Beebee Ammal v. Ibrahim Saibo.
Present: Hearne J. and Wijeyewardene A.J.
BEEBEE AMMAL v. IBRAHIM SAIBO.
341—D. C. Badulla, 5,808.
Partnership—purchase of land by partners—Death and retirement of partners—Formation of new partnership—Transfer of. beneficial interest in pro-perty purchased to new partnership—Rights of heirs of deceased part-ners—Partition action.
Where land was conveyed to seven persons trading in partnership “ asK. A. S. & Co., and their successors and assigns ”, the property vested inthe partnership and the beneficial title was in the partners as such.
On the death or retirement of a partner the beneficial interest in theproperty remained to the surviving partners, and on the formation of anew partnership such- beneficial interest became an asset of the newpartnership for the purpose of its business.
The transfer of this beneficial interest from one. partnershiD to anotherdoes not require a notarial instrument.
Beebee Amma.1 v. Ibrahim Saibo.
HIS was a partition action. The facts are stated by Wijeyewar-dene A. J. as follows: —
The plaintiffs respondents instituted this action under Ordinance No. 10of 1863 for the partition of a land called Kandewatta alios Childer’s lot,situated at Haputale. The seventh, eighth, ninth, tenth, eleventh,twelfth, thirteenth, fourteenth and sixteenth defendants-appellants filedanswer claiming the property exclusively and stating that the propertywas originally partnership property belonging to the branch business ofthe firm known as K. Abram Saibu & Company, carrying on a business atHaputale and that by certain deeds the property has now devolved onthem subject to certain rights of the plaintiffs in the legal estate in respectof the property. The first six defendants have not .filed an answer.
It is necessary to set out in detail the various transactions with regardto the partnership and the property as they have an important bearing on.the questions of fact and law which arise in this case.
By indenture P 27 of April 4, 1902, the following seven persons formedthemselves into a partnership for the purpose of “ establishing andopening boutiques, shops, stores, bakeries and carrying on a supply ofcontract business as well as any other partnership business under the
style and firm of …. K. Abram Saibu & Company”
for three years or a longer period at the discretion of the principal partners—K. Ibrahim Rawther, Mohamadu Saibu, Kader Ibrahim Saibu, SheikAdam Saibu, P. Esubu Saibu, A. K. Ahamed Saibu.
By deed P 3 of May 1, 1902, one J. L. Devar sold the property inquestion to these seven individuals “ trading in Ceylon as K. AbramSaibu & Company ”.
During the pendency of this partnership, the second partner died andthe sixth partner retired from the business. Te estate of the secondpartner was administered in the District Court of Kandy-. P 7 of 1909is the inventory filed by the administrators.
By indenture P 28 of September 17, 1906, the first, third, fourth, fifthand seventh partners of the earlier partnership and one Kader BatchaSaibu agreed to carry on the same business as under P 3 for a term ofthree years from August 6, 1906, or “ for a longer period not exceedingsix months ”.
The first and seventh partners of the first partnership who were alsopartners of the second partnership died in 1911 and 1909 respectively.Their estates were administered in the District Court of Kandy. P 4and P 6 of 1914 are the inventory and administrator’s deed in respect ofthe estate of the first partner while P 14 of 1912 is the inventory in respectof the estate of the seventh partner.
By the indenture P 29 of March, 1912, the third, fourth and fifthpartners of the first partnership, some of the heirs of the first partner ofthe first partnership including Ibrahim Saibu, Kader Batcha Saibu, whowas a partner of the second partnership, and some others agreed to carryon a business similar to the business of the first partnership under the oldname of K. Abram Saibu & Company for a period of forty months com-mencing from November 19, 1911. The deed also provided for a continu-ance of the partnership for a period not exceeding twelve months.
Beebee Ammal v. Ibrahim Saibo.
By P 9 oi May, 1912, P. Esubu Saibu (the sixth partner of the firstpartnership) and the heirs of Mohamadu Kani Saibu, (the second partnerof the first partnership) sold their interests in the property to the severalpartner of the third partnership carrying on business as K. Abram Saibu.
The deed of partnership P 29 empowered Kader Ibrahim Saibu (thethird partper of the first partnership) Sheik Adam Saibu (the fourthpartner of the first partnership) and K. Ibrahim Saibu who were partnersof the third partnership or any two of them to sell the immovable propertyand buildings “ now belonging or which may hereafter at any time duringthe continuance of this partnership become the property of the saidpartnership business ”. Purporting to aet in the exercise of this power,two of the partners so authorized with some of the other partners conveyedthe property in question by P 21 of 1917 and the rights of the vendeesunder that deed have now devolved on the appellants.
