equally.

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

35

FA No.124 of 1997 & FA No.144 of 1997

8. That the Income of the house property will be shared by each
partner in proportion to the respective aforesaid share held by each of
us in the firm.”

42 . The aforesaid paragraphs 6 and 7 indicate that there was to be
separate share of the incomes from business as well as from house
properties and therefore, it is not so that it is only a partition of businesses,
but it seems to be an outright partition of businesses as well as incomes
from house properties. There is clear assertion in the partnership deed that
other immovable properties are there which have been partitioned on 20-
10-1941, but there is no clear assertion that which house property, which
house or land property will fall to which person of the family. Therefore, it
only indicates that actual physical possession of the immovable properties
was postponed to be decided at some later date, because arrangement in
that respect might have been inconclusive, but it was duly mentioned that
incomes derived from house properties will be shared by each partner in
proportion to their share, that means that income from the house properties
would cease to be joint income of the joint family, but it would be an
individual income of individual three brothers, of the three brothers
separately in their individual capacity.
43 . Apart from the partnership deed of 1943, another substantial
development took place, whereby the three brothers filed a suit against one
Seth Chhaganlal in the year 1943 registered as RCS-B No. 2 of 1943 before

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

36

FA No.124 of 1997 & FA No.144 of 1997

Subordinate Judge Class II, Sagar, which was decided on 04-02-1944. Para
1 of the judgment, which is placed on record as Exhibit D1-9/D-110,
mentions that the plaintiffs Shivprasad, Shobharam, and Balchand were
formally members of a joint Hindu family and traded under the name and
style of Hiralal Tikaram and they have now separated and constitute a
registered firm under the same name. Issue no. 1 was framed as to whether
the plaintiffs are partners of registered firm Hiralal Tikaram, and it was
found proved by the trial court in response to issue no. 1. All the three
brothers were plaintiffs in the suit and it clearly amounts to admission by
all the three brothers that there has been a partition and they have now
separated and constitute a partnership firm as partners. The father of
plaintiff no. 1 had filed a suit as far back as in the year 1943 and admitted
to severance of status, disruption of status of joint family as far back as in
the year 1943, which was also found proved even in 1943.
44 . The severance of status of joint family was not found proved by the
trial court only on strength of document Exhibit D 1-9/55, which is an
order of Income Tax Appellate Tribunal in Income Tax Appeal No.s 3780,
3781 & 3782 of 1948–49 arising from assessment years 1945–46, 1946–47,
and 1947–48. These have been decided by Income Tax Appellate Tribunal
(ITAT), Bombay Bench "B" on 10-10-1949. In this order, there is some

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

37

FA No.124 of 1997 & FA No.144 of 1997

reproduction of a statement of Balchand recorded on 23-02-1945, whereby
Balchand has stated as under:
"I am a partner in the above-said firm in the capacity of a member
of the Hindu Undivided Family of Hiralal Tikaram."

45. It was held by the ITAT that it appears that the assessee did not know
that they were entitled to substantial relief as a result of constitution of firm
w.e.f. 21-10-1941. The ITAT goes on to mention that the partners divided
the business assets of the Hindu Undivided Family on 20-10-1941 and they
constituted a firm on 20-10-1941. They were ignorant of the benefits due to
them as a result of constitution of firm. The returns continued to be
submitted as before.
46. The ITAT went on to hold that there seems to be no dishonesty of the
assessee and therefore ruled in favour of assessee, directing the Income Tax
Officer to register the firm for the assessment year 1945–46 onwards. The
ITAT has recorded the finding that up to assessment year 1945–46, the
returns seem to have been filed not as partnership firm because the assessee
seems to be unaware of tax benefit. The ITAT has allowed tax benefits to be
extended as per partnership firm from assessment year 1945–46 onwards.
The statement of Balchand which has been quoted by the ITAT is the only
fact that has been taken into account by the trial court in holding that the
joint family still existed. The statement date of Balchand is 23-02-1945 and

Signature Not Verified
Signed by: NAVEEN KUMAR
SARATHE
Signing time: 15-10-2026
18:08:32

38

FA No.124 of 1997 & FA No.144 of 1997

the tax appeals are from assessment year 1945–46 onwards. The
assessment year 1945–46 would translate to financial year 1944–45, which
would have ended in March 1945. The statement of Balchand is dated 23-
02-1945. There was no reason for statement of Balchand to have been
recorded on 23-02-1945, by which date the assessment, the financial year
had not ended, and the appeals are filed before the Income Tax Tribunal in
the year 1948. Therefore, it is therefore impossible that this statement was
recorded before the ITAT on 23-02-1945. The order of ITAT is utterly
cryptic that before which authority these statements were recorded. The last
paragraph of the order of ITAT mentions that the statement of Balchand has
been pointed out by the Departmental Representative. It indicates that this
statement was not before the tribunal. Then before which authority this
statement was made is totally ambiguous and cannot be gathered from the
order of ITAT. Even the ITAT allowed tax benefit as a partnership firm and
did not disallow the tax benefits as a partnership firm and held that even if
Balchand made the statement that there is Hindu Undivided Family, then it
seems to be made in ignorance of tax laws. Therefore, this order of the
Income Tax Appellate Tribunal does not lead to any presumption that there
was no disruption of joint family status.

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47. The relevant portion of the order of ITAT, whereby the ITAT has
ultimately upheld the grant of tax assessment as per partnership firm is as
under:-
"Till recently, it appears the partners of the firm did not know
that they were entitled to substantial relief as a result of the
constitution of the firm with effect from 21.10.1941. They
divided the business assets of the Hindu Undivided Family on
20.10.1941 and they constituted a firm on 21.10.1941. They
were ignorant of the benefits due to them as a result of the
constitution of the firm. The returns continued to be submitted as
before. Balchand also made the statement to which our attention
was drawn by the departmental representative. It appears to us
that there has been no dishonesty on part of the assessee. We,
therefore, allow these appeals and direct the Income Tax Officer
to register the firm for the assessment years 1945–46, 1946–47
and 1947–48."

