Case Name: Sachin Jaiswal vs Hotel Alka Raje
Equivalent Citations: 2025 SCC OnLine SC 446
Court: The Supreme Court of India
Relevant key Sections: Section 14 of the Indian Partnership Act, 1932
Keywords: Property of the firm

Facts of the case:

Heir of Bhairo Prasad Jaiswal contested ownership of hotel property originally purchased by him. He and his brother formed a partnership firm (Hotel Alka Raje) in 1972 and constructed a hotel building on that land. A 1983 relinquishment deed transferred his interest in the land to the firm. Upon his death, his heirs sought title to the property. The Allahabad High Court clarified that while heirs inherit the deceased partner’s share in the firm, the property itself belongs exclusively to the partnership under Section 14 of the Partnership Act. The Supreme Court upheld this decision.

Issues:

1. Whether the legal heirs of a deceased partner can claim ownership rights over immovable property used by a partnership firm after the partner’s death.
2. Whether the immovable property contributed by a partner becomes the property of the partnership firm under Section 14 of the Indian Partnership Act, 1932
3. Whether a relinquishment deed executed by a partner effectively extinguishes personal claims over the property in favor of the partnership.
   Observations of the court: The Supreme Court observed that once a partner contributes immovable property to a partnership firm and executes a relinquishment deed, such property becomes partnership property under Section 14 of the Indian Partnership Act, 1932. The Court held that legal heirs of the deceased partner cannot claim individual ownership over such property, as the partner’s rights were extinguished during their lifetime. The property vests with the firm, and heirs only succeed to the partner’s share in the firm, not specific assets. This reinforces the distinction between firm property and individual ownership.

Ratio of the Case:

1. The Supreme Court held that when a partner contributes immovable property to a partnership firm and executes a relinquishment deed in favor of the firm, the property becomes the exclusive property of the firm under Section 14 of the Indian Partnership Act, 1932. After such relinquishment, the partner no longer retains individual rights over the property. Upon the partner’s death, legal heirs do not acquire ownership rights over that specific property but may inherit the monetary share in the partnership, if any. The Court reaffirmed that firm property is distinct from personal property of its partners.