Before the execution of P 21, P. Ibrahim Saibu (the fifth partner of thefirst partnership) who was a partner of all the three partnerships died in1915, leaving as his heirs the plaintiffs-respondents.
H. V. Perera, K.C. '(with him N. E. Weerasooria, K.C. and E. B. Wikra-manayake), for defendants, appellants.—The property in dispute wasproperty bought for the partnership business. The deed itself indicatesthat it was bought by seven persons trading as Abram Saibu & Company.It is also significant that the word “successors.” is used and not the usual“ heirs, executors, &c.”. The seven vendees had the legal title but’ thebeneficial interest was vested in the partnership. They were trustees forsale and for distribution of the assets at the dissolution—see section 20 ofthe English Act and Lindley (9th ed.), pp. 816, 973 and 409. Whenany one of them died, or retired there was no separation of thebeneficial interest. It remained in the partnership. At the dissolutionof the first partnership the remaining partners and some others continuedthe business by forming a second partnership. The assets of the firstpartnership were transferred to the second including this beneficial interest.A notarial document was not necessary for the transfer of this beneficialinterest. Ordinance No. 7 of 1840 deals only with the transfer of legalestate. (Narayanan Chetty v. James Finlay & Co.’) It is not correct 4osay as Fernando J. said in the connected case 39 N. L. R. 105 that tinsstatement was obiter. The base of Madar Saibo v. Sirajudeen", on whichFernando J. relied, is really in our favour. It merely decided that asagainst a stranger the only persons entitled to an action were the holdersof the legal title. Similarly at the dissolution of the second partnershiptheir beneficial interest vested in the third and under a power of salein the partnership deed was conveyed to the appellants. The interestsof the partners at the dissolution of the partnership was only to anaccounting. There is evidence D 1 and D 5 that the retiring partnerswere paid their shares. The fact that this property was partnershipproperty is further indicated by P 9 which was a transfer by a retiredpartner' and the heirs of a deceased partner in which it is stated that this
» 29 N. L. Ii. 65.
2 17 S. L. R. 97.
Bee bee Ammal v. Ibrahim Saibo.
was partnership property. The inventories prove'nothing. But D 10which was an application to Court to sell by the administrators of one ofthe partners described this as part of the partnership assets. It is sub-mitted that the previous case Ammal v. Ibrahim1 was wrongly decidedon the law. In any event the decision on the facts in that case was thatthe property in dispute there was not partnership property. Thestatement of the law was obiter. If the view of the law is not obiterthis appeal should be referred to a divisional or full Court, as that viewis wrong.
L. A. Rajapakse (with him M. M. I. Kariapper), for plaintiffs, respond-ent.—The Supreme Court as a Court of Appeal decided the samequestions of law and fact between-the same parties in Ammal v. Ibrahim.The same Court should not and cannot refuse to follow the earlier decision.Judicial comity or courtesy of Courts require that Courts of co-ordinatejurisdiction or of equal rank should follow the decisions of one another,even if the decision is based on a wrong principle. (Merry v. Nickalls ’.)The whole theory of our legal system is based on- that; otherwise therejvill be “no finality in the law. If the principle is wrong, it is for ahigher Court—the Privy Council—to correct it and settle the principle.Vilazquez v. Com. of Inland Revenue The Vera Cruz Lyons v. Lond.and Midland Bank “.
[Wijteyewardene J.—Are two Judges of this Court bound by a decisionof two other Judges ?]
Yes, otherwise it will lead to endless confusion and misery of litigation.•See Wake v. Varah but in cases where the previous decision was notappealable to a higher Court and the second Court is satisfied the decision'is obviously and clearly wrong, the matter may be considered by a FullCourt. See Jane Nona v. Leo Leech v. N. Staffordshire Rly. Co. andBeale on Interpretation, pt. 1, s. Hi, p. 29 et seq.
[Hearne J.—May two Judges not refer a case to a fuller Bench ?]
Not unless they are disagreed or the Chief Justice so orders. Thepractice of two Judges referring cases to a Divisional Court is not author-ized by Jaw. See sections 41 and 54a of the Courts Ordinance, No. 1 of1889.