48. It is settled in law that as per Income Tax Act, it has to be a definite
partition in definite portions which is different from Hindu law. In
Charandas Haridas v. CIT, reported in AIR 1960 SC 910 , it has been
held as under:—
“ 11. The respondent suggested that the family could have partitioned
the managing agencies among the members of the family by allotting
them severally; but that would not have been possible without a
dissolution of the managing agency firms and their reconstitution,
which was not altogether in the hands of Charandas Haridas. It was
also suggested that the managing agencies could have been allotted to
Charandas Haridas while the others took some other property, or a
receiver could have been appointed. No doubt, there were many
modes of partition which might have been adopted; but the question
remains that if the family desired to partition these assets only and no
more, could they have acted in some other manner to achieve the
same result? No answer to this question was attempted.”


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49. The question of definite portion was interpreted by the Hon’ble Apex
Court in Udayan Chinubhai v. CIT, AIR 1967 SC 762 in the following
manner:—
“ 7. But an order recording partition can be made only if the
properties of the joint family are partitioned in “definite portions”,
that is, the properties are physically divided if they admit of such
division, otherwise in such division as they admit of. In Gordhandas T.
Mangaldas v. CIT [11 ITR 183] the High Court of Bombay held that
Section 25-A contemplates a physical division of the joint family
property : a mere division of interest in such property is not enough.
Beaumont, C.J., in delivering the judgment of the Court observed at p.
195:
“I think that the expression ‘definite portions’ indicates a
physical division in which a member takes a particular house
in which he can go and live, or a piece of land which he can
cultivate, or which he can sell or mortgage, or takes particular
ornaments which he can wear or dispose of, and that the
expression ‘definite portions’ is not appropriate to describe an
undivided share in property where all a particular member can
claim is a proportion of the income, and a division of the
corpus, but where he cannot claim any definite portion of the
property…. No doubt the expression ‘division in definite
portions’ will have to be construed with regard to the nature of
the property concerned. A business cannot be divided into parts
in the same manner as a piece of land; division may only be
possible in the books. Special cases will have to be dealt with
by the Income Tax Officer when they arise. If he comes to the
conclusion, that, having regard to the nature of the property,
what has been done amounts to a division in definite portions,
he will record his finding under sub-section (1); If he comes to
the conclusion that it does not, then he will have to go on
assessing the family under sub-section (3).”

50. Therefore, the reasoning adopted by the trial court that the order
Exhibit D55 D-55 passed by the ITAT Bombay infers no partition to have
taken place in the year 1941 is clearly erroneous and cannot be sustained.

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51 . Therefore, in the considered opinion of this Court, it is clear that there
was disruption in the Hindu Undivided Family and joint family status as on
20.10.1941, which was followed by constitution of partnership firm vide
Exhibit D1-9/D-1, dated 18.11.1943, which is not in dispute. Even for the
purpose of income tax benefits, though from the order of ITAT it appears
that for some years the returns continued to be submitted on the basis of
HUF, but ultimately the ITAT allowed the returns to be submitted as per
partnership firm since the assessment year 1945–46, which translates to
financial year 1944–45, which is immediately after constitution of
partnership firm, which took place on 18.11.1943 and therefore, from the
very next financial year, i.e. 1944–45, the income tax assessment was alone
as per the modalities applicable to partnership firm.
52. The partnership deed Exhibit D-1 dated 18.11.1943 does indicate
disruption of status of HUF, but there is nothing, which mentions that in
what manner the immovable properties, i.e. houses and lands, etc., would
be distributed, though the partnership deed mentions that even the proceeds
from houses would be divided equally between the partners.
53 . The counsel for the appellants had relied on the judgments in the
case of Musammat Girja Bai vs Sadashiv Dhundiraj 1916 SCC OnLine

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PC 31 , Kalyani v. Narayanan, 1980 Supp SCC 298 and Kalyanaswamy v.
Bakthavatsalam, (2021) 16 SCC 543 to argue that actual division of HUF
is not sine qua non for disruption of joint status.
54. In the case of Kalyani (supra), it has been held that disruption on
joint family status is the first step towards partition by metes and bounds
and actual division of properties follows disruption of joint family status.
Therefore, disruption of joint family status does not necessarily require
partnership by metes and bounds. It has been held in the aforesaid case that
disruption puts an end to coparcenary and the members of the joint family
thereafter continue as tenants in common and not joint tenants. It has been
held as under:-
“10. The next stage in the unfolding of the case is whether Ex. P-
1 is effective as a partition. Partition is a word of technical
import in Hindu law. Partition in one sense is a severance of joint
status and coparcener of a coparcenary is entitled to claim it as a
matter of his individual volition. In this narrow sense all that is
necessary to constitute partition is a definite and unequivocal
indication of his intention by a member of a joint family to
separate himself from the family and enjoy his share in severalty.
Such an unequivocal intention to separate brings about a
disruption of joint family status, at any rate, in respect of
separating member or members and thereby puts an end to the
coparcenary with right of survivorship and such separated
member holds from the time of disruption of joint family as
tenant-in-common. Such partition has an impact on devolution of
shares of such members. It goes to his heirs displacing
survivorship. Such partition irrespective of whether it is
accompanied or followed by division of properties by metes and
bounds covers both a division of right and division of property
(see Appovier v. Rama Subba Aiyan [(1886) 11 MIA 75 : 2 Sar

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218 : 8 WR PC 1] quoted with approval in Krishnabai Bhritar
Ganpatrao Deshmukh v. Appasaheb Tuljaramarao
Nimbalkar [(1979) 4 SCC 60, 68] ). A disruption of joint family
status by a definite and unequivocal indication to separate
implies separation in interest and in right, although not
immediately followed by a de facto actual division of the subject-
matter. This may at any time, be claimed by virtue of the separate
right (see Girja Bai v. Sadashiv [AIR 1916 PC 104 : 43 IA 151 :
18 Bom LR 621] ). A physical and actual division of property by
metes and bounds follows from disruption of status and would be
termed partition in a broader sense.”

55. In the present case, as has already been discussed above, there was a
separation of accounts and once there is a share of profits in members of
the partnership firm and there is no single Karta keeping all the proceeds of
the profits of the partnership firm, therefore, it cannot be said that there was
existence of a Hindu Undivided Family (HUF). This question was
considered by the Hon'ble Supreme Court in the case of Nanchand
Gangaram Shetji v. Mallappa Mahalingappa Sadalge, (1976) 2 SCC 429
in the following manner :-
“37. Reference has already been made to Ex. 316 an order dated
June 20, 1950, of the Income Tax Officer showing that
Defendants 1, 2 and 3 were being assessed on, the basis that
each of them had 1/3rd share in the business. In a joint Hindu
family business, no member of the family can say that he is the
owner of one-half, one-third or one-fourth. The essence of joint
Hindu family property is unity of ownership and community of
interest, and the shares of the members are not defined.
Similarly, the pattern of the accounts of a joint Hindu family
business maintained by the karta is different from those of a
partnership. In the case of the former the shares of the
individual members in the profits and losses are not worked out,
while they have to be worked out in the case of partnership
accounts.”