Another ground on which this appeal should be dismissed is that itinvolves a question of fact. The decision of the trial Judge should not-bedisturbed. He has held that the land in question was not bought withpartnership money, nor formed partnership property. He has rejectedthe evidence of the appellants that the share of the respondents wasby consent deposited in a branch firm.
Moreover, P 3 ex facie vests full title in the vendees. The onus is onthe appellants to prove it was bought with partnership money , or that attust was created. They have not discharged that onus. They havesuppressed their books, see P 36 and P 35, and produced only twobooks D 1 and D 7 prepared ad hoc. They are forgeries and unreliable.
1 39 N. L. R. 10-j.a (1903)2 K. B. 135 al p. 138.
– (1872) L. R. 7 Ch.733rtf pp. 719-701.‘(1876)2 Gh. D. 348 at 357.
(1914) 3 K. B. 458 at461.■ 25 N.L. R. 241 at pp. 247 A 250.
(1884) 9 P. D. 96 atp. 99.* 29 L.J. (M. C.) 150 al p. 155.
HE ARNE J.—Beebee Ammal v. Ibrahim. Saibo.
Even if the legal estate was in the; vendees on P 3 and the beneficialinterest was in the plaintiffs, the latter could not be transferred from oneplaintiff to another orally. The partnerships were different ones. Evenin English law a. writing is necessary to transfer an equitable interestin land. See section 9 of the Statute of Frauds. The provisions of ourOrdinance of Frauds are more stringent. See Arsecularatne v. Perera1.Section 2 of our Ordinance No. 7 of 1840 clearly states that “ a contractfor establishing any interest in land ” is void unless it is notariallyexecuted. “ Any interest ” includes an equitable interest. P 28 andP 29 are not deeds transferring title, but are only partnership agreements.The decision in Narayanan Chetty z>. James Finlay (supra) is obiter, andAmmal v. Ibrahim (supra) is good law. Section 22 of Ordinance No. 7of 1840 read with section 21 shows that without a deed of transfer thetitle (both beneficial and legal) in the seven vendees could not vest inthe second or third partnerships.
The decision of law in Ammal v. Ibrahim, is not obiter. That casedecided (1) that the land in question did not form, partnership property,and (2) even if it did, the beneficial interest could not pass from onepartnership to another without a notarial document.
The conduct of the parties as borne out by the documentary evidenceshows that the land did not form part of the partnership assets. See P 4,
P 7, P 11, P 14, P 16. Valuable consideration has been paid by theappellants in making the purchases on P6, P 19, P 20, P 24. Rentshave been paid as are said to be due by the partners to the co-owners.See P 7, P 14, P 16, P 18, P 27, P 28, P 29.
The vendees on P 3 remained co-owners of -he land, while some of themand certain others became partners in regard to the movables and stock-in-trade. (Lindley (6th ed.), pp. 409, 410, 415, 416, 418, 419 and 421.)
The appellants have perpetrated a fraud on the plaintiffs "who are apurdah widow and minors in India.
H. V. Perera, K.C., in reply.—The beneficial interest of the partners inplaintiffs property is joint. (Ashton v. Robinson’1.) This appeal neednot be referred to a fuller Court. It can be decided here.
Cur. adv. vult.
September 13, 1938. Hearne J.—
The action filed by the plaintiffs was one for the partition of land atHaputale.
It is common ground that the land in question was conveyed by P 3 onMay 1, 1902, to (1) Kawana Kader Ibrahim Rawther, (2) Ana MohamaduKanny Saibo, (3) Kawanna Cader Ibrahim Saibo, (4) Pawana SheikAdam Saibo, (5) Pawanna Ibrahim Saibo, (6) Ena Usoof Saibo, and (7)Kuna Ahamadu Saibo.
These seven persons had become partners^ upon an agreement datedApril 4,. 1902 (P 27), and the conveyance under P 3 was executed duringthe currency of the partnership.
Pawanna Ibrahim Saibo died intestate in 1915. It is claimed by theplaintiffs that under P 3 he was entitled to an undivided 1/7 plus 2/63shares on a deed of conveyance No. 361 dated May 14, 1912, and that hethus left 11/63 shares to which his widow (the first plaintiff) and his sons
1 29 N. L. R. 342 at p. 345.1 (1875) 2 Bq. 25.
HE ARNE J.—Beebee Ammai v. Ibrahim Saibo.
(the second and third plaintiffs) -became entitled, the former to 11/504or 22/1,008 shares and the latter each to 77/1,008 shares.