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56 . The disputes which arose in the 1950s, though various
correspondences have been placed on record between Balchand and
Dashrath as well as with Ratanlal Malaiya, who was the Arbitrator to carry
out partition by metes and bounds, but it appears that these disputes are not
as regards the existence of joint hindu family to be still there, but as regards
the physical division of properties. There is no single Karta of the family
shown after 1941 and it appears that each one of the three brothers was
keeping the shares of the profits to himself. There is nothing which has
been established by any of the parties that any single person remained as
Karta of the HUF, if there was an admitted and undisputed existence of
HUF.
57 . This physical division by metes and bounds seems to have taken
place by the document Exhibit P-1, which was executed on 18/19 July,
1949. This document categorically contains three lists of properties, which
have fell into the share of the three brothers: Shivprasad, Shobharam and
Bhalchand. 14 properties fell into the share of Shivprasad, 11 properties fell
into the share of Shobharam, and 9 properties fell into the share of
Bhalchand. A note of Bhalchand dated 19.07.1949 states that some land
area measuring 4.66 acres adjoining to the east of Hira Mills, which has
been purchased from Ambadas Chandani would not be part of this

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arrangement and he does not intend to make the said land as part of this
arrangement.
58. This arrangement of 1949 has not been believed by the Trial Court
on two grounds: i.e. firstly, that it is not a registered document and it seems
to be a memorandum of partition; and secondly, that it itself mentions that
the parties will sit together by Diwali of the year 1949 and then a final
scheme will be worked out. However, when paragraph 1 of this document
is seen, it categorically declares that immovable property has been divided
as per List A. Paragraph 2 of this document relates to the establishment of a
separate oil and soap factory for eldest brother Shivprasad. Paragraph 3
relates to the share in the shop Bhalchand Lakhmichand. Paragraph 4
relates to middle brother Shobharam not being responsible for profit and
loss in business from the date of this document. Paragraph 4 relates to
Bhalchand not entering into future trading without the consent of eldest
brother Shivprasad. Paragraph 6 relates to the parties settling their accounts
of businesses by Diwali of Samvat 2006 (i.e. 1949) so that the final stamp
of approval can be given on the arrangement and it can be registered.
Paragraph 7 further declares that the immovable property that has been
divided as per list A on 18.07.1949, the three parties shall be deemed to be

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in their separate possession from today and each party shall look after its
own share of properties and recover the rent etc.
59 . Therefore, paragraphs 1 and 7 of this arrangement clearly stipulate
that it is a full and final arrangement/settlement so far as immovable
properties are concerned. Paragraphs 2 to 6 of this document infer that the
disputes regarding accounts of businesses remain to be settled. Paragraph 8
of this document, which is the last paragraph, mentions that till the
accounts are settled, Hira Oil Mill and Vijay Oil Mill shall be looked after
by defendant No.10 Balchand. The eldest and middle brothers, Shivprasad
and Shobharam shall be entitled to call for scrutiny of accounts of the mills.
60. On a careful reading of this document, it can be easily gathered that
it amounted to physical partition of properties so far as immovable
properties are concerned and, only accounts of businesses remained to be
settled, though the businesses had separated in the year 1941 itself, but its
accounts remained unsettled. This seems to be because from the proceeds
of business, certain new businesses were opened in the intervening period
and the parties were quarreling among themselves for their shares in the
subsequent businesses that had been opened with the proceeds of the
partnership firm, which came into existence by partnership deed dated
18.11.1943 (Exhibit D-1-9/D-1).

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61 . The trial Court has not relied on this document on the ground that it
is unregistered. This document has to be read in continuation with what
happened in the years 1941 and 1943, which was the disruption of the
status of jointness of the HUF. This document (Exhibit P-1) is the
document of reducing the physical partition into writing, whereas the
jointness stood disrupted in the year 1941 and at the most in the year 1943
when the partnership deed was executed. It has been brought on record that
accounts were separated in the year 1941 itself. Also it has been brought on
record, that the parties have thereafter acted in furtherance of this
document, Exhibit P-1 and have entered into sale transactions and filed
eviction suits against the tenants in their properties of their respective
shares, which fell to them as per the document Exhibit P-1.
62 . It has further been brought on record that there was subsequent
partition in the respective branches of Shiv Prasad, Shobharam and
Balchand, which has been duly established before the trial Court. The
branch of Shobharam partitioned among itself in the year 1953. The branch
of Balchand partitioned amongst itself in the year 1957. Even the branch of
Dashrath, i.e., plaintiff branch, also partitioned amongst itself in the year
1970-71. The document of partition amongst the branch of plaintiffs is on
record as Exhibit D10-16/D-17, which has been executed on 25.07.1972.

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Therefore, it is clear that all the three branches have acted upon these three
lists prepared in the document Exhibit P-1 of the year 1949. The plaintiff
branch has also sold certain properties, which fell to their share vide
Exhibit P-1 and one of the sale deeds is on record as Exhibit D-10-16/D-
779, dated 29.02.1988. It is, therefore, clear that all the parties have acted
upon this arrangement vide Exhibit P-1 carried out in July 1949.
63. The wealth tax return of plaintiff No.1 Dashrath was pointed out to
this Court, which is Exhibit D10-16/D-10, which includes the properties in
Exhibit P-1, which further indicates that Exhibit P-1 was acted upon by
plaintiff branch. The properties fallen into share of his father vide P-1 were
reflected by the plaintiff in his Wealth Tax return.
64 . In the case of Ravinder Kaur Grewal v. Manjit Kaur, (2020) 9 SCC
706 , it has been considered by the Hon’ble Apex Court that whether a
family settlement/arrangement requires compulsory registration or not. The
disruption of jointness of family had taken place in the year 1941/1943 and
therefore, this list prepared vide Exhibit P-1 in the year 1949 can safely be
said to be memorandum of settlement containing something, which already
took place in the year 1941/1943. The document, therefore, becomes only
memorandum of family arrangement. It cannot become a document which
created or transferred rights for the first time in immovable property.

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65 . In the aforesaid case of Ravinder Kaur Grewal (supra) , it has been
held by the Hon'ble Apex Court that once a party acts upon the terms of
family settlement, then it is not open to the party to resile from the said
arrangement. The parties to the family settlement are estopped from
disowning arrangement already reached acted upon and recorded in the
memorandum of settlement. Once the document does not for the first time
create a right in favour of party in immovable property, then the said
memorandum is only arrangement, which does not require registration. The
Hon'ble Apex Court held as under:-
“25. Be that as it may, the High Court has clearly misapplied the
dictum in the relied upon decisions. The settled legal position is that
when by virtue of a family settlement or arrangement, members of a
family descending from a common ancestor or a near relation seek to
sink their differences and disputes, settle and resolve their conflicting
claims or disputed titles once and for all in order to buy peace of
mind and bring about complete harmony and goodwill in the family,
such arrangement ought to be governed by a special equity peculiar
to them and would be enforced if honestly made. The object of such
arrangement is to protect the family from long-drawn litigation or
perpetual strives which mar the unity and solidarity of the family and
create hatred and bad blood between the various members of the
family, as observed in Kale [Kale v. Director of Consolidation,
(1976) 3 SCC 119] . In the said reported decision, a three-Judge

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Bench of this Court had observed thus: (Kale case [Kale v. Director
of Consolidation, (1976) 3 SCC 119] , SCC pp. 125-26, para 9)
“9. … A family arrangement by which the property is
equitably divided between the various contenders so as to
achieve an equal distribution of wealth instead of
concentrating the same in the hands of a few is undoubtedly a
milestone in the administration of social justice. That is why
the term “family” has to be understood in a wider sense so as
to include within its fold not only close relations or legal heirs
but even those persons who may have some sort of antecedent
title, a semblance of a claim or even if they have a spes
successionis so that future disputes are sealed for ever and the
family instead of fighting claims inter se and wasting time,
money and energy on such fruitless or futile litigation is able
to devote its attention to more constructive work in the larger
interest of the country. The courts have, therefore, leaned in
favour of upholding a family arrangement instead of
disturbing the same on technical or trivial grounds. Where the
courts find that the family arrangement suffers from a legal
lacuna or a formal defect the rule of estoppel is pressed into
service and is applied to shut out plea of the person who being
a party to family arrangement seeks to unsettle a settled
dispute and claims to revoke the family arrangement under
which he has himself enjoyed some material benefits.”
26. In para 10 of the said decision, the Court has delineated the
contours of essentials of a family settlement as follows: (Kale case
[Kale v. Director of Consolidation, (1976) 3 SCC 119] , SCC pp.
126-27)

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“10. In other words to put the binding effect and the essentials
of a family settlement in a concretised form, the matter may be
reduced into the form of the following propositions:
‘(1) The family settlement must be a bona fide one so as
to resolve family disputes and rival claims by a fair and
equitable division or allotment of properties between the
various members of the family;
(2) The said settlement must be voluntary and should
not be induced by fraud, coercion or undue influence;
(3) The family arrangement may be even oral in which
case no registration is necessary;
(4) It is well settled that registration would be necessary
only if the terms of the family arrangement are reduced
into writing. Here also, a distinction should be made
between a document containing the terms and recitals of
a family arrangement made under the document and a
mere memorandum prepared after the family
arrangement had already been made either for the
purpose of the record or for information of the court for
making necessary mutation. In such a case the
memorandum itself does not create or extinguish any
rights in immovable properties and therefore does not
fall within the mischief of Section 17(2) of the
Registration Act and is, therefore, not compulsorily
registrable;
(5) The members who may be parties to the family
arrangement must have some antecedent title, claim or
interest even a possible claim in the property which is

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acknowledged by the parties to the settlement. Even if
one of the parties to the settlement has no title but under
the arrangement the other party relinquishes all its
claims or titles in favour of such a person and
acknowledges him to be the sole owner, then the
antecedent title must be assumed and the family
arrangement will be upheld and the courts will find no
difficulty in giving assent to the same;
(6) Even if bona fide disputes, present or possible,
which may not involve legal claims are settled by a
bona fide family arrangement which is fair and
equitable the family arrangement is final and binding
on the parties to the settlement.’”
27. Again, in para 24, this Court restated that a family arrangement
being binding on the parties, clearly operates as an estoppel, so as to
preclude any of the parties who have taken advantage under the
agreement from revoking or challenging the same. In para 35, the
Court noted as follows: (Kale case [Kale v. Director of
Consolidation, (1976) 3 SCC 119] , SCC p. 136)
“35. … We have already pointed out that this Court has
widened the concept of an antecedent title by holding that an
antecedent title would be assumed in a person who may not
have any title but who has been allotted a particular property
by other party to the family arrangement by relinquishing his
claim in favour of such a donee. In such a case the party in
whose favour the relinquishment is made would be assumed to
have an antecedent title.”

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And again, in para 36, the Court noted as follows: (Kale case [Kale v.
Director of Consolidation, (1976) 3 SCC 119] , SCC p. 137)
“36. … Yet having regard to the near relationship which the
brother and the son-in-law bore to the widow the Privy
Council held that the family settlement by which the properties
were divided between these three parties was a valid one. In
the instant case also putting the case of Respondents 4 and 5
at the highest, the position is that Lachman died leaving a
grandson and two daughters. Assuming that the grandson had
no legal title, so long as the daughters were there, still as the
settlement was made to end the disputes and to benefit all the
near relations of the family, it would be sustained as a valid
and binding family settlement.”
28. While rejecting the argument regarding inapplicability of
principle of estoppel, the Court observed as follows: (Kale case
[Kale v. Director of Consolidation, (1976) 3 SCC 119] , SCC p. 138,
para 38)
“38. … Assuming, however, that the said document was
compulsorily registrable the courts have generally held that a
family arrangement being binding on the parties to it would
operate as an estoppel by preventing the parties after having
taken advantage under the arrangement to resile from the
same or try to revoke it.”
And in para 42, the Court observed as follows: (Kale case [Kale v. Director
of Consolidation, (1976) 3 SCC 119] , SCC p. 140)
“42. … In these circumstances there can be no doubt that even
if the family settlement was not registered it would operate as
a complete estoppel against Respondents 4 and 5. Respondent