The history of the 2/63 shares is traced by the plaintiffs in this way.
Ana Mohamadu Kanny Saibo (the second partner) died on August 2,1906, leaving as his heirs his widow Ameer Beebee Ammai who becameentitled to an undivided 1/4 of 1/7, i.e., 1/28 shares and his daughterHamida Beebee Ammai who became entitled to the remaining 3/28 shares.
Ameer Beebee Ammai, Hamida Beebee Ammai and Ena Usoof Saibo(the sixth partner) sold and conveyed their 1/28, 3/28 and 1/7 sharesrespectively, a total of 2/7 shares, to nine persons of whom PawannaIbrahim Saibo was one. Ibrahim Saibo thus became entitled to 1/x2/7 or.2/63 shares. The defendants admit the execution of deed ofconveyance No. 361. The facts pleaded by the defendants may besummarized thus:The land at Haputale was partnership property and
was treated as part of the assets of the branch there. Ana MohamaduKanny Saibo (the second partner) died in August, 1906, and his heirswere paid his share of the capital and profits. Ena Usoof Saibo (thesixth partner) retired from the partnership and was paid his share of thecapital and profits. (It is through these two that the plaintiffs tracetheir 2/63 shares.) The remaining five partners, i.e., Kawanna KaderIbrahim Rawther, Kawanna Cader Ibrahaim Saibo, Pawanna Sheik AdamSaibo, Pawanna Ibrahim Saibo and Kuna Ahamadu Saibo, together withEna Kader Batcha Saibo formed a new partnership constituted by P 28dated September 17, 1906, “ the land and premises at Haputale beingtreated as part of the assets of the said partnership ”. During the -subsistence of the second partnership Kawanna Kader Ibrahim Rawther(the first partner in the first and second partnership) and Kuna AhamaduSaibo (the seventh partner in the first and the fifth partner in the secondpartnership) died. The heirs of the latter were paid their share of thecapital and profits, the value of the land and buildings at Haputale beingtaken into account, while some of the heirs of the former were allottedhis share in the business. The remaining four partners and five othersformed a new partnership constituted by P 29 dated March, 1912, theland and premises at Haputale again being treated as partnershipproperty. In terms of the powers conferred by P 29 two of the partnerssold the entirety of the land and premises to seventh and eighth defendantsand K. K. Ibrahim Saibo and Kawanna Ibrahim Saibo in April, 1917(P 21), and it is under P 21 and subsequent conveyances that the seventhto sixteenth defendants claim that “ they are the lawful owners of theentirety o| the land
Apart from a question of res judicata which Counsel for the respondentsraised but later abandoned, it was agreed that the determination of thisappeal involved the consideration of three questions,' two of law and oneof fact.
On the question of fact, viz., whether the land at Haputale was partner-ship property, Counsel for the appellants admitted that, assuming it washeld that it was not, the appeal must fail.
HE ARNE J.—Beebee Ammo. I v. Ibrahim Saibo.
But even assuming that it was held that it was, two questions of lawrequired to be answered in his favour before the appellants could succeed.
The first was this : did the grantees under P 3 become, as the plaintiffs-respondents say, co-owners of the land or, as the defendants-appellantssay, was the legal title only in them and was the beneficial title in thepartners qua. partners. The second was whether, assuming the beneficialtitle was in the partners qua partners, their beneficial title could pass toa second set of partners and then to a third without a conveyance.
In the arguments addressed to the Court reference was made to thecase of Ammal v. Ibrahim *, and the view was pressed upon us by Counselfor the respondents that the questions of law involved in this appeal weredecided in the case referred to. It appears to me on a perusal of thejudgment in that case that it was decided on a question of fact, viz., thatthe land in dispute was not partnership property, and that the Judgeswho heard the appeal did no more than express their doubts that the law,as propounded by Counsel for the appellants in this appeal, is the law ofCeylon.
On the first question of law Fernando J. who wrote the judgment ofthe Court said : “ It may of course happen that a -person who is not' himself a partner, may hold property in trust for the partners, while thelegal title is in the grantee, but it is difficult to see how such a position canarise as the result of a deed which ex facie transfers the property to thepartners themselves ”.