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1 as also the High Court, therefore, committed substantial
error of law in not giving effect to the doctrine of estoppel as
spelt out by this Court in so many cases.”
29. The view so taken is backed by the consistent exposition in
previous decisions [Khunni Lal v. Gobind Krishna Narain, 1911 SCC
OnLine PC 14 : (1910-11) 38 IA 87 : ILR (1911) 33 All 356; Hiran
Bibi v. Sohan Bibi, 1914 SCC OnLine PC 28 : AIR 1914 PC 44; Sahu
Madho Das v. Mukand Ram, AIR 1955 SC 481; Ram Charan Das v.
Girja Nandini Devi, AIR 1966 SC 323; Tek Bahadur Bhujil v. Debi
Singh Bhujil, AIR 1966 SC 292; Maturi Pullaiah v. Maturi
Narasimham, AIR 1966 SC 1836; Krishna Beharilal v. Gulabchand,
(1971) 1 SCC 837; S. Shanmugam Pillai v. K. Shanmugam Pillai,
(1973) 2 SCC 312; Ram Gopal v. Tulshi Ram, 1928 SCC OnLine All
140 : AIR 1928 All 641; Sitala Bakhsh Singh v. Jang Bahadur Singh,
1933 SCC OnLine Oudh CC 148 : AIR 1933 Oudh 347; Kalawati v.
Sri Krishna, 1943 SCC OnLine Oudh CC 156 : AIR 1944 Oudh 49;
Bakhtawar v. Sundar Lal, 1925 SCC OnLine All 253 : AIR 1926 All
173; Awadh Narain Singh v. Narain Mishra, 1961 SCC OnLine Pat
99 : AIR 1962 Pat 400; Ramgowda Annagowda Patil v. Bhausaheb,
1927 SCC OnLine PC 64 : (1926-27) 54 IA 396 : AIR 1927 PC 227;
Brahmanath Singh v. Chandrakali Kuer, 1960 SCC OnLine Pat 192 :
AIR 1961 Pat 79; Bibi Aziman v. Saleha, 1962 SCC OnLine Pat 103
: AIR 1963 Pat 62; Kanahi Lal v. Brij Lal, 1918 SCC OnLine PC 19
: (1917-18) 45 IA 118 : AIR 1918 PC 70; Dhiyan Singh v. Jugal
Kishore, (1952) 1 SCC 184 : AIR 1952 SC 145; T.V.R. Subbu Chetty's
Family Charities v. M. Raghava Mudaliar, AIR 1961 SC 797;
Rachcha v. Mendha, 1946 SCC OnLine All 65 : AIR 1947 All 177;
Chief Controlling Revenue Authority v. Satyawati Sood, 1971 SCC

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OnLine Del 356 : AIR 1972 Del 171; Shyam Sunder v. Siya Ram,
1972 SCC OnLine All 149 : AIR 1973 All 382] referred to and duly
analysed in the reported judgment in Kale case [Kale v. Director of
Consolidation, (1976) 3 SCC 119] . The question formulated by the
High Court, in our opinion, stands answered in favour of the
appellants (plaintiff), in light of exposition of this Court in Kale
[Kale v. Director of Consolidation, (1976) 3 SCC 119] .
30. A priori, we have no hesitation in affirming the conclusion
reached by the first appellate court that the document Ext. P-6 was
nothing but a memorandum of a family settlement. The established
facts and circumstances clearly establish that a family settlement
was arrived at in 1970 and also acted upon by the parties concerned.
That finding of fact recorded by the first appellate court being
unexceptionable, it must follow that the document, Ext. P-6 was
merely a memorandum of a family settlement so arrived at.
Resultantly, it was not required to be registered and in any case,
keeping in mind the settled legal position, the contesting defendants
were estopped from resiling from the stated arrangement in the
subject memorandum, which had recorded the settlement terms
arrived at in the past and even acted upon relating to all the existing
or future disputes qua the subject property amongst the (signatories)
family members despite absence of antecedent title to the property
concerned.

31. As regards the decision in Bhoop Singh [Bhoop Singh v. Ram
Singh, (1995) 5 SCC 709] and Som Dev v. Rati Ram [Som Dev v.
Rati Ram, (2006) 10 SCC 788] , the same dealt with the question of
necessity to register any decree or order of a court governed by

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clause (vi) of Section 17(2) of the Registration Act, 1908 (“the 1908
Act”). In the present case, however, clause (v) of sub-section (2) of
Section 17 of the 1908 Act is attracted. Section 17 as applicable
when the cause of action arose (prior to amendment of 2001) reads
thus:
“Part III
Of Registrable Documents
17. Documents of which registration is compulsory .—
(1) *
(2) Nothing in clauses (b) and (c) of sub-section (1) applies
to—
(i)-(iv) *
(v) any document not itself creating, declaring, assigning,
limiting or extinguishing any right, title or interest of the value
of one hundred rupees and upwards to or in immovable
property, but merely creating a right to obtain another
document which will, when executed, create, declare, assign,
limit or extinguish any such right, title or interest; or”
32. In our considered view, reliance placed by the High Court on the
decisions of this Court will be of no avail to alter or impact the
conclusion recorded by the first appellate court. As aforementioned,
in Bhoop Singh [Bhoop Singh v. Ram Singh, (1995) 5 SCC 709] and
Som Dev [Som Dev v. Rati Ram, (2006) 10 SCC 788] , the Court was
dealing with the issue of compulsory registration of a decree or
order of Court. In the context of the applicable clause (vi) in sub-
section (2) of Section 17, the Court in Bhoop Singh [Bhoop Singh v.
Ram Singh, (1995) 5 SCC 709] went on to hold as follows: (Bhoop

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Singh case [Bhoop Singh v. Ram Singh, (1995) 5 SCC 709] , SCC pp.
715-16, para 18)
“18. The legal position qua clause (vi) can, on the basis of the
aforesaid discussion, be summarised as below:
(1) Compromise decree if bona fide, in the sense that the
compromise is not a device to obviate payment of stamp duty
and frustrate the law relating to registration, would not
require registration. In a converse situation, it would require
registration.
(2) If the compromise decree were to create for the first time
right, title or interest in immovable property of the value of Rs
100 or upwards in favour of any party to the suit the decree or
order would require registration.
(3) If the decree were not to attract any of the clauses of sub-
section (1) of Section 17, as was the position in the aforesaid
Privy Council [ Ed. : The reference is to Hemanta Kumari Debi
v. Midnapur Zamindari Co. Ltd., 1919 SCC OnLine PC 41]
and this Court's [ Ed. : The reference is to Tek Bahadur Bhujil
v. Debi Singh Bhujil, AIR 1966 SC 292; Maturi Pullaiah v.
Maturi Narasimham, AIR 1966 SC 1836 and Ratan Lal
Sharma v. Purshottam Harit, (1974) 1 SCC 671] cases, it is
apparent that the decree would not require registration.
(4) If the decree were not to embody the terms of compromise,
as was the position in Lahore case [Fazal Rasul Khan v.
Mohd-ul-Nisa, 1943 SCC OnLine Lah 128] , benefit from the
terms of compromise cannot be derived, even if a suit were to
be disposed of because of the compromise in question.

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(5) If the property dealt with by the decree be not the “subject-
matter of the suit or proceeding”, clause (vi) of sub-section (2)
would not operate, because of the amendment of this clause by
Act 21 of 1929, which has its origin in the aforesaid decision
of the Privy Council, according to which the original clause
would have been attracted, even if it were to encompass
property not litigated.”
33. In the present case, as noted earlier clause (v) of Section 17(2) is
attracted, which pertains to execution of any document creating or
extinguishing right, title or interest in an immovable property
amongst the family members. Thus, the dictum in Kale [Kale v.
Director of Consolidation, (1976) 3 SCC 119] is attracted in the fact
situation of this case.
34. Considering the above, we have no hesitation in concluding that
the High Court committed manifest error in interfering with and in
particular reversing the well-considered decision of the first
appellate court, which had justly concluded that document dated 10-
3-1988 executed between the parties was merely a memorandum of
settlement, and it did not require registration. It must follow that the
relief claimed by the plaintiff in the suit, as granted by the first
appellate court ought not to have been interfered with by the High
Court and more so, in a casual manner, as adverted to earlier.”
66. In the case of P. Anjanappa v. A.P. Nanjundappa, (2026) 4 SCC
492 , it has been held that an unregistered partition deed can be relied upon
for collateral purposes of proving severance of joint family status and
explaining nature of possession. It has further been held that such

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documents can be relied upon to prove disruption of joint family status and
the subsequent separate possession and enjoyment of properties by the
parties.
67. The other question which weighed with the trial Court in discarding
Exhibit P-1 was that there is a recital in Exhibit P-1 that a separate mill
shall be established for Shiv Prasad and that separate mill never was never
opened and therefore, the full terms and conditions of this arrangement
were never fulfilled and there cannot be unequal partition.
68 . The dispute of separate oil mill, which was to be established for the
eldest brother Shiv Prasad seems to be a dispute something different from
the physical distribution of immovable properties. Counsel for the appellant
has argued that looking to the deposition of PW-2 Dashrath, who is plaintiff
No.1 himself, that in Malaiya Oil Mill in the year 1955, two expellers were
installed, which were ordered by his deceased father, which is to be found
in paragraph 29 of his deposition. He further stated that prior to 1950, four
expellers were ordered which were installed in different mills in Damoh,
Satna, and Sagar. He states in paragraph 31 that earlier in Satna, there was
business in the name of Rewa Industries and land was purchased on which
Shrenik Oil Mill was installed. He alleged that for installation of Shrenik
Oil Mill, the money of joint family was invested. He admits in paragraph

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33 that Vijay Oil Mill was installed at Damoh in 1943 and Rajkumar Oil
Mill was installed at Damoh in 1954-55. In paragraph 40 of his deposition,
he denies the suggestion that it was agreed that the third mill shall not be
got constructed and handed over to his father and in exchange of that, his
share would be 50% in Hira Oil Mill. Counsel for respondents stated that
the partnership deed of Malaiya Oil Mill was executed in 1952 and
additional expellers were installed in the year 1955 and therefore, the
question does not arise to establish separate oil mill for the branch of Shiv
Prasad, represented by Plaintiffs. It is seen that PW-1 in paragraph 147 of
his deposition states that in the year 1948-49, the relations between his
father and Balchand got strained and Balchand had handed over Hira Oil
Mill to his father for some time, but he denied the suggestion that his father
had forcibly taken possession of Hira Oil Mill. He further stated that the
management of Hira Oil Mill was again restored to Balchand after 2-3
months. He admits that two expellers of Rs.21,000/- each were received
after death of his father.
69 . This deposition indicates that there was some dispute in management
of Hira Oil Mill, later its name changed to Malaiya Oil Mill and it appears
that the possession of this oil mill during the year 1948-49 repeatedly
interchanged between Shiv Prasad, i.e. father of plaintiff No.1 and

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Balchand, i.e., defendant No.10 and when the distribution of properties got
finalized in 1949, then at that time, since the possession of Hira Oil Mill
was with Balchand, so it was agreed that one more oil mill shall be got
constructed and handed over to Shiv Prasad, i.e. father of plaintiff No.1.
70 . It only indicates that there was some dispute of accounts of Hira Oil
Mill, and nothing else. Different businesses had been set up from 1944
onwards up to 1955 and as already held above by this Court, there was
already disruption of joint family business in the year 1941 and the Income
Tax authorities had also permitted filing of return by partnership firm from
financial year 1944-45. The partnership deed indicates that there was no
single Karta of the family and the profits were to be divided amongst three
brothers, who were partners of the partnership firm and who had ceased to
be members of HUF/Joint Family/coparcenary.
71 . The distribution of properties as per list prepared in 1949 vide
Exhibit P-1 could not, therefore, be discarded by the trial Court only on the
ground that a separate mill had not been handed over to father of plaintiff
No.1 and on that basis it could not be held that the distribution by Exhibit
P-1 amounts to be unequal partition. It was a dispute of proceeds of
partnership firm and it could not be placed on the pedestal of dispute of