On the second question of law he said, “ It seems, therefore, that thisjudgment (Narayanan Chetty v. James Finlay & Co.') is no authorityfor the proposition that the cestui que trust can transfer his interest to atotal stranger without any writing whether notarial or otherwise. Itseems inconvenient, to say the least, that the interests of a cestui que trustcan pass by mere consent of parties and quite unknown to the trusteehimself, because it would be difficult for the trustee at any particulartime to ascertain who was the cestui que trust in whom the beneficialinterest vested ”.
“ In the case before us, however ”, he went on “ the conduct of theparties themselves appears to indicate that each of the seven grantees
was regarded as the full owner of his one seventh share”.
He then considered the facts and on a finding regarding the facts favour-able to the appellants the appeal was allowed.
I-do not think the Judges intended that the doubts they expressed wereto be regarded as an authoritative pronouncement of the law.
The facts in the present appeal and the construction of the documentslead me strongly to the view that the land in dispute was partnershipproperty and was treated as such, and the questions of law which I havestated must, therefore, be categorically answered.
The law of partnership in Ceylon is the same as that in England but theintroduction into Ceylon of the law of partnership obtaining in Englanddoes not introduce into Ceylon any .part of the law of England relating tothe tenure or conveyance or assurance of, or succession to any land, orother immovable property, or any "estate, right or interest therein (Ordi-
nance No. 22 of 1866).
i (1937) 39 N. L. R. 103.
2 29 N. L. R. 65.
HEARNE J.—Beebee Ammal v. Ibrahim. Saibo.
The decision of the first legal question solely with" reference to the lawof partnership in England presents, I venture to think, no difficulty. Ifone partner purchased property in his own name and it was paid for outof partnership moneys, he would be deemed to hold the property in trustfor the partnership, and if the property was purchased, as in this case,in the' names of the seven persons who alone constituted the partnershipthey would also hold the property in trust for the partnership; or, to usethe language employed here in this connection the beneficial title in theproperty would be in the partnership. Having regard to the law ofpartnership what the term “ beneficial title ” connotes is not that anyparticular partner has a right to take away any portion of the partnershipproperty and to say that it is exclusively his, but that he is entitled to ashare in his proportion of the partnership assets after they have beenrealized and converted into money, and all the partnership debts andliabilities have been paid and discharged. For these reasons the beneficialinterest of partners in partnership property may be said to be joint.
The doubt expressed by Fernando J. was whether “the beneficialinterest in the land could vest in a firm or partnership as such without aconveyance expressly in favour of the firm or partnership ”. The deedFernando J. was there considering was one in which one partner purportedto convey to himself and six others as co-partners trading under the nameof “ K. Abram Saibo & Co. ” and their respective heirs, executors, adminis-trators and assigns,' all.his estate, possession, rights, title, &c., in certainland. It is unnecessary for me to state whether in my view the questionof a further conveyance in that case did in fact arise. For, on a considera-tion of the deed relevant in this case in which a third party conveyed theland in dispute to seven persons trading as K. Abram S.aibo & Company,• heir successors (a significant word) and assigns, there is, in my opinion,no doubt that the deed vested the property in. the partnership, that is tosay, that the beneficial title was in the partners as such, and that nofurther conveyance was necessary in order to satisfy the requirements ofour law.
I come to the second point ci' law.
It is claimed by the appellants that on the death of the second partnerin the first partnership and the retirement of the sixth-, an accountingwith the heirs of the former and with the latter having taken place, the•beneficial interest in the property', for the purposes of the partnershipbusiness, was in the remaining five. These five did not thereafter realizeall the partnership property7 and divide the proceeds of sale in the propor-tion to which each was entitled. ‘They formed a second partnershipconsisting of themselves and a sixth person. The latter made certaincontributions and the beneficial interest in the land which was broughtinto the second partnership became the beneficial interest of the secondpartnership for the purpose of the business of that partnership; that is tosay, each member of the second partnership was entitled, on a dissolution,to a share in the proportion of the partnership assets, including the land,after they had been realized and converted into money and all partnershipdebts had been paid. Similarly bn the death of two of the partners ofthe second partnership, the remaining four, instead of realizing all the
404HE ARNE J.—Beebee Ammal v. Ibrahim Saibo.
partnership assets and dividing the proceeds of sale after paying the debtsand accounting with the heirs of the deceased partners, formed a thirdpartnership consisting of themselves and five others and the beneficialinterest in the land enjoyed by the second partnership became the bene-ficial interest of the third partnership for the purpose of the business ofthat partnership.