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partition of HUF property or HUF business, which stood concluded and
finalized by any interpretation latest on 18/19 July, 1949.
72 . So far as the question of distribution of business and dispute of
management of Hira Oil Mill, later changed to Malaiya Oil Mill is
concerned, after execution of document Exhibit P-1, two different
partnership deeds were executed. Firstly, Exhibit D10-16/D1, which is
dated 05.06.1952, as per which Balchand, and Gulabchand son of Balchand
as well as Dashrath, i.e. plaintiff No.1 are the partners in Shrenik Oil Mill.
The second document is another partnership deed dated 20.10.1952 as per
which it has been agreed that the oil mill at Damoh shall be owned by
Shobharam, i.e. middle brother and Hira Oil Mill Sagar and Hiralal
Tikaram be owned by Balchand, Gulabchand son of Balchand and
Dashrath, i.e. plaintiff No.1.
73 . Apart from this, the document Exhibit D-1-9/D-2 dated 01.09.1951
indicates that there was a partnership deed entered into between the two
brothers Shobharam and Bhalchand as well as the plaintiff No.1, who is the
son of eldest brother. It has been agreed by this deed that eldest brother
Shivprasad Malaiya has died on 04.09.1951 and he has elected to join the
firm with effect from 05.09.1951 in place of his deceased father, and the
firm is carrying out five businesses, which are as under:-

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1. Heera Oil Mills, Sagar and Vijay Oil Mill, Damoh
2. Hiralal Teekaram Shop at Sagar
3. Shivprasad Shobharam Shop
4. Hiralal Teekaram Shop at Lalitpur
5. 5 annas and 4 pies share in Bhalchand Lakshmichand firm.
74. The firm was renamed as Shivprasad Shobharam and plaintiff No.1
was inducted as 1/3rd share holder of 5 annas and 4 pies.
The document Exhibit D 1-9/D-4 indicates that the name of the firm was
changed to Malaiya Oil Mills, Sagar and in place of Shobharam, now
Gulabchand Malaiya, who is son of Balchand Malaiya, was inducted. Later
on, the name of this firm was registered and the registration certificate is
also on record.
75 . As per partnership deed dated 20.10.1952 (Exhibit D10-16/P-2), the
agreement was arrived at between Balchand, Gulabchand son of Balchand,
and Dashrath (Plaintiff No.1) that the oil mill at Damoh shall be owned by
Shobharam, which was earlier under the fold of firm Hira Lal Tika Ram
and the firm shall be renamed as Malaiya Oil Mill, Sagar and Plaintiff
No.1’s share shall be 8 annas in a rupee, i.e. 50 percent.
76. This document of 05.01.1952 indicates that earlier his father was
having 1/3 share in the firm and now the share of the plaintiff was

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FA No.124 of 1997 & FA No.144 of 1997

increased to 50 percent, which gives rise to the possibility that some
arrangement was reached between the family members, whereby the share
of the Plaintiff No.1 was enhanced to 50 percent in the earlier firm upon
retirement of Shobharam from the said firm, who separated from the said
firm after separating Vijay Oil Mills Damoh from the firm.
77 . Therefore, it appears that the dispute of separate oil mill got settled
upon execution of these subsequent partnership deeds that have been dealt
with above in this judgment. If the issue of separate oil mill had not been
settled, then there was no reason for the plaintiff No.1, to have entered into
subsequent partnership deeds with his uncles, i.e. Shobharam and
Balchand.
78 . Indeed, the plaintiff No.1 had filed a suit for rendition of accounts in
the partnership firm, which was later on dismissed in default of
prosecution. This suit, RCS-B No. 6 of 1961 was dismissed as abated vide
order dated 23.1.2001, and no further remedy seems to have been availed
by the Plaintiff No.1 or his legal heirs against this order. Even if any
remedy has been availed, that would not have any bearing on the dispute of
partition.
79. In teeth of the partnership deed dated 05.01.1952, the force of letter
Exhibit P-53 gets wiped off, whereby Balchand had stated that it is he who

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will now run Hira Oil Mills solely. This letter Exhibit P-53 has been written
on 15.09.1951, but shortly thereafter, different partnership deeds have been
executed between the Plaintiff No.1 and his uncles during 1951 and 1952
that have been discussed in detail above, which means that the dispute
which arose from the letter Exhibit P-53 got settled between the parties.
80 . It cannot be disputed that if different branches of the family are
partners in different businesses, then there are bound to arise differences
and these differences will arise continuously. Any business which is
running would always have frictions and differences between partners.
These are natural during course of running of any business by many
partners. This may explain the subsequent letters written up to 1959 by
Balchand between Balchand (Defendant No. 10) and Dashrath (Plaintiff
No. 1) and Ratanlal Malviya, who was the arbitrator. These are continuous
disputes and the language of these letters cannot be inferred to mean that
the dispute of partition still survives and the HUF still survives. Amplifying
these accounting disputes, the suit for partition was filed.
81 . Now the question arises that whether the suit being filed for many
properties, but the list vide Exhibit P-1 only for some of the properties, it
can be said that the partition was for complete properties or it was for some
of the properties.

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82 . To consider this question, the deposition of the mediator, Ratanlal
Malviya (PW-1) has been perused. He admits that he is related to all the
branches of family, but further admits that his relation with Plaintiff No.1 is
very close and he stays at house of Plaintiffs whenever he visits Sagar, and
on date of deposition also (14.4.1975), he has stayed in the house of
Plaintiff No.1. He cryptically states in paragraph-39 that the partition of
immovable properties was final vide Exh. P-1, but “decision” was not final.
83. One more relevant fact is that earlier this witness was examined on
03.4.1974 also, but thereafter his deposition was cancelled by the Trial
Court because one of the minor defendants was not properly represented on
that date. Thereafter, his deposition was recorded afresh on 14.4.1975.
However, on 03.4.1974, this witness had categorically stated that the
partition as per Exh. P-1 was final and all the three brothers took separate
possession as per Exh. P-1. When this part of deposition was confronted to
him on 14.4.1975, he admitted having stated so, which is recorded in para-
41 of his deposition dated 14.4.1975.
84. The deposition of plaintiff No. 1, Dashrath has also been seen. In
paragraphs 86, 87, and 88 of deposition of PW-2 Dashrath Kumar, it has
been brought on record that he had filed a suit against one Rajjilal for
recovery of rent of one of the properties in the list Exhibit P-1 against a