I have said that the beneficial interest of the partners in partnershipproperty is, in my opinion, joint in the sense 1 have indicated. Further,as on the death of a partner it is only to an accounting and a share thathis representatives would be entitled, the beneficial interest in landbelonging to the partnership would remain in the members of the partner-ship for the time being, and if not required to be sold for the purpose ofpaying partnership debts, could by agreement form one of the assets of asecond partnership, and thereafter, subject to the same conditions of athird. This frequently happens.
As is pointed out in Lindley on Partnership (8th ed.) at p. 424,“ Where a change occurs in a firm by the retirement of one or more of itsmembers, nothing is more common than for the partners to agree thatthose who continue the business shall take the property of the old firmand pay its debts, or that part of the property of the old firm shall becomethe property of those by whom its business is to be continued, whilst therest of the property shall be otherwise dealt with ”.
The objection raised by Counsel for the respondent was that theinterests in land which the appellants assert passed by agreement fromthe first partnership to the second, and from the second to the third, couldnot and did not so pass in the absence of a conveyance, while the argumentof Counsel for the appellants was that a deed was not necessary forthe acquisition of beneficial interests.
In Narayanan Chetty v. James Finlay & Co. (supra) it was held accordingto the head note that “ there is nothing in section 2 of Ordinance No. 7 of1840, repugnant to the proof, by parol evidence, of the transfer of equit-able interests in land arising out of a trust created by operation of law ”.It was submitted by Counsel for the-respondents that that case decidedthat the grantee of land subject to a trust could acquire the interests ofthe cestui que trust without a notarial instrument, and that the decisionmust be confined to" the particular facts of that case. The Judges whoheard the appeal in Narayanan Chetty ®. James Finlay & Co. (supra)examined at length the provisions of section 2 of Ordinance No. 7 of 1840and concluded that the Ordinance must be read as limited to acts ofparties which are directed. to affect the legal estate, and that it is notconcerned with equitable interests in regard to which it has made noprovision. Even if, as has been suggested, the case was decided on awider principle than was necessary, I would respectfully adopt the viewsOf the law as set out in the judgments of Garvin and Dalton JJ.
In my view the two legal questions involved in this appeal must beanswered in favour of .the appellants.
I would point out that Fernando- J. did not say that the case ofNarayanan Chetty v. James Finlay & Co. “ was not an authority that the
WTJEYEWAKDENE AJ[.—Beebee Animal v. Ibrahim Saibo.
cestui que trust can transfer his interest to a total stranger without anywriting notarial or otherwise ” but only that it seemed to him to be so.
In regard to the facts the trial Judge appears to have misconceived theposition bf the defendants when he said that, even if the property waspurchased with the funds of the firm, “ their purchase in the name of allthe partners must be taken to be for their exclusive benefit and not forthe benefit of partnerships that may or may not be constituted by thepartners in future ”. Again he does not appear to have considered the•main question of fact in detachment from the questions of law. It istrue that he says, “ on the oral and documentary evidence before me I amof the opinion that the rights of the vendees on P 3 did not vest in thethird partnership, but this appears to have been (and I use the word inno way derogatory to him) coloured by his view that “ in the absence ofan effectual vesting of the. property in the second partnership accordingto the law of the country I fail to see how this property came to beconsidered part of the assets of it It appears to me that if he hadfully taken into account the documents in the case, he could not havedecided the matter without an examination in his judgment of theimplication, contrary to his finding, of such documents as P 3 and P 9.I have had the advantage of reading my brother’s judgment on -thequestions of fact involved in this appeal and I agree with the conclusionsat which he has arrived.
If, as I hold, the beneficial title is in the appellants, the plaintiffs-respondents have made out no case for partition, even on the assumptionthat they have legal title in the shares set out by them.
1 would allow the appeal with costs and dismiss the plaintiffs’ actionwith costs.
[His Lordship after stating the facts proceeds as follows :—]
A study of the various documents filed in the case leaves no doubt inmy mind that the property in question was regarded by the vendees onP 3 and their representatives in interest as partnership property until thepresent dispute arose. The deed P 3 itself shows that the purchase bythe seven individuals named in the deed was not for the purpose of holdingthe property as co-owners but for the purposes of the partnership estab-' lished shortly before by P 27.
The vendees are described in the deed as persons trading under the nameof K. Abram Saibu & Company, and the Notary who has drawn the deedhas made a significant departure from the usual formula employed indeeds of conveyance in referring to the representatives of the vendees as“ successors and assigns ” and not as “ heirs, executors, administratorsand assigns”.
The deed P 9 of 1902 is as previously stated by me a deed of conveyanceexecuted by a retired partner and the heirs of a deceased partner of thefirst partnership. The vendees were all the partners of the third partner-ship including P. Ibrahim Saibu under whom the plaintiffs claim.
This deed refers to the property in question as an’asset of the partnershipof K. Abram Saibu & Company and purports to be a conveyance to thevendees “ carrying on business under the name and style of K. Abram1
WIJEYEWARDENE A.J.—Bee bee Animal w. Ibrahim Saibo.
Saibu & Company ”, under deed P 29. Though the entire considerationis mentioned in the body of the deed as Rs. 20,000 the attestation clauseshows that only sums of Rs. 3,055.58 and Rs. 8,871.41 were paid in thepresence of the Notary to the heirs of the deceased partner and theretired partner and that these payments were made by cheques issuedby P. Abram Saibu & Company. The Notary does not mention that thevendors acknowledged the payment of the balance sums to them beforethe execution of the deed.
According to the appellants the partners looked into the accounts ofthe partnership and found that the shares of Mohamadu Kani Saibuthe deceased partner and P. Esubu Saibu, the retired partner in the firstpartnership including Kadewatta as an asset of the partnership amountedto Rs. 8,871.41 and Rs. 3,055.58 respectively. The recitals in the deedP 12 of 1912 show that the accounts of the partnership have been lookedinto before the execution of P 12 while D 1 and D 5 show that theimmovable properties were included among the assets of- the partnership.On paying out the shares of Mohamed Kani Saibu and P. Esubu Saibu.the second partnership desired to-obtain a conveyance of the interest ofthese partners in the legal estate of Kadewatta and other immovableproperties and for that purpose the deed P 9 was executed. The oralevidence on this point is strongly supported by the statements in thedeeds P 9 and P 12 and the documents D 1 and D 5. Though the respond-ents have questioned the genuineness of D 1 and D 5. I see no reason toreject them and it appears to me to be distinctly unfair to expect theappellants to lead more cogent evidence than they have been able toadduce with regard to^ transactions which took place over twenty-fiveyears ago. The document D 1 bears the signature of P. Ibrahim Saibu,the predecessor in title of the plaintiffs and the witnesses called by thedefendants have sworn to the fact that the document was signed byP. Ibrahim Saibu. As against this evidence there is only the statementof the third plaintiff, son of P. Ibrahim Saibu, who was a boy of thirteenwhen his father died in 1915. He says that he does not think that thesignature on D 1 is the signature of his father. He does not slate that hehas seen his father signing any documents nor has any attempt been madeto place before the Court the evidence of any witness who has comparedthe admitted signatures of P. Ibrahim Saibu with the signature on D 1.The plaintiffs also seek to throw doubt on the signature on D I by pointingto the fact that P. Ibrahim Saibu was ill for some time before his deathin 1915 and that he therefore could not have signed D 1 at Haputale in1911. The evidence of the plaintiffs however discloses the fact that P.Ibrahim Saibu was ill for less than two years prior to his death in India,in 1915, and-1 am not prepared to reject the positive evidence led onbehalf of the appellants merely on the suggestions made by the plaintiffs.In view of the fact that one of the vendees on P 9 is the predecessor in- title of the plaintiff this document militates very strongly against thecontention of the plaintiffs that the property in question was not regardedas partnership property.
The three deeds of partnerships P 27, P. 28, P 29 contain recitals whichshow that immovable property formed part,, of the assets of the various
WUEYEWARDENE AJ.—Beebee Ammal v. Ibrahim Saibo.
partnerships and the appellants 1 think are entitled to rely -on theserecitals as supporting their plea that the property in" dispute is an assetof the partnership in view of the failure of the respondents to show thatany property other than this property formed an asset of the partnership.
The inventories P 4, P 7, and P 14 and the administration'deed P 6which is based on P 4, no doubt, appear to support the plaintiffs’ conten-tion that the immovable properties were not assets of the partnershipsas these inventories mention in addition to a share of the partnershipbusiness an undivided share of the immovable properties.