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tenant in the property. In paragraph 89 of his deposition, he stated that out
of his own will, he had written in the plaint of that suit that he is the sole
owner of the house property, which fell to the share of his father as per list
Exhibit P-1.
85. In paragraph 220 of his deposition, the plaintiff No.1 says that he has
seen Exhibit P-1 document and whatever had been decided by Ratanlal
Malviya, the same was admitted by the three brothers. Whatever property
fell into the share of his branch, he has already got possession. In paragraph
221, he admits that he has sold certain property and he has sold the
property in capacity of the sole owner.
86 . In para 8 of his deposition, he submits that immovable property of
the joint family was partitioned by list Exhibit P-1. He states in para 8 that
only plot of Ambardas had not been partitioned in which his uncle
Balchand had objection, though that plot was also purchased from joint
family funds. Therefore, in para 8 of his deposition he admits that except
plot of Ambardas, the joint family immovable properties were partitioned
vide list Exhibit P-1.
87. PW-2 Dashrath (Plaintiff No.1) further submits in his deposition in
para-72 that accounts were written daily. However, in para-73, he feigns
ignorance about the balance on the date of death of his father. In Para-75,

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when confronted with partnership deed, Exh. D 1-9/D-2, he admits signing
it, but then retracts saying he signed it, but does not remember where he
signed it. In para-85 of his deposition at page-241 of Paperbook-II, he
states that he has kept the sale proceeds of four properties, which he claims
to be joint family properties. Most importantly, in para-220, he admits that
Ratanlal Malviya had carried out partition of immovable properties which
was acceptable to all the three brothers. He further admits that he got
possession on the properties falling to his share. Some of these properties
have been sold by him and he has kept the sale proceeds (para-221).
88. In para-264 he (plaintiff) admits that in one Firm i.e. Balchand
Lakhmichand, Balchand Malaiya separated from the firm and he was
inducted in place of Balchand. He clarified in para 266 that this might be
because it was as per the 1949 partition.
89 . Therefore, it cannot be stated by the plaintiff that any immovable
property of the family remained to be dealt with by Exhibit P-1. Even
Exhibit P-1 does not say so and there is objection note of Balchand on that
document Exhibit P-1 relating to plot of Ambardas, which corroborates the
deposition of plaintiff No.1 Dashrath Kumar. If any other properties are
there in the plaint, then in teeth of admitted document Exhibit P-1, it cannot
be said that these properties were also joint family properties.

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90. Therefore, this Court is of the considered opinion that the properties
had already been partitioned. There was severance of joint family status on
20.10.1941 and the separate possession and physical partition of
immovable properties took place in July 1949 vide Exhibit P-1. The
business had already been converted into partnership firm and the
partnership firms continued to be reconstituted time and again after it being
first constituted in the year 1943 and these re-constitutions continued up to
the year 1952, which indicates that in the matter of businesses, only the
rendition of accounts remained to be carried out, which is a continuous
dispute, which arises in every business and it cannot be said to be a dispute
of partition of joint family property, because the disruption / severance of
joint family status took place in the year 1941 itself.
91. So far as the applications for amendment and applications for taking
additional documents on record by the legal heirs of defendant No.10
Balchand are concerned, the same are also taken up. By these applications,
an amendment is sought that various properties in the list Exhibit P-1,
which have fallen to the share of other parties, are in fact self-acquired
properties of Balchand or certain properties, which have fallen to the share
of Balchand were in fact self-acquired properties of Balchand, which
should never have been subject matter of family arrangement Exhibit P-1.

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92 . The suit was filed in the year 1959 and prior to that date, nothing had
been stated by Balchand that some of these properties dealt with in Exhibit
P-1 are of his sole ownership. His only objection is noted in the document
Exhibit P-1 in relation to plot of Ambadas, which has not been made
subject matter of document Exhibit P-1.
93 . This Court has gone through the statement of Balchand, who was DW-1
for defendants No.10 to 16. In the last line of paragraph 249 of his
deposition, he states that he has accepted the settlement Exhibit P-1, though
it was erroneous, because he wanted to settle the matter and wanted to
avoid future disputes.
94. In para-274 of his deposition, he states that the rents of the
immovable properties used to be divided equally between the brothers,
which further establishes that there was no single Karta of HUF and the
proceeds from the properties were being divided, which indicates severance
and destruction of HUF status. Although in paragraph 291 of his
deposition, he states that the proceeding as per Exhibit P-1 carried out on
18 and 19 July, 1949 is invalid and is not acceptable to him, but again in
paragraph 300, he states that till today he wishes that whatever was agreed
vide Exhibit P-1 should be given finality. Therefore, though defendant
No.10 Balchand states that he was not agreeable to the

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settlement/arrangement Exhibit P-1, but he wishes that it should be given
effect to and he had accepted that arrangement. After having accepted that
arrangement in the year 1949 and signed it without any objection, now in
the suit, defendant No.10 Balchand or his LRs cannot say that they were
not agreeable to the family arrangement Exhibit P-1, or that it was
unjustified towards Balchand and his family members. Therefore, no
reasons are made out to allow the amendment application or to take the
additional documents on record to challenge Exhibit P-1 at this distance of
time, which is 77 years after it had been executed.
95 . This Court is of the considered opinion that there was already a
partition and severance of joint family status in 1941 and actual division of
immovable properties took place in 1949, which became final between the
parties.
96. Various dispute of accounts in the partnership business remained,
indeed the dispute of distribution of profits from the partnership business
also seems to have survived, but those disputes cannot be said to be
disputes of partition of Joint Hindu Family property, because no such Joint
Hindu Family remained in existence.

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97 . The family arrangement/settlement embodied in Exhibit P-1 is final and
binding on the parties. Accordingly, properties not included in that
arrangement cannot be treated as joint family or HUF properties.
98 . Therefore, in the considered opinion of this Court, the judgment of
the trial Court deserves to be set aside, and the suit of the plaintiff deserves
to be dismissed.
99. If any challenge to the dismissal order dated 23.1.2001 in relation to
suit for accounts filed by the Plaintiff No.1 i.e. RCSB 6 of 1961 (New No.
RCSB-12 of 1999) is pending, then this judgment shall not come in way to
seek rendition of accounts.
100 . Accordingly, the appeals are allowed . The impugned judgment and
decree passed by the trial Court is set aside and the suit filed by the plaintiff
is dismissed. No orders as to cost.


(VIVEK JAIN)
JUDGE

nks/MISHRA/rj

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Signing time: 15-10-2026
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