One cannot, however, ignore the fact that these inventories are generallyprepared on the deeds handed by the parties concerned to their lawyersand the person responsible for the preparation of the inventories may wellhave thought that he was required by the provisions of section 538 of theCivil Procedure Code, 1889, to include a share of the immovable propertiesin view of the deed of transfer P 3. Whatever may be the reason for theinclusion of the shares of immovable properties in these inventories, theydo not afford any ground for drawing an inference that the partiesconcerned did not regard this property as partnership property. Theadministrator in whose name P 4 was prepared filed a motion D 10 inCourt a month afterwards asking the sanction of Court to sell theundivided shares of the immovable properties stating that these propertiesformed part of the assets of the partnership. The document D 10 showsthat it is unsafe to draw any inference adverse to the appellants from thefact that the inventories mention the shares of the immovable propertiesas separate assets.
The oral evidence led in this case shows that the value .of the propertywas taken into account in assessing the shares due to the retired anddeceased partners and I do not see any reason for not accepting suchevidence as it is supported by the documents produced in the case.Moreover the learned District Judge has not stated in express terms thathe rejects the oral evidence adduced in support of the appellants.
On the oral and documentary evidence in the case I have reached thedecision that Kadewatta was acquired on account of the firm of P. AbramSaibu & Company and for the purposes and in the course of the firstpartnership. I
I am further of opinion that this property has always been regarded bythe original purchasers and their representatives in interest as partnershipproperty. It now remains to consider whether this property became inlaw the partnership property of the second and third partnerships.
Ordinance No. 22 of 1866 introduced the English law of partnership toCeylon subject however to the limitation that “ nothing therein containedshall be taken to introduce into this Colony any part of the law of Englandrelating to the tenure or conveyance, or assurance of, or succession to,any land or other immovable property, or any estate, right, or interesttherein ”.
WUEYEWARDENEA.J.—Beebee Animal v. Ibrahim Saibo.
The relevant provisions with regard to the transfer of interests in landare contained infection 2 of Ordinance No. 7 of 1840 which reads :—“ Nosale, purchase, transfer, assignment, or mortgage of land or otherimmovable property and no promise, bargain, contract, or agreementfor effecting any such object, or for establishing any security, interest, orincumbrance affecting land or other immovable property (other than alease at will, or for any period not exceeding one month), nor any contractor agreement for the future sale or purchase of any land or other immov-able property shall be in force or avail in law unless the same shall be inwriting and signed by the party making the same, or by some personlawfully authorized by him or her in the presence of a licensed NotaryPublic and two or more witnesses present at the same time, and unlessthe execution of such writing, deed, or instrument be duly attested bysuch Notary and witnesses”.
By deed P 3 the legal estate in the property was vested in the sevenpersons named therein but the property was to be held subject to thecondition ^imposed by operation of law. that it should be available for thepayment of the debts of the partnership and that afteir such payment thebalance if any of the proceeds of sale should be distributed among thesurviving partners according to the terms of the partnership deed, at thewinding up of the business and affairs of the firm. The result wouldthen be that while the legal estate was vested in the seven purchasers thebeneficial estate would be in the partnership as indicated by me. Thequestion of law that now arises for consideration is whether this beneficialestate of the first partnership could have been transferred to the secondpartnership and later on to the third partnership except by notarialdocuments executed according to section 2 of 1840. In Narayanan Ckettyv. James Finlay & Co. *, the Court had to consider the scope of thissection. On a comparison of our Ordinance with the English Statuteof Frauds (29 Car. 11 c. 3) Garvin and Dalton JJ. held in that case thatOrdinance No. 7 of 1840 should- be read as limited to the acts of partieswhich are directed to affect the legal estate in immovable property andshould not be extended to apply to equitable interests. '
I am unable to agree with the view of Fernando J. in Ammal et al. v.Ibrahim et al.3 that the decision in Narayanan Chetty v. James Finlay & Co.(supra) is applicable only to the special facts in that case and should notbe regarded as an interpretation of the scope of section 2 of OrdinanceNo. 7 of 1840 on the question whether the Ordinance regulates andgoverns the assignment of equitable interests' created by operation of law.
On my findings on the question of fact and law the position is that whilethe respondents are entitled to the legal estate in certain undivided sharesof the property the beneficial estate, in the entire property is now vestedin the appellants who do not desire the property to be dealt with underOrdinance No. 10 of 1863. I hold therefore that the plaintiffs are notentitled to maintain the present action and that the action shall thereforebe dismissed with costs. The appellants are entitled to the costs of thisappeal.
– (1937) 39 N. I.. R. 10.
' (1997) 2.9 N. L. R. 65.
BEEBEE AMMAL v. IBRAHIM SAIBO